Food startups are known to be changing the hospitality industry – from delivery services to innovative restaurants, the food industry arguably has more variety today than ever before.
As the demand for great food doesn’t seem to be going anywhere, becoming a supplier for it could be a satisfying venture.
If you have been thinking of starting your own food startup, we’ve prepared a quick guide with some key considerations.
Starting An Australian Food Startup
There are a number of things to consider when starting your food startup. On the business side of things, you need to look at costs, marketing, production and competition to name a few.
There’s also the legal side of it all. You’ll need to have the right legal agreements and protections to be able to run a successful venture. We go through some of these in the article – keep reading to learn more!
Can I Start A Food Truck Startup?
Yes, it’s perfectly legal and even common to start a food truck business.
A food truck start up business is open for anyone to start. You don’t need to meet a specific criteria. What you will need to assess, however, is whether your individual circumstances are suited to launching a food truck startup.
Take a look at the costs, time management and skills to see whether you can dedicate what is necessary to a food truck startup.
Like any other food business, a food truck will require the legal documentation to protect and regulate your business activities.
Food Truck Startup Costs
The cost to start a food truck will depend on the business itself, however, it can cost in the tens of thousands. You can either buy a food truck or get a truck and turn it into a food truck yourself. Either way, it’s been reported to cost on average anywhere between $28,000 to over $100,000.
If you want to buy into a food truck franchise, these costs may look a little different – speak to one of our expert franchise lawyers for more information.
Can I Run A Food Startup From Home?
It’s possible to run a food startup from home, however, it’s important to see whether your space is suitable for the task, can keep up with hygiene requirements and whether your local council zoning laws permit the activities you wish to partake in.
This is also known as a home-based food business and they are held to the same standards as any restaurant or cafe.
When it comes to running a business from home, there are specific laws that apply to both you and your employees. Your employer obligations under Work Health and Safety laws still apply to your employees who work remotely.
Running A Food Delivery Startup
Food delivery startups are the middle person between restaurants and consumers. If you’re thinking of starting one, consider the areas you will service, whether you will hire employees or contractors, the competition on the market, insurance coverage as well as any liabilities.
Conduct thorough research and make a business plan so you can stay on track with your goals. It’s always good to talk to a legal professional so they advise you on any potential issues.
Running A Healthy Food Startup
Healthy food startups pride themselves on having fresh food that is good for their consumers, as opposed to the fast food quality that often prevents people from wanting to eat out.
Healthy food can often be more expensive to prepare, so make sure you sort out your finances accordingly. Additionally, it’s always best to be transparent with your customers about where the ingredients have been sourced from, how the food has been prepared or stored and exactly what is in it. This way, they can decide whether or not it’s healthy.
We’ve written more about the specific labelling and packaging requirements under Australian law – you may wish to read into these if you’re packing food for your startup.
What Food Regulations Should I Be Aware Of?
The food industry is a strictly regulated area, so your business will be held to a pretty high standard. This is understandable and something you should be aiming for regardless as badly prepared food has the ability to make people extremely ill (you don’t want to be liable for negligence!).
In order to see the rules that are more specific to your business, you have to know your business classification and check the regulation for your state. For NSW, it can be found here.
At a federal level, Australians should adhere to the Food Regulations Act 2015 and the Australia and New Zealand Food Standards Code. In addition to this, most Australian states and territories require businesses to have a food safety supervisor. As an individual, you may also be required to undergo training in food safety.
Local councils have certain requirements for food businesses, so be sure to check out your local regulations as well.
Get Funding For Your Food Startup
Consider how you will fund your startup. Like with any business venture, you will need to see what the startup costs are, how much it will cost to run the business and what you can reasonably expect to earn in the first year.
Putting all the factors together, come up with a number to see how much the business will cost to get started. Then, take a look at your options.
You could bootstrap, take out loans, apply for grants and get capital from investors – each method has their own benefits and risks. It will be up to you to determine which path is best for your business.
Crowdfunding For Food Startups
Crowdfunding is a way to get capital into your business from the general public without actually owing them shares. Rather, entrepreneurs might send people who donate to them gifts, merchandise or samples. In exchange, they raise money to fund their idea.
What Legal Documents Do I Need For A Food Startup?
It’s crucial to have all the correct legal documents sorted before you start serving customers. The right legal documents can help protect your business and even make it more transparent with customers – talk to a legal professional to make sure this part gets done the right way.
Online Terms And Conditions
As a food startup, you may have your own app or website. Website Terms and Conditions are a common agreement between you and the user of your website which sets out the expectations for using the website.
Terms and conditions also cement your authority over the website, allowing you the power to add and remove anything for the benefit of all your users. Further, it can limit your liability for anything that goes wrong on the site.
Alternatively, if you run your startup through an app, it’s wise to have a lawyer draft your App Terms and Conditions.
Personal information is anything that can be used to identify an individual, including their:
- Email address
- Postal address
- Phone number
- Bank details
Disclaimers For Food Startups
Disclaimers are used to let consumers know that you are denying legal responsibility for something.
For example, after a business has made customers aware of the ingredients in their food, they might have a disclaimer (which also serves as a cautionary statement) alerting customers that consuming certain ingredients in high amounts can lead to x side effects.
As the customers have been amply warned, it is then their responsibility to consume the product safely.
Disclaimers should be within reason – it won’t protect illegal acts or negligence by a business. However, it can limit and even prevent a business from being held liable when a consumer fails to take proper precautions resulting in loss or injury for them.
Working With Food Suppliers
As a food business, you will most likely need to contact a supplier to provide the ingredients and materials that are going to be used to prepare food.
For example, a supplier could be someone who routinely brings fresh produce to your business every morning. When you have a relationship with a supplier, it’s good to have a Supply Agreement in place. It’s a contract that covers the most important aspects of your relationship, to make sure that everyone is on the same page and things can run smoothly.
A Supply Agreement covers:
- A description of the items is being provided
- The date and time of the delivery
- How and when payment is to be made
- Dispute resolution
Confidentiality Clauses Or NDAs
Food businesses will often deal with recipes or other important inside information that is key to the business’ success (some could be classified as trade secrets!).
In this case, you’ll want to take measures to protect this valuable information so it doesn’t fall into the wrong hands. So, you may want to insert confidentiality clauses into your contracts to keep your information secure.
If you’re thinking of hiring staff to assist your food startup, then it’s important to have an Employment Agreement in place with them.
An Employment Agreement will cover what is expected of them, their rates, time off, duties and terms of employment. In addition to this, an Employment Agreement also details what an employee can expect from you as their employer.
Having a transparent relationship with your employees is key to having a strong one – this can start with having a strong employment contract in place.
Food startups are a great way to follow your passion for food – it’s important to go about it the right way, though! To summarise what we’ve discussed:
- Food startups are businesses that serve or deliver food to consumers
- These can include food delivery businesses, food truck businesses and healthy food startups
- It is possible to run a food startup from home, as long as you meet all the requirements
- Be aware of and follow all the federal and local food regulations
- Plan how you will fund your food startup
- Gather all the necessary legal documents
Chat To A Startup Lawyer
As you may have seen, there are a number of legal obligations to cover before you can get your startup running!
Here at Sprintlaw, we help new businesses every day no matter where they are in their startup journey. Our expert startup lawyers are happy to talk to you about your legal questions.
If you would like a consultation on a food startup, you can reach us at 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat.
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