If there’s one thing that U.S. consumers aren’t afraid to spend on, it’s food. Studies estimate that the food industry is forecast to reach over $1.5 trillion in sales this year. Opening a food retail business is a great way to capitalize on this spending.
That said, food retailers have unique challenges to mitigate when opening their first store. From scouting the right space to registering for FDA approval, this guide shares how to start a food business that’s set up for success.
What food business is most profitable?
The costs for every food business will vary depending on things like the type of business you’re operating, market conditions, and your retail location. Shopify’s data estimates that entrepreneurs spend $40,000 in their first year of business.
While food retail remains a growing industry, it's characterized by notably slim profit margins that require careful operational planning. This is especially true in today's market, where retailers must balance traditional in-store operations with expanding omnichannel experiences.
Here’s how that breaks down:
- Operations: 10% to 15%
- Product: 28% to 36%
- Shipping: 8% to 12%
- Online: 9% to 10%
- Marketing: 7% to 12%
- Team: 14% to 30%
As for profit margins, Restaurant365 estimates that restaurants have about a 3-10% net profit margin depending on factors such as the restaurant’s size, menu prices, and turnover. Grocery Dive reports grocery stores have a much lower profit margin, averaging just 1.6%. These razor-thin margins make inventory management and operational efficiency crucial for success. Industry leaders are increasingly turning to technology solutions to optimize these areas and protect their bottom line.
Types of food retail businesses to start
If you have a passion for making and selling food, here are some popular retail business ideas:
- Grocery store: These retail stores are used by people from all demographics. However, startup costs are pretty hefty—anywhere from $50K for a small independent store to $5M for a full supermarket—because you’ll need to invest in equipment to keep food perishable. While profit margins are thin, the consistent demand makes up for it. The key to profitability is solid supply chain management skills and plenty of space for inventory.
- Specialty food stores: From Asian markets to gourmet cheese stores, there is a growing market for specialty food stores. These retailers often sell luxury food products with a higher price tag. The key here is choosing the right location—one with a local audience of people willing to pay a premium for specialty food.
- Convenience store: From groceries to household items, convenience stores have longer operational hours to serve customers who don’t want to visit a larger store. Remember that you’ll need a special license to sell restricted products such as tobacco or alcohol in your convenience store.
- Market vendor: With a push toward more organic foods and supporting local farmers and vendors, market vendors are a great food business option. Startup costs can be as low as $2,000 to $10,000—making it one of the most affordable businesses to start.
- Mobile food truck: On-the-go food stalls are a popular option for entrepreneurs who want to break into the food retail space—some renowned chefs even opt for food trucks over brick-and-mortar restaurants because they offer fewer fixed overheads. Being mobile also allows you to maximize how and where you reach your demographic.
- Prepared foods: Meal prep businesses and catering businesses fall under the prepared food market. You can start small from a home kitchen (where legal) and take advantage of recurring revenue through subscription models.
How to start a food retail business
- Start planning
- Set up the legal foundation
- Secure relevant permits and licenses
- Choose your store location
- Design your retail store
- Plan your supply chain and inventory
- Choose a POS system
- Set up your ecommerce store
- Explore omnichannel features
- Hire and train staff
- Market your food retail business
1. Start planning
A business plan documents the vision of your new food retail business. It’s a roadmap of how you’ll achieve your goals, and helps plan around any potential risks.
A solid business plan should include:
- Executive summary: An overview of your plan.
- Company description: What your food business does, why it’s unique, and the reasons for starting your business.
- Market analysis: Research on who your competitors are, who you’re selling to, and what the industry looks like.
- Products or services: What you’ll sell and how it benefits customers.
- Organizational structure: Any employees and their responsibilities.
- Marketing plan: How you’ll promote your food products.
- Logistics and operations: The backend systems that will power your new store.
- Financials: Projected income, expenses, and funding requirements.
2. Set up the legal foundation
Setting up your food business with the right legal foundation can save you headaches in the long term. That means taking care of things like:
- Registering your business under the right tax designation. Whether you pick an LLC, corporation, or sole proprietorship, you'll need to register your new business structure with your state and get an EIN from the IRS.
- Choosing the right commercial insurance. From worker’s compensation insurance to general liability insurance, protect your new business from financial loss and meet legal requirements. This can cover you in the event of theft or food safety issues.
- Opening a separate business bank account. Combining personal and business funds is the top audit trigger for small food businesses. Use a business credit card to help keep business and personal expenses separate.
- Keeping tabs on your accounts. Accounting is how you’ll track expenses, sales, and profits. A good accountant is worth their weight in gold, but if you decide to do your accounting yourself, set that software up early.
3. Secure relevant permits and licenses
Every area has specific requirements and permits that different food retail businesses need. Check with your local authority to confirm which permits you’ll need. Generally speaking, you’ll need:
- General business license
- Food handler's permit
- Food and Drug Administration (FDA) approval
If you’re planning on selling alcohol, make sure you plan for the time and money it will take to get a liquor license. It can take up to six months to get approval. New retailers spend around $300 on permits and licenses, but again, costs vary quite a bit according to location and type of business (i.e., liquor licenses can cost up to $40,000 or more).
4. Choose your store location
If there’s one important thing when opening a retail store, it’s your location. Prime spots in shopping malls and retail parks benefit from a steady flow of foot traffic. But there’s a tradeoff: they tend to be more expensive than out-of-town locations.
When scouting potential retail locations, ask yourself:
- Do my target customers live nearby?
- Is the store accessible?
- Are there nearby parking or transport links?
Before signing a long lease, consider testing your concept. Use farmer’s markets and pop-up events to gauge your product interest and get feedback from your target audience.
5. Design your retail store
The layout of your retail store can show your food in its best light, reduce checkout lines, and encourage impulse buys. The size of the aisles, the organization of tables, the decor, and the lighting can affect the experience your customers and staff have.
The ideal layout depends on what you’re selling in your store. Grocery stores, for example, might use the grid layout—it places impulse-purchase items near the front and everyday essentials near the back. If you’re selling food and need a checkout counter, however, you could put your checkout desk on the left side of the store’s entrance. This would create enough space for a waiting area.
Don’t just think about where your products are in your retail store layout—consider leaving space for free samples. Small, bite-sized versions of your bigger food products let people try before they buy. Make these sample stations visible from the store entrance or window display to entice customers.
6. Plan your supply chain and inventory
Without inventory, you won’t have anything to sell. Yet the greatest challenge that food retailers face is that inventory is perishable. Stock can become obsolete if you don’t store it adequately or sell it by the “use by” date.
Modern food retail demands sophisticated inventory management to combat two major profit-draining issues: spoilage and theft. Industry data shows that these factors can account for up to 3% of total sales, making real-time inventory tracking essential.
Create a clear plan of how you’ll manage this inventory throughout the retail supply chain. That might mean:
- Implementing real-time inventory tracking systems that provide automated alerts for low stock and potential spoilage.
- Using predictive analytics to forecast demand and optimize ordering.
- Installing specialized hardware like smart scales and security systems to prevent shrinkage.
- Maintaining temperature-controlled environments with automated monitoring.
- Using first-in, first out (FIFO) stock rotation to sell perishable items before expiration.
- Choosing a third-party logistics (3PL) provider that offers temperature-controlled inventory storage to ship online orders.
- Heavily discounting inventory close to its “sell by” date to squeeze money out of otherwise dead stock.
7. Choose a POS system
Your point-of-sale (POS) system is the backbone of your entire business. It’s the technology you’ll use to process orders, track inventory, reference customer details, and take payments from customers in-store.
Today's food retail environment demands more than basic transaction processing. Modern POS systems must support:
- Specialized hardware integration for scales, self-checkout terminals, and age verification
- Sophisticated loyalty program management across all channels
- Real-time inventory tracking and automated reordering
- Integration with food delivery platforms and online ordering systems
- Comprehensive security features for high-risk transactions
However, not all POS systems are created equal. Some vendors might promise capabilities that help small businesses, only for you to migrate systems later down the line—a costly and time-consuming process.
Opt for a POS system that unifies your product, order, and customer data from every sales channel. Shopify is the only platform to do this natively, as POS and ecommerce are built on the same core operating system. This approach is proven to reduce operational costs by 22% compared to traditional systems and boost gross merchandise value by 8.9%.
Plus, unified POS systems improve staff productivity enough to save the equivalent of 0.4 full-time employees per store location—so you can get more done without committing to a bigger headcount and fixed expenses.
Take it from the popular baking business Lola’s Cupcakes. Now, with over 40 locations across the UK, the brand has migrated to Shopify to take advantage of unified data. Its omnichannel loyalty program rewards customers wherever they shop—a perk that over 10,000 new customers have taken advantage of.
“Shopify has enabled us to bring the retail and online environments together to enhance the customer experience,” says managing director Asher Budwig.
8. Set up your ecommerce store
An ecommerce website is both a sales channel and a powerful marketing and brand-building tool for your food retail business. While your physical store serves local customers, your website can become a hub for education, engagement, and sales.
Your ecommerce website should:
- Showcase your full product catalog with high-quality photos and descriptions
- Tell your brand story and share your food philosophy
- Build credibility through customer reviews and testimonials
- Provide product information and serving suggestions
- Capture email subscribers for marketing campaigns
- Process pre-orders and manage wholesale accounts
Shopify makes this easy—you get access to the world's best ecommerce platform that runs on the same system as your POS setup without the need to sync inventory, order, and customer data between platforms.
9. Explore omnichannel features
Modern food retail success requires seamless integration across all sales channels. Industry leaders like Amazon Fresh have demonstrated that unified commerce isn't just a luxury—it's a necessity for meeting customer expectations.
Key components of successful omnichannel integration include:
- Unified loyalty programs that track and reward customers across all channels
- Real-time inventory visibility across online and in-store channels
- Flexible fulfillment options including delivery, pickup, and ship-from-store
- Consistent pricing and promotions across all channels
- Integrated customer data and purchase history
Research shows that retailers with unified commerce platforms see an average 8.9% increase in gross merchandise value compared to those using separate systems for different channels
10. Hire and train staff
The time will come when it’s no longer feasible to operate your food retail business singlehandedly. An extra pair of hands—whether they’re preparing food or serving customers—can free up time for you to focus on growing the business as opposed to keeping things running.
Here are some retail job positions you might hire for as you grow:
- Sales associates
- Cashiers
- Inventory control specialists
- Marketing specialists
- Loss prevention or security guards
- Store managers
Remember that any employees you hire will be the face of your business. Employ friendly, reliable people and train them on customer service, your POS system, and food safety regulations. A clear training guide and employee handbook that details the duties for all job positions can keep everyone on the same page.
11. Market your food retail business
Retail marketing campaigns raise awareness of your new store and drive foot traffic to your location. Aim for a mix of digital and traditional channels, and plan a grand opening promotion that builds buzz around your store’s opening.
Stuck on ideas? Here are some examples of posts you can share on social media:
- Videos of happy customers enjoying your food
- Photos of inside your store
- Behind the scenes in your kitchen
Don’t just focus on customer acquisition—implement a loyalty program that encourages existing customers to return. For example, customers could earn one point per dollar they spend in your store. These points can be converted into store credit to redeem on their next purchase.
Open your food retail business with Shopify
There’s no beating around the bush: starting a food retail business is no small feat. From writing your business plan and securing FDA approval to spreading the word about your new location, your business's infrastructure heavily impacts how much you can spend doing what you do best: making food.
Shopify's unified commerce system combines all your sales channels and business operations into a single, streamlined platform. This makes opening and running your food retail business faster and easier.
The best part? You don't need to be a tech wizard to get started. Shopify's interface is intuitive enough that you can focus on what matters, while still maintaining a professional, efficient online presence.
Food retail business FAQ
Do I need FDA approval to sell food?
While you don't need direct FDA approval to resell food at retail, you will need approval if you’re manufacturing, processing, packaging, or storing food products for consumption.
Are bulk food stores profitable?
Bulk food stores can be profitable because they rely on selling larger product quantities at a higher overall order value. Success factors include lower packaging costs, reduced waste, higher inventory turnover, and lower labor costs. Location, inventory management, and market demand significantly impact profitability.
What is the profit margin for a food retail store?
Profit margins vary depending on the type of food retail business you’re operating. Grocery stores, for example, tend to average between 1-3% net profit margin.
