If you are in the process of starting a food business, it is likely you have or will come across unexpected obstacles. As is the reality when starting any business. It is important to remember that there are resources available to help guide you through overcoming these obstacles. The below article, written by Mattie Morgan, provides some valuable insight on how to avoid some of the pitfalls that can come with opening a business.



In 2019, the food marketing system (food retail and food service, collectively) supplied approximately $1.77 trillion worth of food. But $969.4 billion—more than half of the total value—was supplied by food service facilities, as reported by the U.S. Economic Research Service. The same report also revealed that there’s been a continuous upward trend in the value of the food service industry since the 1960s, as more people continue to buy food at establishments. And there’s no sign of it dwindling down anytime soon, even with the pandemic considered.

Starting a food service business could potentially be a very profitable venture if done right. So it’s just as important to think about the technical side of things as much as the food itself.

Choosing the right business structure

Often, people start businesses as a sole proprietorship since this usually doesn’t have many filing procedures. Indeed, sole proprietorships in New Mexico don’t even need to register with the Secretary of State, or create corporate reports. The downside is that you’ll be personally liable for all possible legal obligations and debts incurred by your business. On the other hand, forming an LLC here in New Mexico could be more advantageous if you’re looking for asset protection. Your business is viewed as a separate legal entity, so you’re shielded from total liability should things turn sour. While you may even incorporate your business, this may deal you with higher costs and lots more paperwork than is usual for startups; but it’s ideal if you’re looking to immediately grow your business and already have the funds to maintain it.

Keeping a roster of reliable suppliers

Running a food service business means you need to think about operations from end-to-end, including vendors and suppliers. Look for ones who have good track records, and, preferably, much experience. Before commencing your search, you first need to finalize your menu, storage availability, and projected sales volume. Beyond just the ingredients, your kitchen appliances should also be bought from reliable stores. Even something as simple as a mini rice cooker needs to be practical, cost-efficient, and multifunctional. Refrigerators, microwaves, and ovens should be energy-efficient. With these in mind, you’ll be able to narrow down your options for suppliers. Business content writer Mary King suggests that you start looking for vendors by going to wholesale retailers and local farmers markets, asking for recommendations from peers within the industry, or even conducting a Google search!

Knowing your competitors

Several businesses have pivoted online since the pandemic started, and this is both a challenge and an opportunity for you. This way, you get a better view of their product offerings and marketing strategies. F&B industry writer Domenick Celentano proposes that you evaluate your business idea by asking yourself if the market is saturated with concepts similar to yours. If the answer is yes, it doesn’t mean that you give up. Celentano encourages you to go back to the drawing board and polish your ideas even further, until you come up with the winning one.

Securing funding

Wanting to start a business doesn’t necessarily mean that one has the personal funds to do so. The reality is that several startups rely on external funding to get their business started. And there are several ways to secure financing for your new venture. In our state alone, there are a slew of investors both from the state’s private sectors and the New Mexico government, such as the New Mexico Small Business Investment Corporation, which is a legislation that provides equity or debt capital to aid in business growth and expansion. There are even organizations like the New Mexico Small Business Assistance Program and WESST that offer loans and grants, as well as assistance in creating business plans. It’s also important to note that it may take a few years before you make your first significant profit, so money may be tight at first. Choosing the right investors and gaining the right support is an essential part of the process, as you’ll be working with them for a good while.

In addition to all the business and technical aspects of starting a food service business, you’ll also need to keep your passion for food alive to truly be successful. Read our write-up on Beatrice Montano, a woman who beat the odds with her passion for cooking, and persevered to be part of the food service industry.


Written by Mattie Morgan for streetfoodinstitute.org