Many a farmer or farmer’s wife, it seems, harbours a secret ambition to diversify into catering. Some ventures can prove very successful but transforming the dream into reality rarely works the way it should. Be prepared for some exceptionally hard work if you decide to join the growing band of on-farm caterers.
How do I decide what to offer?
The choices are wide – tearoom, takeaway, cafe or restaurant. Look at your buildings – what are they suitable for? Do you want to work in the evenings? Is there a gap in the market? Do you want to cater for families or couples? Location is critical – any more than 30 minutes’ drive will put off a lot of potential customers.
Once you have decided which market to aim at get expert advice and visit your competitors to see what you will be up against, says Gill Ainge at Taste of the West. Choose your menu and price based on your target market and competitors’ offerings.
Local food, if promoted correctly, can command up to 18% higher prices, she adds.Most importantly, you must like people. The personal welcome is critical to the success of every service business.
Will I need planning permission?
If you plan to convert a redundant building you’ll need permission for change of use and possibly any structural work. Even if the room is within the farmhouse, you will still need permission for change of use. Talk to your local planning authority.
How much will the conversion cost?
The rule of thumb is 1000-1300/sq m, which includes building works, services, carpeting, kitchen and toilets. You could cut this greatly by using on-farm labour.
What equipment will I need?
Kitchen equipment like preparation tables, cookers and fridges can all be bought from commercial kitchen suppliers, some of which also offer a kitchen design service. Catering auctions are also a useful source of second-hand equipment – details of local auctions can usually be found online or in The Caterer magazine.
A medium-sized new kitchen costs about 25,000. Some equipment, such as dishwashers, may be best procured via a hire company with a servicing guarantee, in case of breakdowns.
Tables, chairs, cutlery, crockery and so on are all a personal choice and can cost as much, or as little, as you desire. A medium-sized, relatively upmarket restaurant will cost about 10,000 in new furnishings – buying second-hand from dealers or closing down sales could considerably reduce that cost.
Do I need a licence?
You’ll need to be registered with the Local Authority as a food business. Registration is free; apply to your local Environmental Health Service.
If you intend to serve alcohol you will need a premises licence and a personal licence. The former costs from 100 to 635 depending on the rateable value of the premises and must be renewed annually for 70-350. The latter costs 37 a year and for this you must be appropriately qualified, which costs about 125 including a one-day course.
What training will I need?
The Food Safety (General Food Hygiene) Regulations 1995 require proprietors of food businesses to ensure that they and their staff are adequately trained and supervised. Those handling food should be trained to at least level 1 standard. Anyone with supervisory or management responsibilities should be trained to level 2 and managers trained to level 3.
Several national bodies offer accredited food hygiene training courses, which are usually run by your local authority. One-day courses cost about 30.
What about health, hygiene and safety requirements?
Health and hygiene legislation is extensive when it comes to handling, processing, cooking and storing food. You need to have procedures in place based on Hazard Analysis and Critical Control Point (HACCP) principles to ensure food safety. For more information contact the FSA.
Catering premises are strictly regulated and all surfaces and walls need to be easily cleanable and electrics checked regularly. To ensure that your premises comply with health and hygiene legislation, contact your local Environmental Health Service.
You will need to have a fire certificate and procedures in place in case of emergency plus disabled access and toilet facilities.
Do I need insurance?
Public liability and employers’ liability insurance are essential. The best move is often a caterer’s package policy, which covers public, employers’ and product liability, plus stock, cash and business interruption insurance. Annual premiums range from 300 for tearooms to 500 for restaurants.
What about business rates?
Business rates will be chargeable on the non-farming business. Rates are charged at 40% of the property’s rental value as of 1 April, 2003, or a proportion of the property if the business is being run from the farmhouse.
What grants are available?
DEFRA Rural Enterprise Scheme grants have now closed, and it is not yet clear what sort of projects the replacement Regional Development Service schemes will cover, or when they will open.
However, some local funding may be available – for more information contact your local Business Link office. Grant schemes and banks will both require a comprehensive business plan – speak to people who are experienced in the catering industry to get an idea of projected turnover and running costs.
How do I go about advertising?
One of the most cost-effective forms of advertising is free editorial in your local papers and magazines, says Mrs Ainge. “Put together a good press release and send it round. Or invite the editors round for a free meal. Also, enter yourself for awards and publicise it if you win – it’s good for promotions and staff morale.”
If you can’t get free editorial, take out a half-page advert in each of your local papers for your launch – it will cost around 1000 but should be money well spent. Ongoing adverts in local papers or magazines, perhaps with special offer vouchers, are also useful. Set aside about 5000 for marketing in your first year.
Do I need a website?
It is vital to have a website, but it must be professional or it may put off potential customers. Essential information includes your contact details, sample menu and some photos of your restaurant or tearoom.
What about staff?
Advertising in local papers is the most usual way to recruit staff. Boxed adverts cost from about 200 + VAT per week. Word of mouth is also useful when looking for a certain type of chef.
When interviewing your chef, ensure that you have similar ideas on food and sourcing, and get him to cook for you. A good chef also needs to have financial and management skills.
There are certain legal requirements when employing staff – these include the need to inform them of their particulars of employment in writing. It is a good idea to have a written contract, but not always necessary to get a solicitor involved. Contact ACAS for more details.
How much will it cost to run?
Food costs will amount to about a third of your turnover, labour about 28% and overheads 20-30%, leaving about a 10-20% profit margin.
Food is usually sourced either direct from the farm or through wholesalers, who tend to buy from city markets.
Other costs include disposal of waste. If you separate food waste from other waste it will cost about 200 a month to be taken away to landfill.
The farm produces all its own fruit and vegetables, as well as beef, lamb, geese, turkeys and eggs, and with a bakery and kitchen on-site customers can enjoy home-cooked breakfasts and lunches after doing their shopping. “We average about 100 people a day in the restaurant,” says manager Marcia Smith. “We can seat about 75 indoors and 120 outside.”
The cafe and farm shop are required by the council to serve at least 50% home-produced food, with 40% from Devon and Cornwall. “At first it felt like a restriction but now it makes us special – people love to know where the food on their plate comes from.”
The bakery and caf now employ 10 full-time staff, all of whom are kept up-do-date with the farming activities. “People do ask what’s happening on the farm so we have to know what’s in season,” says Miss Smith. With the farm shop, bakery, PYO and caf all on-site, each business tends to thrive from sharing customers.
“We do try and keep it simple – there are so many upmarket places but we find that our customers want proper home-cooking. It’s important not to take on too much until you’ve perfected what you are already doing – and now we are looking to expand.”