5 Considerations Before Opening a Deli

If you want to turn your passion for food and people into a viable business, opening a deli is a great idea. Being passionate about your business is important, but to succeed, you must be aware of the legal, financial and regulatory requirements of owning a deli. Generally, delis are small businesses that operate as cafes, small grocers or butchers. They often sell imported goods, sandwiches and cold meats. In this article, we set out five elements to consider before opening a deli business.

1. Location

Take time to assess a variety of possible locations for your deli. Location is a key factor in the success of a business. It may attract or detract customers. When assessing locations, consider the local demographics, competitors and landmarks that may affect the flow of your business.

Delis are often located near other small shops and cafes in family-friendly suburbs. Try to find premises that already have the infrastructure you need to run your deli. This will reduce the cost of renovating the premises to make them suitable for your purposes.

Most small businesses lease rather than purchase their premises. It is prudent to have a lawyer review the terms of your commercial lease to ensure that you are not locked into a contract with unfavourable conditions.

When designing the layout of your premises, consider industry standards and regulations that may apply. For example, if your deli is in New South Wales (NSW) and processes meat, you must comply with regulations relating to the storage and disposal of meat that may affect the layout of your premises.

2. Business Structure

Before opening a deli, you must decide on a business structure. The most common business structures include:

• sole trader: As a sole trader, you have full ownership and control of the business. You acquire all the profits but are also personally responsible for all the debts;
• partnership: Two or more co-owners own and control the business. The co-owners share profits according to their partnership agreement and are personally liable for the debt of the business; and
• company: Companies are more expensive to register, but they are beneficial because they limit the owner’s liability. So if your company is unable to repay its debts, you are usually not personally responsible for them.

3. Licensing Qualifications and Permits

You must ensure that you have the necessary licensing qualifications and permits before opening a deli. The permits vary between states, so it is important that you research the requirements of your state.

In NSW, you must:

• notify your local council of your business and food activity details;
• appoint a trained food safety supervisor; and
• comply with food safety and labelling standards.

Many delis sell raw meat. If your deli processes meat, you will need to apply for a Food Authority licence. Processing meat includes slicing, boning, cutting and packaging meat. These licences are regularly audited to ensure holders comply with proper hygiene and food safety standards.

4. Hiring Staff

Determine how many staff members you will need before opening a deli. You can advertise open job positions on job listing sites or social media. Ensure that the team you hire is trained to comply with relevant food safety regulations.

You may wish to hire casual staff, part-time staff or full-time staff. Part-time and full-time employees:

• are entitled to paid sick and annual leave;
• can expect ongoing employment; and
• can expect to work regular hours every week.

Casual staff members are not entitled to paid leave however they must be paid a ‘casual loading’ fee per hour.

You may consider hiring minors or university students to work on weekends. Although there is no minimum age to work in NSW, minors must be of school leaving age to work during school hours. Ensure that you are paying your employees according to the Hospitality Industry Award Pay Guide.

5. Insurance

Accidents happen. When they do, it is crucial that your business is prepared. As a deli business owner, you should consider various types of insurance including:

• public liability insurance;
• product liability insurance;
• property insurance; and
• theft insurance.

Public liability insurance covers you in the event someone sues you for personal injury or property damage that occurs as a result of business activities. For example, if someone trips over a stool in your deli and injures themselves.

Product liability insurance protects you against claims of personal injury or property damage caused by the products you sell. If a customer falls ill because of food you supplied in your deli, product liability insurance will cover the costs of the claim. This type of insurance is often included in public liability insurance packages.

Property insurance covers you in the event of damage to your property. Generally, this includes:

• fire;
• flooding; and
• other accidental damage.

Theft insurance is often included in property insurance packages. It provides cover for the loss of contents and inventory from theft.

Key Takeaways

Opening a deli is an exciting endeavour. While the passion that you have for your business is important, financial and regulatory knowledge is essential to your deli’s success. The five key issues to consider when opening a deli are:

1. location;
2. business structure;
3. licensing qualifications and permits;
4. hiring staff; and
5. insurance.

If you have any questions, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.