With its limited menu, a sandwich shop is an ideal venture for an entrepreneur who wants to launch a small, food-based business. The average American spends about $3,000 a year eating lunch out. Why not capture some of the market by starting a sandwich shop?
Start With a Business Plan
A written business plan serves as a road map for all the decision-making you need to do to launch and run your shop successfully. Look for free business plan templates online that are specific to the sandwich business. Visit a local office of the Small Business Administration or Small Business Development Center for expert advice on a business plan and other aspects of your enterprise, including financing options, the purchase of equipment and supplies, licensing and marketing.
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Define Your Target Market
Customers have many different options for dining out. You need to distinguish yourself in the marketplace and give them good reasons to visit your shop. Across the country, there are popular sandwich shops that specialize in variations on the humble peanut butter and jelly sandwich or grilled cheese. Other shops are known for unique filling combinations, delicious breads (including gluten-free options), vegetarian and vegan fare or ethnic specialties. Think about the niche you plan to fill in your area and the customers you want to attract with your sandwich business.
Location, Location, Location
Sandwiches can be enjoyed at any time of day when the location is convenient for customers. Perhaps you want to specialize in grab-and-go breakfast sandwiches for commuters at a location near a public transportation hub. You may want to cater to the lunchtime crowd in a shop near an office or industrial park or offer hearty sandwiches that people can pick up for dinner on their way home from work. The right location is important even when you plan to provide delivery services to your customers’ locations.
Licensing and Registration
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All businesses must have a federal tax ID number (also called an Employer Identification Number, or EIN). Obtain a free number by completing the application on the website of the Internal Revenue Service (IRS). You must also register your sandwich business with the local government. Food service businesses are subject to state and local health department regulations and inspections, which vary from one location to another. Find out the regulations where you live before you set up shop, so you don’t have to go back and make potentially costly changes later.
Equipment and Supplies
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The equipment needed for starting a sandwich shop depends to some extent on the foods and beverages for sale. Visit an online or brick-and-mortar restaurant supply store to figure out what you need and how much you’ll spend. Typical equipment and supplies for a sandwich shop startup include the following:
- Commercial appliances, including refrigerator, freezer, fryer, microwave, grill, convection oven and soup kettle
- Holding cabinet
- Food prep equipment, including meat slicer, portion scale, French fry cutter, knives, tongs, spatulas and cutting boards
- Tabletop serving supplies, including cup dispensers, lid organizers, reusable plasticware, food serving baskets and condiment dispensers
- Textiles, including aprons, dishcloths and oven mitts
- Paper goods, including wraps, bags, plates, cups and napkins
- Safety and sanitation supplies, including disposable gloves and cleaning and sanitizing chemicals
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Subway is one of the least expensive franchises to purchase. By starting a sandwich shop through a franchise, you get the benefit of instant name recognition and the experience and expertise that have made the chain successful. Subway charges a $15,000 franchise free, and startup costs range from $116,000 to $263,000. Jersey Mike’s requires an average investment of $350,000, as does Jimmy John’s and Firehouse Subs.
The Risks of Opening a Sandwich Shop
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As with any small business, there are risks of opening a sandwich shop. Statistically, about 60% of new restaurants fail the first year, and 80% fail within five years. You need the right location, and you must be able to attract customers right away, offering them a high-quality product. Word-of-mouth can make or break your business. One bad review on Yelp can potentially force you to close up shop.