How to Start a Food & Beverage Business in Hong Kong
14 minute read
So you’re thinking about starting a food and beverage (F&B) business in Hong Kong. If you’re wondering how exactly to begin and what requirements you need to consider, then you’re in the right place! Let’s get started.
Why should you start a food and beverage business in Hong Kong?
If there is one thing Hong Kongers are known for, it’s their passion for food. This is not a surprise, given that the city is a melting pot of many cultures with a food scene that’s quite diverse and unique.
Although many businesses were forced to close due to the pandemic, the number of licenses for F&B businesses actually increased. This only goes to show that there is a steady market and the demand is still quite high.
There was also a rapid integration of delivery services in the industry, largely due to the pandemic. Many opted to dine in the comfort of their homes to limit contact with other diners. With the boom of apps like Foodpanda and Deliveroo, some smart F&B business owners actually saw increased revenues despite the fact that fewer people are dining in restaurants.
How to start a food and beverage business
Starting this kind of food business in Hong Kong might sound like a difficult feat. However, as long as you have a full view of the requirements and procedures involved within the restaurant industry, it is definitely a manageable undertaking.
Here are the steps you need to complete to properly start a food and beverage business:
1. Incorporate your business and hire a corporate secretary
In order for your company to be registered in Hong Kong, you must acquire a certificate of incorporation. The Hong Kong Companies Registry is the department that issues these certificates.
When applying for a certificate of incorporation, you have to decide what type of business entity your company will be. If you have no idea what the difference is between a limited liability company or sole proprietor, here is an easy guide to these types of business entities in Hong Kong and more.
There are a few things to prepare, including your proposed business name, a local registered address, a designated company secretary, etc.
If you want to streamline the process, you might want to consider hiring a digital incorporation service company like Sleek, which can incorporate your food business in as little as 24 hours.
Not only can Sleek take care of registering your business 100% online, but we can also provide a corporate secretary for your company. Corporate secretaries are a mandatory role in every business, keeping an eye on annual filings and requirements to ensure that your business is operating legally. If you outsource the role to our expert team, you’ll never have to worry about your company staying compliant with Hong Kong’s local laws.
2. Come up with a solid business plan
A business plan will help you by acting as a financial roadmap for your business. Laying out your business goals, exploring the feasibility of them, and compiling it all into a digestible business plan is crucial to your success. Your business plan should consider risk factors and how you plan to mitigate them. If you’re looking to receive funding for your food and beverage business, this will give investors and loan officers the necessary information needed to believe in your vision and help you raise capital.
This important step is not as complicated as you think. In fact, here is a template that you can use to begin your business plan for your food business.
3. Decide on a business structure
When choosing a business structure, you will likely have to decide on the type of food or beverages you will be selling first. You must conduct market research, hone in on a target market, and make plans accordingly. Whether it’s a home-based food business that lives online or a fine dining brick and mortar restaurant, there are many F&B business structures that you can choose from. These are a few that are prominent in Hong Kong:
- Food trucks
- Mom and pop “cha chaan tengs“
- Fast food chains
- Bars & Pubs
- Order fulfillment “cloud kitchens”
4. Get your accounting and bookkeeping in order
As you probably know, there are tight profit margins in the restaurant industry. That means you must regularly pull together finance reports with the help of an accountant. Both accounting and bookkeeping work together to provide accurate information about the company’s financial standing.
A bookkeeper consistently issues, organizes, and reconciles all financial records, such as food sales, deposits, accounts payable, and staff payroll. This then allows the accountant to analyze the information and present it to stakeholders of the company. With good bookkeeping and accounting, your food business will see consistent growth on top of a stable financial platform. Strong financial practices are also advantageous when it comes to tax time and everything must be audited.
These tasks can be quite complicated, especially if your business is rapidly growing and you don’t have enough manpower to effectively manage it all. The good news is that there are third-party service providers like Sleek that can do the accounting and bookkeeping on your behalf. That’s something that anyone in the food industry can benefit from!
5. Acquire all necessary licenses
It is mandatory to apply for the necessary permits and licenses before starting a food and beverage business in Hong Kong, no matter what type of structure you choose. The most basic license that you have to apply for is a General Restaurant license, which you can obtain from the Food and Environment Department.
Whether you’re operating a catering business, a bar, or anything in between, there are unique business permit requirements. Even something as simple as selling beverages with a vending machine requires its own permit. And if you plan on serving alcoholic beverages, you must get a liquor license from the Liquor Licensing Board. Permit applications may have varying processes, so take note of this and plan accordingly.
6. Hire the right people
One fundamental aspect of running a successful food and beverage business is hiring the right people. Why is this essential? Since the F&B business requires excellent customer service and low wait times, it is important to hire people who understand how to hustle. Remember, in this industry, you are not only selling food and beverages but also an experience. The right people can foster that experience and bring your business to new heights.
If you don’t have a kitchen crew at your disposal, the first step in finding the right employees is to make a job posting or to ask via word of mouth. You can use the traditional route of posting it outside your doors or even receive help from hospitality recruitment agencies. You can also make use of online job posting platforms for a wider reach.
7. Market your products well
The food and beverage industry is a very competitive and saturated market. This is why you should invest in marketing your products well to differentiate your brand from others. There are several ways of doing this, including creating unique packaging, blogging, using social media, or working with popular lifestyle magazines for paid advertorials. Some popular magazines for foodies are Sassy Hong Kong, The HK HUB, and Foodie Magazine.
A modern form of advertising is employing the help of social media influencers to make organic content that will pique people’s interest in your business. You can also work with farmers markets, grocery stores, community events, or food expos like the Hong Kong Food Festival or the HKTDC Food Expo, which are yearly events. Pop ups will help provide consumers with a taste of what you offer so that they’re encouraged to visit your business and try more food options.
8. Scale with Calculated Steps
Success does not happen overnight, especially in the food and beverage industry. When planning to grow your business, make sure to take small but calculated steps. Observe the things that you can improve, and focus on them. These can be your quality of service, the atmosphere of the dining area, your lunch promotions, or the food ingredients that you use.
It’s also important to set yourself up for financial success by future-proofing and considering your profit margins. Which suppliers will give you better deals on raw ingredients? What refrigerated truck service will you use to transport cold goods? Where can you see your business expanding in 6-12 months, and what will you do to accommodate that growth?
Along the way, you’ll have unique bottlenecks that can potentially put a halt to your business, so it’s important to visualize those problems and find solutions before you even begin. Some issues only become apparent in later stages, but you have to be adaptable and flexible in finding solutions, which leads to the next step.
9. Remember to Adapt
In this day and age, there are more and more integrated tools and services made to help you run your business easier, thanks to the advancement of technology. These methods will help you save time, energy, and overall cost. Sleek can provide you with automation services so that your F&B business runs seamlessly. If you let us take care of the back office admin, you have all the time in the world to focus on running your business.
You should also consider using apps such as UberEats, Foodpanda, and Deliveroo. This makes access to your products much easier from the perspective of the consumer, which can translate into an increase in sales. This also helps you compete with other big names by being on the same platforms.
Other ways to stabilize your F&B business
There is no compulsory insurance that you need to get when you decide to open a food and beverage business in Hong Kong. However, this doesn’t mean that you shouldn’t consider exploring your options. Remember, insurance is there to prevent financial difficulties in case of unforeseen circumstances.
Ideally, you should consider getting some or all of these insurances:
- General Liability Insurance – This insurance covers injuries of third parties or property damage caused by your business operations.
- Business Interruption Insurance – This type of insurance protects your business against unavoidable or unnecessary business operation interruptions.
- Property All Risks Insurance – This insurance will protect you from unexpected property incidents that impact the company financially.
As your food and beverage business grows, you may need additional funding to establish yourself in the market. In this case, there are several ways for you to acquire said funding in Hong Kong. You can apply for government grants (Anti-epidemic Fund) or seek an angel investor (Angel Investment Network).
Hong Kong is very open to supporting up-and-coming business owners, especially in the food and beverage industry. There is no shortage of funding available. All you need to do is research the grants you qualify for and send in your applications.
Without a doubt, the process of starting a food business is lengthy and requires a lot of work. It can be overwhelming, especially if it’s your first business venture and you don’t have a team yet. In that case, Sleek is here to help establish your F&B business and manage the back end so you can focus on more important things – like how to turn your business into a successful enterprise in no time at all.