Startup Business Idea #15 Vegan Food Store: Join The Veganism Rag
If you’re dreaming of opening a restaurant for vegetarians or vegans, you’re going to be riding a wave that’s a lot more than a ripple. The number of people globally transitioning to a diet based on plants is increasing steadily, and at the grocery store and in their eating habits, they have started making different choices.
Veganism is no longer confined to the fringes of a culture where it has been ridiculed for too long for being ‘weird’ or ‘serious’. Finally, the vegan lifestyle is beginning to become the norm, known for its positive effect on biodiversity and animal rights without the need to compromise flavour or style.
The continuing explosion of vegan and plant-based business reports and trends over the past year prove that this trend is only beginning to make its mark, and entrepreneurs are leading the way.
The Market Potential
Veganism is everywhere. The fad which has quickly turned into a lifestyle first rose to fame in the U.S.
According to studies undertaken by Nielsen for the Plant-Based Foods Association (PBFA) and the Healthy Food Institute, sales of plant-related food in the US rose by 8.1% over the last year, topping $3.1 billion.
According to research company Packed Facts, plant-based dairy substitutes are projected to constitute 40% of the combined amount of dairy and dairy substitute drinks within three years, up from just 25% in 2016. In 2018, the company expects new forms of fat-free fat, including corn, hemp, pea, flax and quinoa, to find broader markets.
According to a study by research firm Bharat Book, vegan cheese has taken off in a major way, with the global demand expected to be worth just under $4 billion by 2024, rising at a compound annual growth rate of 7.6% from 2016 to 2024.
The humble pea is revolutionising the plant-based industry when, according to Potential Business Insights, global pea protein sales are expected to be worth $104 million by 2026.
It’s not just the rise in vegan products that showcase the power of this lifestyle. The repercussions are visible in the downfall of companies that provide foods that goes against the vegan culture.
According to Mintel, though Market Watch estimates that Dean Foods, the biggest dairy milk provider in the US, recently reported a net income of just $1.4 million in the third quarter, down from $14.5 million in the same timeframe a year earlier. This downwards trend is not limited to the US alone: in the past financial year, Australia’s largest producer of dairy goods, Murray Goulburn, reported a 22% decline in milk prices. Meanwhile, in 2017, after 92 years, Elmhurst, one of the longest-running dairies on the US East Coast, agreed to cut its losses and turn to the manufacture of plant-based milk alone.
The egg industry is beginning to feel the pinch as well. Shares in Cal-Maine Foods, an egg manufacturer in Jackson, Mississippi in the United States since 1969, saw their shares decline by 7% in July this year after the company recorded its first annual loss in more than 10 years. Adolphus Baker, the CEO, blamed the rise of egg substitutes in popularity.
It’s important to note that plant-based buyers in the modern mass-market are searching for foods that replicate the tastes they’re already used to … particularly meat and dairy items. The plant-based meat segment is a market worth $800 million with a 10% annual growth rate in 2019, compared to just 2% for traditional meats.
Moreover, according to Allied Market Research, the global meat substitute market is projected to produce $5.2 billion in revenues by 2020, recording a compound annual growth rate of 8.4% over the 2015-2020 forecast period.
While the rise of vegan foods and the downfall of non-vegan food products is evident, companies aren’t jumping at the opportunity to ‘go-vegan’ for a plethora of reasons. The primary reason for this is the cost. Needless to say, the process of creating an alternative is much more expensive than using natural resources available.
Moreover, not every individual is vegan. Hence, vegan stores miss out on a large proportion of audiences if they choose to just supply vegan products. On the other hand, stores that stock both vegan and non-vegan options need to invest double the funds, which isn’t a very practical approach.
Lastly, many vegan stores aren’t seeing the profits they expect simply because they are approaching the entire idea wrong. Instead of, say, supplying customers with more in-store veganism knowledge or combining their pre-existing, accidentally-vegan products together, of which there are many: cookies, crisps, sauces, soups, they seem to have hastily commissioned a bunch of fairly dodgy food products and put huge Green Vs on the package. Not all of it is terrible, but definitely, not all of it is fantastic.
Hence, this has given rise to a huge mass of consumers looking for a better option. Your business could be that option and with the right practices can quickly dominate this million-dollar niche with a vegan food store.
When researching the concept of your vegan or vegetarian restaurant, it is important to ask; where are plant-based food customers already shopping locally, and what items are they buying? Your nearby natural food supermarket may be a low-cost way to investigate prospects, identify new collaborations, and connect with your target clients.
No matter what business you’re starting, a bakery, coffee shop or vegan café, before selecting the venue, it still takes time to research the sector. Is it going to be a walk-up venue in an environment with a lot of people on foot? When you’re off-the-beaten-track, is there enough parking space? How are you going to bring individuals to your restaurant?
With organic products, vegan and vegetarian diets typically go hand-in-hand. For popular ingredients, that means more money per pound than typical restaurants have to spend. Novel fruits and vegetables would have an enticing vegetarian menu; heirloom varieties and seasonal, hard-to-source products.
Restaurants usually look for a gross margin per dish of 25% or more. You will have to weigh in higher food prices when you write the business plan for your restaurant, in addition to your mortgage, taxes, kitchen appliances, décor, and marketing budget.
They’re manageable. Vegetarian and vegan diners are usually willing to pay for their meals a little bit more. But not only do they look at the food on the tray, but they also look at the service items. Instead of bleached ones, focus on using cotton or organic paper napkins, bamboo or stainless steel cutlery instead of discarded plastic, organic/recyclable paper or compostable take-out cartons instead of plastic or styrofoam, etc. Both of this information demonstrates that you are not only mindful of the welfare of your consumers, but of the wellbeing of the whole world.
Be prepared to deliver an eco-friendly experience from start to finish – and budget for it, and you’re sure to have a successful vegan store in your hands!
For more business ideas or for tips on how to be a successful entrepreneur, keep reading The Money Gig.0