Food Startups – What’s cooking?

Since 2014, formation agents have reported a record number of companies being formed each month, compared to figures from previous years. This can be attributed to a variety of factors, but ultimately what emerges is a renewed sense of optimism and confidence by the public in the current economic climate. We are by no means out of the woods yet, but it does appear that the economy is recovering and that the number of people in employment is rising.

A particular segment of the startup market which is experiencing a visible boom is that of “food startups”, both in the UK but also in the US, where a sizzling $350 million was invested into such new ventures according to CB Insights in 2012. Here in London, there was a 25% increase in the number of restaurants opened in 2012 compared to the figure for 2011, and figures due shortly for 2013 seem promising. The key advantage that this sector offers is the degree of flexibility in which trade can be carried out, which makes it such a viable opportunity: from food vans to dining clubs, pop-up restaurants to home online retail, or even simple market stalls.

Furthermore, the public’s attitude towards food seems to be changing; people are now considerably more particular about whom they buy from, in the wake of the 2013 horsemeat scandal that rocked supermarkets across the country. We appear keen to seek alternative channels to acquire goods and produce, which will come with better guarantees of quality than those of a large supermarket, who isn’t able to provide these on an item-by-item basis. You will therefore notice several food startups who specialise in just a few types of food and cuisine (either online or otherwise), clearly stating the origin of their goods and ingredients in as much detail as possible, branding their product in accordance with its “birthplace”, and adding a more personable approach to providing value and integrity to their client base. Paradoxically, however, the horsemeat scandal has generated lots of curiosity in people, giving rise to formerly shunned varieties of meat, such as the aforementioned horsemeat, but also kangaroo meat, ostrich meat, and even crocodile meat!

Food startups are also heavily involved in promoting their goods via the seemingly endless avenues of social media, often assisted by satisfied clients who readily check-in on Facebook with a photo of their latest meal, not only pinpointing the location of their purchase but also highlighting its mouth-watering presentation. Instagram is also no stranger to photos of amazingly good-looking food, with popular hash-tags for just about every type of dish. Encouraging online engagement with their customers (both past and present), can broaden their reach and appeal at virtually no cost whatsoever. Word of mouth is great, but an independent and trustworthy review online that someone’s peer can read is even better!

Another advantage that this industry offers is the relatively low cost of setting up one’s business, either as an individual or as part of a group of shareholders. Many of these startups work with (and rely on) crowd-funding companies, which help them raise sufficient capital to begin their new venture. It is, in fact, no coincidence that crowd-funding has also taken off as a favoured path to obtaining the necessary capital for budding entrepreneurs, despite the fact that it is increasingly hard to make one’s dream stand out amongst the crowd of applicants.

Although it can prove to be a fun, inspiring and lucrative market, we must not forget that it is full of risks, struggles and fierce competition; long hours, coupled with the constant need to invent, test, and promote new and delicious products can take their toll. Consequently, there are many organisations dedicated to providing guidance and support to food startups, with Kitchenette fast becoming a leader in this field.

There are hungry people everywhere it seems: those hungry for great food, and those hungry for a profitable success. Food brings people together, and great food brings a healthy profit.

This post was by Oliver Jackson at MadeSimple