Despite the uncertainty for many high street shops struggling to keep afloat against e-retail giants, delicatessens and independent fine foods specialists are thriving.
As concerns for the environment grows, more and more British consumers are buying ethical products. In 2018, sales for ethical food and drink rose by more than 16%, the largest increase since 2012, which is a good sign for delis stocking sustainably-sourced goods.
Consumers are shifting towards healthier, luxuriant foods, thanks to celebrity chefs and cooking shows endorsing local, niche ingredients. It’s an ideal time to buy a delicatessen but you will need to set yourself apart from the competition and be determined to succeed.
A buyer’s profile
To run a successful delicatessen you must make sure your stock is constantly fresh and homemade; ordering the right quantities, managing your stock and knowing what sells is important. You also need to spend time sourcing good quality, reliable, local suppliers.
As a deli owner you need to learn who your customers are and what they want from your store. Your business location will determine the demographic of shoppers. If you’re based in a tourist town, offer products the town is renowned for and goods people can take home.
Building up a loyal customer base takes time. You need to be patient and willing to go the extra mile to keep your customers happy. Consider making homemade chutneys or dips rather than buying them and try to stock products that are different and unique to your store.
Get to know your customers on a more personal level. If you’re friendly and build up a good rapport with your regulars as they’re more likely to keep coming back. Your team of employees should also have expert knowledge of all your stock so they can offer advice.
What to look for in a business
Deli’s are often located in smaller towns and villages because they are specialist stores that are generally frequented by customers with a high disposable income. In larger towns, delicatessens are mainly found in secondary retail sites as opposed to the high street.
Be very weary about buying a deli in a tourist-driven town. A lot of your business will be seasonal, and you could struggle to keep afloat during the quieter winter months. If you are considering this type of location, a market stall deli could be more appropriate and viable.
You should ask to review the businesses accounts and trading history for the last three-to-five years to get an idea of profit margins and turnover figures. Also, consider how much time and money you will need to spend fixing business before you make an offer.
Finance and statistics
Some deli business opportunities may offer seller financing; make sure you are fully informed on the terms and conditions and consult your solicitor. You can also contact your bank and apply for a business loan depending on your eligibility and current credit status.
It may be worth contacting a business finance specialist; they can call upon a range of lenders to find
a financing opportunity that suits your needs. You should also check whether you are eligible for a government-backed start up loan, which range from £500 to £25,000.
The gross profit margin for a deli is generally between 25% to 60%, and you can expect to make an annual net profit of roughly £50,000. This will vary depending on the size of your business, the location, the demographic and number of customers that frequent your store.
Is it right for you?
There is a certain level of risk with any retail business, largely due to the soaring growth of low-priced, convenient online shopping. You need to inject your own personality and passion into the business and focus on quality, unique products, to make your deli a success.
You will be dealing with perishable items, so you must be able to spend time managing your inventory, reviewing your sales and marketing your products so they sell before they expire. You need to have confidence to compete with local competition, and a contingency plan.
Be prepared to work long hours and throughout the weekends for the first few years. You will need to have excellent recruitment and training skills to build a dedicated, loyal and efficient team of employees who you can trust to manage the business when you’re not there.