How to start up a Chinese catering business

Chinese food is very popular in the UK and recent years have seen the arrival of restaurants offering regional food such as Sichuan alongside the more established Cantonese. Our guide will help you start up and run your own Chinese catering business.

Research your target market

When you plan your new business it's very important to research your market - how much demand there is and how well that demand is already being met.

Estimating demand

You'll want to confirm that there's enough demand in your area for the Chinese restaurant you're planning. First of all, it makes sense to check out the competition. Count how may existing eating places there are already in the locality. See how many are Chinese restaurants and how many offer different types of cuisine. Sample the food on different nights of the week in different restaurants to get a feel for how busy you are likely to be. It can be a good idea to locate in the 'Chinatown' district if there is one - but it's very important to offer something different in order to win customers. Competition is frequently intense and you may have to keep your prices down and give large portions.

Think about the nature of the local population - are there, for example, sufficient numbers of Chinese to be worth specifically targeting them with authentic cuisine?

Catchment area

Note down the different types of potential customer living and working in the area. For example, if you plan to attract businesspeople for the lunch time trade are there plenty of workplaces locally. Although you are likely to have many customers in the evenings who will arrive on foot, you will also hope to attract people from a distance. There are several things to consider when you're deciding on where your outlet will be:

  • is the area well served by public transport
  • is there ample parking nearby
  • is the area considered a safe place in which to leave a vehicle
  • does the area attract reasonable numbers of people in the evening (perhaps to nearby pubs), and is it considered to be a safe and pleasant area to visit at this time of day
  • if the area isn't a fairly central one, is there are large resident population nearby

Competitors

You'll want to make sure that enough customers will choose your restaurant rather than other eating places. Check out your competitors to see:

  • what type of food and drink they offer
  • whether they change the menu frequently to take advantage of seasonal produce
  • what prices they charge
  • whether they offer a take-away service
  • do they participate in an online ordering service like Just Eat or Deliveroo
  • what are their opening hours
  • what type of customer they attract
  • how the premises are decorated
  • what ambience the restaurant achieves
  • whether service is quick and professional

This might immediately show you that there is a gap in the market for a certain type of Chinese restaurant - for example, offering a more informal, relaxed atmosphere, which is particularly popular with younger diners. Be wary about competing mainly on price - it is difficult to offer the high quality service demanded by customers today if you are operating on very low margins.

Find out what people want

It can be a good idea if possible to talk to people in your area about your proposals. Ask them:

  • what sort of dishes they would like you to offer
  • whether they would support a take-away or delivery service
  • what opening hours would suit them best
  • whether they would prefer you to have a licence to serve alcoholic drinks
  • what, if anything, don't they like about existing Chinese restaurants in the area

Don't forget that market research can be ongoing. Once your outlet is open, talk to your customers. Find out what are their likes and dislikes and ask if there's anything they would like you to serve that isn't currently on your menu. Note down which dishes are popular and which ones don't sell well. Consider including 'specials' on your menu from time to time - if they're popular you could add them to your main menu.

Research current trends, plus legal and tax issues

Establish your customer profile

The nature of your customer base will depend to a certain extent on:

  • the sector of the market you are targeting
  • your location
  • the time of day

Some Chinese restaurants build up a core of regular customers, which may change depending on the time of day and day of the week. For example, during the working week the restaurant might cater for local business people, but at the weekends the clientele might include more families. The Saturday lunchtime trade might include lots of shoppers.

During the early part of the evening your clientele might consist of families, but when the pubs close many of your customers will probably be young adults.

In some restaurants, for example in busy city centres or in holiday areas, you may rarely see the same customer twice.

It is a sad fact of life that some Chinese restaurants and take-aways have to cope with drunken, abusive and even violent customers. In some cases customers may refuse to pay their bill. Make sure your staff are prepared for this eventuality and know what they should or shouldn't do.

Think about whether you will allow customers at the bar to open a tab and put drinks on the bill for the table, which they settle up at the end of their meal.

Special offers and discounts

Many Chinese restaurants offer customers free or discounted meals or free drinks for promotional reasons. Although these are always popular with customers it's important to make sure that you will make enough profit if you decide to have special offers.

Don't forget to brief your staff on which customers are entitled to a discount, and how much. Guard against staff offering unauthorised discounts to their friends and relatives.

No shows

Restaurants of all types suffer from no-shows - people who book a table but then don't turn up. Individual businesses tackle this in different ways - some don't take bookings, others regularly overbook. You'll have to decide which approach suits you best.

Services and quality standards

People have become used to high standards of presentation and service, so it's important that:

  • your premises are clean, smart and inviting, with a good food hygiene inspection rating from the local authority
  • waiting staff are polite and efficient
  • your staff are well trained and do not make mistakes with orders
  • your staff are prepared for and trained to handle unruly customers from time to time
  • your recipes use good quality ingredients
  • customers feel that they receive good value for their money

Services to offer

You might consider offering a take-away service as well as a restaurant service. You could offer a discount (for example 10%) on take-away meals. Make sure that the person answering the telephone is good at accurately taking down the take-away order. You could offer a delivery service through Just Eat or Deliveroo. You might also consider offering a local delivery service, either by using your own drivers or by doing a deal with a local taxi firm.

Although not very commonplace in Chinese restaurants, it might be a good idea to have a daily specials board - many regular customers look forward to trying a new recipe from time to time. You could also consider changing your menu occasionally - perhaps seasonally. Think too about the possibility of offering gluten-free, low-fat or low-salt options. You could consider showing the amount of calories in each dish on your menus.

Advertising and marketing your catering services

Whatever catering services you decide to offer, you'll want to make sure that your potential customers know about you.

There are a number of things you can do to market and promote your restaurant, including:

  • advertising in your local newspaper and any other local publications, such as a leisure guide
  • buying an entry in a restaurant guide
  • making sure your details are included in any online guides produced for your area
  • participating in any local food fairs or exhibitions
  • handing out business cards to all customers
  • making sure that your logo and telephone number is prominently displayed on any take-away packaging
  • launching your own website, showing all the features that will attract customers to your restaurant
  • using social media to raise the profile of your restaurant and keep in touch with customers - you could use Facebook and Twitter to tell people about your latest menu and special offers, for example
  • taking steps to manage and take full advantage of your Tripadvisor listing
  • signing up to an online ordering service like Just Eat
  • having leaflets printed, perhaps describing how you cook some popular dishes. If you are planning to target the business community you could distribute leaflets to local offices and other workplaces

Almost all types of advertising and promotion have a cost, whether it's financial or your own time and effort - or both. You need to be sure that the beneficial effects of your advertising efforts are worth the time and money spent on them. It's up to you to decide which types of advertising work best for you - sometimes this is down to trial and error.

Estimating income

Note: all figures on this page are included for illustrative purposes only

Your weekly income will probably be affected by a number of things, including:

  • your opening hours and the number of days each week that you're open
  • the number of seats in your restaurant
  • the number of sittings you have
  • how full you are on each day of the week
  • your prices, and the average 'spend' in your restaurant
  • how much take-away business you do (if any)

For example, your restaurant may have room for 60 diners but you will only be really full on Friday and Saturday, when you might serve 100 people, in two or more sittings. Thursday and Sunday may be quite busy too, when you serve around 65 people, but the rest of the week is often quiet. You decide to close on Mondays. You only have a few people in on Tuesday and Wednesday. So your weekly sales pattern might be something like:

Number of covers served

  • Monday - Closed
  • Tuesday - 10 covers
  • Wednesday - 20 covers
  • Thursday - 65 covers
  • Friday - 100 covers
  • Saturday - 100 covers
  • Sunday - 65 covers

If you offer a menu and wine list in the mid-price range the average spend per head in the restaurant might be in the region of £20.00. In the above example the 360 covers served in the week would bring in income of £7,200.

You may find that your average per-head spend is higher on certain days of the week - probably Fridays and Saturdays when people tend to order more drinks - and at certain times of the year like Christmas.

You might also decide to offer a take-away service at a discounted price. Take-away sales might amount to around 20% of turnover. Continuing with the above example this would add a further £1,800, bringing total weekly income to £9,000. If you are licensed to sell alcohol, income from drinks might amount to between 15% and 20% of this.

Once you have decided on the size of your restaurant and your pricing policy enter your estimate of monthly income in the cash flow. Don't forget that you are likely to serve more customers in the run up to Christmas. If you have a large number of customers from the local Chinese community then festivals like Chinese New Year (Spring Festival) may also be very busy.

Your menu and wine list

Chinese restaurants traditionally offer a very wide range of dishes, based around chicken, pork, beef, fish and seafood, with many accompanying vegetable side-dishes. However, a number of things will influence the choice of dishes you will offer your customers and the range of alcoholic drinks that you will stock. For example:

  • the sector of the market you will target. Are you aiming for the after-pub customer, or do you hope to establish a reputation for high quality, authentic and innovative cuisine complemented by fine wines
  • whether or not you will offer set meals for different numbers of diners. Many customers welcome this so that they do not have to choose dishes themselves. Set meals also usually represent good value for money, but you should make sure your profit on them is not too low
  • whether you offer different lunchtime and evening menus. For example many Chinese restaurants offer a wide range of dim sum - but only in the daytime
  • the expertise of your chefs and their ability to produce new dishes to attract customers
  • whether you decide to introduce healthier dishes for customers looking for low fat, low salt and 'no MSG' options
  • whether to offer gluten free and dairy-free dishes

The biggest influences for the next couple of years are expected to be the trend towards healthy eating and the requirement for gluten free and dairy-free options.

Remember that you'll need to provide information to customers about any of 14 specified allergens included in your dishes. You could do this by including the information on your menus, or you could provide the information verbally. If you're serving food as a buffet, you'll need to provide allergen information separately for each food item.

More and more customers choose wine with their meals so it would be a good idea to shop around for a good wine merchant who can recommend a range of wines which will complement your dishes.

Give careful thought to your menu pricing. Ideally you will cost each dish and price it on the menu accordingly, allowing yourself a reasonable profit margin. Consider whether you will add a bit of extra profit onto very popular dishes. Decide how much mark-up you will add to the cost price of wine and other alcoholic drinks too.

Buy an existing business

You might decide to buy an existing Chinese catering business rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, regular sales, staff, premises and equipment are already in place.

The Chinese catering industry suffers to some extent from a 'succession problem'. Younger generations of many Chinese families are reluctant to follow their parents into the catering business, choosing instead to follow other careers. So retirement can be quite a common reason for a business to come onto the market.

Try to find out as much as possible about the business's reputation. Has it recently failed any food hygiene inspections? Are there any actions or enforcement orders still outstanding? Check out the restaurant's current food hygiene inspection rating, and look to see what people are saying about the restaurant on Tripadvisor.

But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish the genuine trading and financial position, so that the price you pay for the business is not too high.

Franchises

Franchising can be a good 'halfway house' between starting out from scratch and buying an existing restaurant business. If you purchase a franchise you'll still be setting up your own business, but you could benefit from the experience, resources and brand name of a business that is already successful.

Franchise opportunities are available in the Chinese catering industry - for example, the Wok&Go franchise which offers a mix of Chinese, Malaysian, Thai, Japanese and Indonesian cuisine. Although different franchise schemes may vary in detail, most feature the following key points:

  • as a franchise holder, you will remain self-employed but will use the identity (corporate logos, trade name and so on) of the franchisor
  • in return, you will pay the franchisor a fee - this might be a one-off investment, a monthly charge, or a combination of both
  • both you and your franchisor will have to fulfil certain obligations and maintain certain minimum standards

Some franchisors will help you with advertising and marketing, and give you advice and support on a range of business and technical matters. In some cases you may have to purchase some of your supplies from your franchisor.

Details of the above points are set out in the franchise agreement or contract, which both you and your franchisor will sign. The agreement will also deal with other matters, for example any territorial exclusivity due to you and the minimum period for which the franchise will run.

Before entering into a franchise agreement, it is advisable to compare the terms of different franchisors to be sure that you are getting a good deal. Go through the contract with your solicitor before signing anything. More information about franchising is available on the Franchise Info website. Information is also available from the British Franchise Association (BFA).

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