PEOPLE ARE SOPHISTICATED NOW
Demand for speed and convenience by the contemporary man is growing bigger and bigger each day. In everything we do, people now require goods and services provided to them at close to them as possible so they can obtain them at the least cost, at their own time and with as many varieties or options as possible.
This demand has led to the growth of internet businesses and the use of internet platforms by brick and mortar businesses as well. Beside the internet, some businesses have employed the use of wheels to satisfy this demand for convenience, timely delivery and low pricing. These businesses choose to present their products closer to target markets by carting them in vans and other vehicles and by so doing avoid comparatively expensive rents for premises which confines them to specific area(s).
Catering service is one of such services that could be presented to people on wheels. There have been some popular cases in the country where food distribution and sales is carried out in vans across the city. Food is prepared at a central location and dished into appropriate temperature conserving pans and bowls and into a van for distribution and sales. It is the quest to fulfill the demand for convenience and speed that has led to this innovative way of selling food across the city.
HOW TO RUN THE BUSINESS
To begin a business like this, the appropriate regulatory requirements must be fulfilled. First a business must be registered at the appropriate agency. The necessary operating permits from Food and Drugs authority and the Ghana Tourism Authority must be obtained. These permits may sometimes be obtained only after the inspection of cooking area, inspection of medical report by cooking staff among others.
If you are not cooking yourself, you may need the services of good and experienced caterers to man your kitchen. Cooking and the resulting food that comes out of the kitchen have been identified as one of the major reasons that your business will thrive in this market or not. Food must be of good quality, hygienic, delicious, nutritious and at the same time affordable to your target population.
A good van is very important to this model of catering services. This business requires a van that is properly maintained and always safe. The van must as well be kept neat and hygienic. The van is what most of the time your customers come into contact with. A good salesman or salesgirl and a well groomed driver are also necessary. Together, these form your market facing unit. There is therefore the need to properly train them to be able to attend to the demands of your customers.
This business thrives well in the cities and other busy towns. The market is big and you need to segment is and target one that you will be able to serve well and very well before thinking of expansion into other segments. From the beginning, your target market are usually busy workers.
Capital requirement for this business may well depend largely on the size of business you want to engage in. You need a good kitchen and very good van forming a larger part of your initial capital expenditure. There may be other dues and fees you will be required to pay at the regulatory agencies but these may not be significantly big.
The food business in Ghana averagely runs on a 33% rule or the one-third rule. Averagely, it has been found that the price charged for a served meal usually contains three portions. One-third of the price is usually the cost of ingredients used for the meal (direct costs).
Another one-third represents overheads such as labour, gas, electricity, etc. The third part is the profit added to the two costs (direct and indirect). So most served meals come with about 33% margin but competition, location, kind of food and quality may significantly impact these ratios.
A financial summary of the business is presented below without the fixed cost element.
|Variable Elements||Per Week (GHc)||% of Revenue|
|Transportation and sales||-1000||-20%|
These are only estimates based on certain assumptions. All profits are pretax profits
RISKS AND CHALLENGES
This business requires patience from the beginning as most Ghanaians do not like to buy food from strangers. So from the beginning you risk not being able to capture the market you set out to capture. You may end up throwing some of your food away at the end of each day if you don’t appropriately determine the quantity to cook.
Possible changes in regulations may also abruptly bring an end to this model of business. Though remote, it is worth your anticipation. However, after about a year of operations, you should be able to cover fixed cost. Also make sure most of your assets can be used in the traditional catering service where a fixed location is preferred – just in case.
Investment sector: Catering Service
Expected Return: 20% contribution per week
Payback Period: 1.5 years including fixed cost
Attention required: High
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