Do you want to start a frozen food business? If YES, here is a complete guide to starting a frozen food business with NO money and no experience.
Okay, so we have provided you an in-depth sample frozen food business plan template. We also took it further by analyzing and drafting a sample frozen food business marketing plan backed up by actionable guerrilla marketing ideas for frozen food businesses. In this article, we will be considering all the requirements for starting a frozen food business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Frozen Food Business?
We all love meat – from chicken, pork, beef to turkey and all what not. This is why those in the frozen food business aren’t going to go broke anytime soon. A frozen food store is a retail outlet where different frozen foods are sold and it is a business that can be started in any location in the United States of America, and it is open to all and sundry as long as you have the drive to run the business.
A frozen food store is a very easy business to start and it is not so capital intensive. Getting the right products that people want to buy and good record keeping are the secrets of running a frozen food store. A frozen food store can be run offline in a conventional retail store or online on an e-commerce retail site.
It is a business that can be managed by a family. For instance, one family member can take care of the cash register, another stocks the freezer (cold room), and another unloads the delivery truck etc. It is a fact that you can be successful with your frozen food store business without any formal training; all you need is informal training or to understudy someone who is in the business.
To be on the safe side, before launching this type of business, you need carry out market research, economic and cost analysis, and of course feasibility studies. If you get things right before launching your frozen food shop business, it will not take you long before you break even and start smiling to the bank.
If you want to start your frozen food shop business, all you need to do is read this article and you will be well equipped.
Starting a Frozen Food Business from Home – A Complete Guide
- Industry Overview
The grocery stores industry including supermarkets and frozen food stores, account for the largest share of food store sales in the US. In 2013, grocery stores accounted for 90% of the country’s food and beverage store sales, while supermarkets accounted for 95% of the total grocery store sales. The food retail industry is a high-volume, low-margin business, with cutthroat competition from all quarters. It includes grocery stores and supermarkets, as well as convenience stores.
The staples offered at these stores make the industry non-cyclical. In addition, grocery stores and supermarkets offer an alternative to restaurants during tough economic times, as buying groceries for home cooking is one alternative. Buying prepared foods, which are new higher-margin offering at grocery stores, is an additional alternative to restaurants.
However, offering new higher-margin items such as gourmet foods, prepared foods, and general merchandise is making this industry more cyclical than in the past, creating pressures on revenue during the recent economic downturn.
The Supermarkets and Grocery Stores industry that the frozen food store is a part of makes up the largest food retail channel in the United States of America. Businesses in this industry retail general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and other dairy products.
If you are close observer of the Supermarkets and Grocery Stores industry, you will agree that frozen foods have a special place in American households due to their simplicity, convenience and price. Nonetheless, the industry has experienced only slow growth in recent time mainly due to escalating competitive pressure.
Going forward, the steadily improving US economy will likely have a positive impact on grocery and food-service sales overall, as disposable income rises and consumers spend more on discretionary products and meals outside the home. However, industry growth is expected to remain limited as consumers become more health conscious.
The supermarket and grocery stores industry is a major sector of the economy of the United States which generates a whooping sum of $602 billion annually from more than 42,539 outlets scattered all around the United States of America.
The industry is responsible for the employment of well over 2,624,650 people. Experts project the supermarket and grocery industry to grow at a 1.4 percent annual rate. The establishments in this industry that have dominant market shares in the United States are; Albertson, Kroger and Publix Super Markets Inc.
It is a fact that an estimated two-thirds of the United States’ gross domestic product (GDP) comes from retail consumption of which the supermarket and grocery stores industry that frozen food store is a part of contributes greatly.
This is why the United States of America’s economy is measured with the yardstick of how well the retailing business is fairing in the U.S. In essence, when there is an unstable economy, purchasing power drops and it impacts the retailing/grocery stores industry negatively which may result in the closure of some supermarkets/grocery stores.
It is interesting to note that more frozen food shops especially lager retail outlets have started to include self-serve checkout lanes in their stores. It creates shorter lines that appeal to consumers as the average customer would not want to stay long on the queue.
The frozen food shop business will continue to blossom because people will always want to eat frozen food. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own frozen food shops in the United States of America.
Over and above, the supermarket and grocery store industry that frozen food store is a part of is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner like the average mom and pop business or you can choose to start on a large scale with several outlets in key cities.
Starting a Frozen Food Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who buy frozen food cut across all genders and age groups. Male and female, adults and children all eat frozen food, both organic and non – organic, hence the demographic composition of the frozen food business is all encompassing.
The truth is that when it comes to selling frozen foods, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people, but to all those that reside around the locations where you have your frozen food shops and who have purchasing power.
So, if you are thinking of opening your own frozen food shop business, then you should make target demographics all encompassing. It should include households, restaurants, hotels and everyone with the purchasing power in the neighborhood where your frozen food shop will be located.
List of Niche ideas Within the Frozen Food Business That You Can Specialize in
There is no niche area in the frozen food shop business because the frozen food shop business is a niche area in the supermarket and grocery stores industry. Every player in the frozen food shop line of business simply retails various types of frozen foods such as fish and seafood, meat, baked goods, vegetables, fruits and fruit juices, poultry and other products.
So, if you are looking towards opening your own frozen food shop business, then you should clearly define your market so that you will be able to get a fair share of the available market in the industry.
The Level of Competition in the Frozen Food Line of Business
The competition that exists in the frozen food shop line of business goes beyond competition amongst frozen food shops in your location; you are expected to compete with grocery stores, supermarkets and any other outlets that also sell frozen foods.
The truth is that no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you always have varieties of organic and non – organic frozen foods, you can deliver excellent customer care services and you know how to attract and reach out to your target market.
But over and above, there are several frozen food shops, supermarkets and grocery stores scattered all around the United States. So, if you choose to start your own frozen food shop business in the United States, you will definitely meet stiff competitions amongst these frozen food outlets. Besides, there are larger frozen food shops that determine the trends in the industry and you should be ready to compete with them for customers.
List of Well – Known Brands in the Frozen Food Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their business and the results they have achieved over the years.
These are some of the leading frozen food shops in the United States of America and in the globe;
- SYSCO Corporation
- US Foods
- Babeth’s Feast
- American Frozen Foods
- Malincho Euro Market & Prestige Liquor
- Cruisin USA Frozen Custard
- Red Mango Frozen Food Stores
- CRF Frozen Foods
- Grocery Babu LLC.
- Carando Gourmet Frozen Foods
- India Bazaar Grocery Store
- SunOpta Frozen Foods
- Ajinomoto Windsor, Inc.
- R K Grocery
- Smith Frozen Foods
- High Liner Foods USA Inc
- Food City USA
- Freddy’s Frozen Custard & Steakburgers
- Dannon Co Inc
If you are planning towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
The frozen food shop business is not a green business. As a matter of fact, you will come across several frozen food shops, grocery stores and supermarkets when you drive through town. So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of what is required to rent a shop where you are expected to open your frozen food shop business and the amount required to purchase freezers, trays, knives, frozen food supplies and also the cost to successfully run the business.
Over and above, if you are considering starting a frozen food shop business, then your concern should not be limited to the cost of renting a shop facility and purchasing freezers, trays, knives, frozen food supplies, but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Starting Your Frozen Food Shop Business from Scratch vs Buying a Franchise
When it comes to starting a business of this nature, it will pay you to buy the franchise of a successful and well – established frozen food shop/brand as against starting from the scratch. Even though it is relatively expensive buying the franchise of an established frozen food shop brand, but it will definitely pay you in the long run.
But if you truly want to build your own brand after you must have proved your worth in the supermarkets and grocery stores industry, then you might just want to start your own frozen food shop business from the scratch. The truth is that it will pay you in the long run to start your frozen food shop business from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.
Please note that most of the big and successful frozen food shops around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
Possible Threats and Challenges You Will Face When Starting a Frozen Food Business
If you decide to start your own frozen food shop business today, one of the major challenges you are likely going to face is the presence of well – established frozen food shops, grocery stores, supermarkets and any other outlets that also sell frozen foods. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face are economic downturn and unfavorable government policies. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
Starting a Frozen Food Business from Home – Legal Matters
- Best legal entity to use for this type of business
When considering starting a frozen food shop business, the legal entity you choose will go a long way to determine how big the business can grow; some frozen food shop businesses design their business for the neighborhood market, some for city wide market, while others for national market via franchising and opening chains of frozen food shops.
You have the option of either choosing a general partnership, limited liability company, or even a sole proprietorship for a frozen food shop business. Ordinarily, sole proprietorship should have been the ideal business structure for a small scale frozen food shop business especially if you are just starting out with moderate startup capital in a small neighborhood and with just one outlet.
But if your intention is to grow the business and have chains of frozen food shops across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders’ meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your frozen food shop business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your frozen food shop business with the ability to sell franchise and open chains of frozen food shops all across the United States of America, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Catchy Business Name ideas Suitable for a Frozen Food Business
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own frozen food shop business, here are some catchy names that you can choose from;
- Mama Bee® Frozen Food Shop, LLC
- Clarisse Bowen™ Frozen Food Shop, LLC
- Clara Banes© Frozen Food Shop, Inc.
- Inglewood Community® Frozen Food Shop, Inc.
- All About You™ Frozen Food Shop, Inc.
- Temple Gate™ Frozen Food Shop, Inc.
- Rebecca Alfred & Family© Frozen Food Shop, Inc.
- One Stop® Frozen Food Shop, LLC
- Browne Street© Frozen Food Shop, Inc.
- City Gate© Frozen Food Shop, Inc.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your frozen food shop business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own frozen food shop business in the United States of America;
- General insurance
- Health/Medical insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own frozen food shop business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Is Professional Certification Needed to Run a Frozen Food Business?
When it comes to operating a frozen food shop business, you do not need to have any formal training or special certification before you can be allowed to open and operate a frozen food shop business in the United States of America and in all countries of the world. All you need is informal training that will expose you to the in and out of buying, preserving and selling frozen foods and effectively running the business.
On the other hand, if you come across any form of certification that can aid you to conduct your frozen food shop business, then by all means try and pursue such certification.
List of Legal Documents You Need to Run a Frozen Food Business
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own frozen food shop business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Foods and drinks handler certificate
- Health inspection Certificate
- Proof of district-issued food and drinks manager identification card
- Copy of license for the service support facility and/or a recent inspection report
- Business Plan
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Frozen Food Shop Business
Starting a frozen food shop business can be cost effective especially if you choose to start on a small scale by running a small frozen food shop business in a street corner. Securing a standard and well-positioned store and purchasing freezers, trays, knives and supply of frozen foods et al are part of what will consume a large chunk of your startup capital. If you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale frozen food shop business with a functional cold room.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your frozen food shop business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for a Frozen Food Business
When it comes to choosing a location for your frozen food shop business, the rule of thumb is that you should be guided by the demand for frozen foods and other items retailed by frozen food stores and easy access to wholesale purchasing of frozen food supplies directly from farmers or distributors. Of course, if you are able to secure a central location for your frozen food shop business, it will give people easy access your store.
It cannot be overemphasized that the location you chose to open your frozen food shop business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.
Before choosing a location for your frozen food shop business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set up your own frozen food shop business.
These are some of the key factors that you should consider before choosing a location for your frozen food shop business;
- The demography of the location
- The demand for frozen foods and other items sold in a frozen food store in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of frozen food shops, supermarkets, grocery stores and any other outlets that also sell frozen foods in the location
- The local laws and regulations in the community
- Traffic, parking and security et al
Starting a Frozen Food Business – Technical and Manpower Details
On the average, there are no special technology or equipment needed to run this type of business except for freezers, trays, knives, Storage hardware (bins, utensils, racks, shelves, food case), Counter area equipment (counter top, sink, ice machine etc.), receipt issuing machines, Sound System (For playing music), Point of Sale Machines (POS Machines), CCTV Cameras and Flat Screen TVs. You will also need computers, internet facility, telephone, fax machine and office furniture (chairs, tables and shelves) amongst others and all these can be gotten as fairly used.
As regards leasing or outright purchase of a store facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short term rent/lease while test running the business in the location. If things work out as planned, then you go on a long term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.
When it comes to hiring employees for a standard frozen food shop business with more than one outlets, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Shop Manager, Sales and Marketing Officer/Sales Girls and Boys, Accounting Clerk and Cleaners. These are some of the key employees that you can work with. On the average, you need a minimum of 5 to 10 key staff members to run a small scale but standard frozen food shop business.
The Service Process Involved in the Frozen Food Business
When it comes to the business services process of frozen food shop business, there are no hard and fast rules about it. Basically, it is the duty of the merchandize manager to help the organization purchase different types of frozen foods. They go out there to source for good purchasing deals and they also ensure that they only purchase at the right prices that will guarantee them good profits.
Once the frozen food shop business is in full operation, the frozen foods are properly arranged in different segments of the freezer and the prices listed.
It is important to state that a frozen food shop business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated frozen food shop business process is not cast on stone.
Starting a Frozen Food Business – The Marketing Plan
- Marketing ideas and strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a frozen food shop business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction of the supermarkets and grocery stores industry cum frozen food shop business.
Businesses these days are aware of the power of the internet which is why they will do all they can to maximize the internet to market their services. In other words, a larger percentage of your marketing efforts need to be directed to internet users; your website should become your number one marketing tool.
These are some of the marketing ideas and strategies that you can adopt for your frozen food shop business;
- Introduce your frozen food shop by sending introductory letters alongside your brochure to households, restaurants, fast food restaurants, hotels, motels and other key stakeholders throughout the city where your frozen food shop is located
- Advertise on blogs and forums, and also on social media platforms like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in roadshows in targeted communities from time to time to promote your frozen food shop business
- Join local frozen food and grocery store business associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing
One key factor that will help you sell your frozen foods and other items at rock bottom prices is to purchase your frozen food supplies directly from farmers or from frozen food wholesalers in pretty large quantities. The truth is that the higher the quantity of items that you purchase directly from farmers and wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your frozen foods and other items at the right prices is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Asides from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.
Strategies to Boost Your Frozen Food Business Brand Awareness and Create Your Corporate Identity
If your intention of starting a frozen food shop business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of frozen shops and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create a corporate identity for your frozen food shop business;
- Place adverts on both print (newspapers and food magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your frozen food shop business
- Install your billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your frozen food shop business
- Distribute your fliers and handbills in target areas
- Contact households, caterers, restaurants, fast food restaurants, hotels, motels and other key stake holders throughout the city where your frozen food shop is located informing them about your frozen food shop business and the frozen foods and other items you sell
- List your frozen food shop business in local directories
- Advertise your frozen food shop business in your official website and employ strategies that will help you pull traffic to the site
- Position your Flexi Banners at strategic positions in the location where your frozen food shop business is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.