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If you want to start a cafe or restaurant from scratch, you are probably passionate about food and the creative aspects of starting your own business. However, the food industry in New Zealand is one with: 

  • high barriers to entry; 
  • fierce competition; 
  • high startup costs; 
  • regulatory hurdles; and 
  • tight margins.

Therefore, before you open your doors, it is crucial to understand the market, know your competitors and have all your licences in order. You do not want to be weighed down by fixed overhead costs, like rent and salaries, without being able to sell your food. However, you can avoid these issues with careful planning and by understanding your legal obligations. This article will explain how to set up your cafe or restaurant and what licences you will need to operate in New Zealand.

Create a Detailed Business Plan 

When you want to compete in an industry with high barriers to entry, it is crucial that you research the market and your competitors thoroughly. This will help you to understand how to differentiate your new business and gain customers.

For example, suppose you want to start a cafe. You need to think about how you plan to appeal to customers, whether it be superior service, better coffee, cheaper prices or more options.

Creating a business plan will guide your analysis and help you explain your ideas clearly. You should focus your attention on a few key issues, including: 

  • an analysis of your target market and your competitors;
  • a definition of your value proposition; 
  • the structure of your management team; 
  • resourcing for your business; and 
  • financial analysis. 

You should also consider testing your business idea and discussing it with a mentor. There are free mentoring services available to small businesses in New Zealand. You can sign up with the Regional Partner Network to find out what services you are eligible for. 

Choose a Location

If you want to start a cafe or restaurant, you need to find the right space for it. However, this can be harder than most people think. What may look like the perfect spot, like a bustling street in a popular suburb, may turn out to be a failure. Although your food and your service quality are also important to the success of your restaurant, your location will probably have the greatest influence over your success.

When choosing a location for your restaurant or cafe, you need to consider: 

  • the type of food business you want to run;
  • the demographics of your potential customers;
  • the foot traffic in the area;
  • accessibility and car parking; and
  • your competitors and their proximity to your business.

Once you have found your dream location, you will have to sign a legal agreement with the landlord to rent the space. Commercial leases can be complicated documents. If you fail to understand critical clauses, you could end up being in an unfavourable position if a dispute arises. Therefore, you should ask your lawyer to: 

  • review it; or
  • ask about any clauses that you are unsure about. 

Get Your Licenses

Food Safety Requirements

To sell food in New Zealand, you need to meet food safety and other legal requirements. You have to register with either your local council or with the Ministry for Primary Industries (MPI) depending on the complexity of your business. 

You will also need to meet certain food safety requirements, requiring you to:

  • correctly train staff in relation to food handling; and
  • keep records to trace your products.

Medium and low-risk businesses like most cafes and restaurants often follow national programmes as opposed to tailored food control plans. Whether you are under a food control plan or a national programme, you still need to: 

  •  register;
  •  meet the standards;
  •  keep some records; and 
  •  get checked.

For example, when you operate a cafe you need to keep certain foods chilled and protect it against contaminants. In this case, your food plan may involve keeping a food diary, where you record information about your:

  •  cleaning schedule;
  •  staff training;
  •  refrigeration chiller temperatures; and
  •  checks for rodents. 

Other Licenses

If you want to start a cafe or restaurant that sells alcohol, you need to get a special licence. When you lodge your application you will pay a fee. The District Licensing Committees (DLCs) consider all applications for licences in each territorial authority. To make their decision, they will consider a number of factors including:

  • your suitability as an applicant;
  • any relevant local alcohol policies;
  • the days and times at which you will sell alcohol;
  • the design and layout of your premises;
  • whether you sell goods or provide other services other than alcohol and refreshments;
  • whether your provision of alcohol will create disorder or disruption in your area;
  • whether you have systems, staff and training to comply with the law; and
  • any matters reported by the Police, an inspector or the Medical Officer of Health.

You will also need a licence to operate a dining area outdoors on public land, including: 

  • footpaths; 
  • streets; 
  • squares; 
  • parks; or 
  • recreational areas. 

There are several rules you will need to follow. For instance, you will likely be responsible for keeping the area clean, tidy and smoke-free. Typically, businesses generally cannot operate on public land past midnight. You must use removable furniture and store all furniture inside your premises at the end of each trading day. To find out more information, visit your local council website. 

Set Up Your Business

To set up your business, you need to complete a number of tasks online through government websites, such as: 

  • conducting a thorough check of existing registered businesses before settling on a name for your business; 
  • protecting your name and brand by registering your trade mark;
  • deciding on a business structure and registering your business with the NZBN or Companies Office;
  • getting an IRD number for your business and meeting your tax obligations; and
  • researching whether you need to comply with other industry-specific regulations. 

Employer Obligations 

As an employer, you have to train your staff on matters concerning food safety and food handling. You can choose whichever method of communication to deliver the training that best suits your needs, such as: 

  • an online module; 
  • in a classroom; 
  • through written manuals; and 
  • via in-house training. 

When training your staff, you should consider: 

  • starting with basic orientation; 
  • moving toward upskilling; 
  • using the latest technology; 
  • engaging in team-building exercises; and 
  • keeping employee records. 

You should also make sure that you understand how to draft your employment agreements. This is a document that sets out the relationship between you and your employee. It is a good idea for both parties to sign the document to show that you both agree to it.

Developing Your Marketing Strategy 

Developing and implementing a sound marketing strategy will increase your chances of success. But first, you need to understand your target customers and how they go about finding a cafe or restaurant to eat at. 

For example, they may use a search engine like Google to search for burgers nearby. They want to be able to make a quick decision on where to go, but they have multiple options. Therefore, the main goal of your marketing strategy should be to give your customers a reason to choose your cafe or restaurant.

If you have an inspiring story behind your brand, you should publish this on your website and other marketing collateral. This will help to differentiate your cafe from your competitors.

Social media is a part of our daily lives. With more and more people using apps like Facebook and Instagram, social media marketing is one of the easiest ways to connect with your potential customers.

When you start a cafe or restaurant, adding local marketing to your strategy can help you attract new customers. This tactic allows you to target consumers and customers within a certain radius of your cafe or restaurant. The key to developing a successful local marketing plan is to define your buyer personas accurately and to have a mobile-friendly website. 

Some of the strategies you can use include: 

  • localising your website;
  • claiming your local listings on third-party websites and directories;
  • investing in local SEO; and
  • localising your social and paid advertising.

First impressions are essential, so you need to make sure that all your marketing efforts are portraying a strong and clear brand. This will help to turn new visitors into regular customers. You may also consider establishing a loyalty discount program to strengthen your customer base into a loyal community.

Key Takeaways

When you start a cafe or restaurant in New Zealand you will come across many challenges, especially if you are competing against institutions like SPQR. Therefore it is crucial to research the market and find the right location for your cafe or restaurant. To operate a food business, you will need to register and obtain a licence from local authorities and the MPI. You will need additional licenses to: 

  • sell alcohol; and 
  • have an outdoor dining space. 

As a business, you have legal and tax obligations, such as deciding on a structure, registering with the NZBN or Companies Office and Inland Revenue. If you need help to start a cafe or restaurant or reviewing your lease or employment agreements, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page. 

FAQs

What does it take to start a small restaurant?

There are lots of tasks you need to navigate when starting your cafe or restaurant. You should start by developing a concept for your restaurant and outlining your business plan. Then, you need to scope out a good location for your business and understand your legal obligations with respect to food safety. Finally, you will need to register your business, develop a marketing plan and prepare to onboard employees.

How do I choose a location for my cafe?

It can be difficult to find a good location for your business. You should consider the type of cafe or restaurant you want to run, the demographics of your potential customers, foot traffic in the area, accessibility and your competitors’ proximity to the location.

What licenses or permits do I need to open a cafe?

Cafes and restaurants need to obtain a variety of licenses to operate. This includes verification that you satisfy New Zealand’s food safety requirements, an alcohol permit and a licence to operate a dining area outdoors on public land.

What employer obligations do I have to the employees at my cafe?

You must train your staff as to the correct food safety and handling practices, to ensure that you meet your legal obligations to your customers. It is also important that you draft a clear employment contract, so that you and your employees understand your relationship with one another.

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