Hole in One: 6 Steps to Open Your Bagel Shop

Everything bagel with garlic and herb cream cheese? Raisin and cinnamon with slabs of butter? New York, San-Francisco or Montreal style? What about as crisps sold fresh from your local bagelry? Sydney is caught in the middle of an aggressive (and delicious) takeover – bagel shops are popping up from Surry Hills to the CBD. Below, we explain how to set up your bagel business and ensure it’s a hole in one.

Step 1: Location, Location, Location

Before setting up, you should visit other bagel shops to understand your competition. Will your bagelry be located in a highly dense neighbourhood or inside a shopping complex? What are your hours of operation? Does your space include a kitchen large enough to prepare bagels, house equipment and refrigerate food ingredients? These factors will drive your marketing options and pricing.

After you have selected your location and venue, you will need to enter into a retail lease with the landlord. The Retail Leases Act 1994 (NSW) will regulate your retail lease if you operate in NSW. Before signing any agreement, ensure you have reviewed the terms of your lease, including:

• When does the lease commence and end?
• What is the duration of your lease?
• Does the lease restrict particular types of business activity?
• Who is responsible for named costs (for example, make good clauses)?
• How are changes to the rent calculated?

Step 2: Business Structure

Which business structure will you choose to operate your bagel shop? If you decide to operate as a sole trader, you will be in total control of your business. You will also be personally liable for any debts incurred. To register as a sole trader, you will need to apply for an Australian Business Number. You may then decide to apply for a business name and a trade mark.

Alternatively, you may choose to incorporate your business and register your bagel shop as a company with ASIC. Companies typically attract higher startup costs and fees and are a more complex structure. As such, it’s important to have a well-drafted shareholders agreement. A company is an attractive business structure as it is a separate legal entity, limiting your personal liability if an employee injures herself or a customer has food poisoning (touch wood!).

Step 3: Register a Trade Mark

To protect your brand and cement your reputation, it’s important your register your business’ name and logo. You can apply to IP Australia to register your trade mark. Having a registered trade mark gives you the exclusive rights to commercially exploit your intellectual property and allows you to prevent others from using the same name or design.

Step 4: Food Licenses, Regulations and Permits

As a bagel shop owner, you must obtain the appropriate licenses to handle and sell food. Importantly, food regulation, licensing and permits differ state to state. We’ve set out the relevant authority you will need to contact to obtain your food business license in each state: 

• NSW: The Department of Primary Industries Food Authority (NSW)
• VIC: Department of Health & Human Services (VIC)
• ACT: Australian Capital Territory Health
• QLD: Queensland Health
• SA: South Australia Health
• WA: Department of Health (WA)
• NT: Department of Health (NT)
• TAS: Department of Health and Human Services (TAS)

Food Standards Code

The Australia New Zealand Food Standards Code (the Standards) regulates food and safety standards. The Standards provide strict regulations on matters such as: 

• How you must label food; 
• Any relevant warnings you will need to display;
• Directions for use; and 
• Storage of food.

Food Safety Supervisor

Most states in Australia require that businesses in the food sector have at least one trained Food Safety Supervisor (FSS). Your appointed FSS will be required to have the authority to supervise others handling food and take reasonable steps to ensure that the food business is free from related hazards.

Step 5: Equipment

You will need to consider whether you are going to be buying, installing or leasing certain equipment. Equipment such as large ovens and mixtures can be very expensive. So think about whether it is more commercially viable to lease equipment or, enter into a hire-purchase agreement. If you are fitting out your premises with any equipment, ensure you include this in your retail lease. 

Step 6: Hiring Employees

Your staff will be an asset to your bagel joint, and you will need to make sure that you comply with the entitlements guaranteed under the Fair Work Act 2009 and any associated award. Your employment agreement should address pay, sick leave, leave entitlements, indemnity, occupational health and safety and intellectual property. Your staff are also likely to require training so that your bagel store’s employees are compliant with food, health and safety regulations.

Key Takeaways

Opening up a bagel store is both equally challenging and rewarding, and it’s worth taking the time to plan your business carefully. Before opening your doors, carefully consider your lease, employees, equipment and business structure. If you need assistance with setting up your bagel joint (or taste testers), get in touch with our business lawyers on 1300 544 755.