How to open a food business in Puerto Rico

Are you thinking about opening a food business in Puerto Rico? Before jumping in, several factors should be taken into consideration to start a successful business. Javier Billoch Picó, San Juan regional director at the Small Business and Technology Development Center (SBTDC), shares the five steps he recommends taking before opening a food business in Puerto Rico.

Step 1: Define your concept and study the market

 Before investing in a food business, have a clear idea of the type of restaurant or food business you want and the niche you intend to serve. Will it be a cafe with an organic menu, a specialized food truck, or an haute cuisine concept?

Once the culinary proposal has been defined, it is essential to conduct a market study to analyze the competition and create a good business plan. According to Billoch Picó, this business plan must include:

• A detailed description of products and services
• An analysis of strengths, weaknesses, and opportunities
• An assessment of operational costs and profits
• Developing a menu with calculations for cost per dish and profit margin
• Kitchen logistics, restaurant capacity, inventory management, food purchasing, and receiving merchandise
• Staff members with job description (specifying the career path of both management and kitchen staff)
• Risk management and resilience to ensure business continuity (such as having an emergency power generator or solar panels, water tanks, strong structures, and life insurance for key employees —a renowned chef, for example— as well as property and public liability insurance)
• A solid marketing plan

It is also recommended that once you have the menu ready and have set a price for each dish, put it to the test. For example, select a group of friends and acquaintances or coordinate a focus group to try your dishes and give their opinions on the menu quality and prices.

Step 2: Finance your food business

 There are several financing options for food businesses in Puerto Rico, Billoch Picó said. One alternative is business loans offered by financial institutions. In addition, the US Small Business Administration (SBA) guarantees loans to banks and cooperatives. SBA financing programs are used by banks to offer commercial loans with the best possible terms and conditions for business owners.

Additionally, there are federal and state incentives that include business subsidies which can be combined with financing if the bank agrees to it. There are also programs that offer support, advice, and financing required to successfully develop your business, among others.

It is crucial to carefully consider financing options and evaluate your needs and repayment capabilities before deciding, Billoch Picó added.

Step 3: Establish the legal structure and open your commercial banking account

 To establish the legal structure of your food business, it is important to choose the business entity and type of structure that best suits your needs, such as Doing Business As (DBA), a corporation, or a limited liability company (LLC). Once a decision has been made, you will be able to access the Electronic Registry of Corporations and Entities through the Department of State portal to register your business.

Likewise, you must request and obtain an employer identification number (EIN) from the Internal Revenue Service (IRS) for tax purposes. In addition, you must register as an employer with the Puerto Rico Department of the Treasury through the Unified Internal Revenue System (SURI by its Spanish acronym) and obtain a Merchant Certificate as a withholding agent.

Furthermore, it is essential that you separate your personal finances from those of your business. Therefore, you must open a business banking account that offers payment, deposit, and collection services, among others.

Step 4: Get the necessary licenses and permits

 Before opening a restaurant on the island, it is essential to obtain a series of permits and licenses. These include, but are not limited to:

• The Single Permit from the Permit Management Office (OGPe by its Spanish acronym) by applying online at the Single Business Portal. This permit includes the Use Permit, the Environmental Compliance License, the Fire Prevention Certification, and the Health License, among others
• The Municipal License that you can apply for and obtain in the municipality where the restaurant or food business will be located
• The Liquor License from the Department of the Treasury (required only if your business will sell alcoholic beverages)
• The Health Department’s Safe Food Handling course and certification for managers and assistants.

Step 5: Promote yourself and create customer retention strategies

 Finally, Billoch Picó emphasized that marketing strategies must be regarded as an integral part of the business plan.

The expert also recommends having a presence on social media and having a digital menu that includes attractive photos and videos of the business and the dishes available at your restaurant. You can also take advantage of technologies like food delivery apps or e-commerce platforms to expand your reach.

Likewise, it is crucial to train your team to provide exceptional customer service, focusing on the dinner experience and menu exploration. In addition to product quality and good customer service, building loyalty through promotions and other incentives are effective strategies for converting visitors into repeat customers and growing your food business’s success.

With careful planning and a strategic approach, you can begin your path to success in the world of gastronomy in Puerto Rico.

 

Banco Popular de Puerto Rico (“Popular”) has no affiliation or relationship with the people or entities mentioned in this article. This article is for informational purposes only and does not constitute an endorsement or guarantee of its accuracy. Neither Popular nor its affiliates, subsidiaries or related companies are, nor will they be, liable for any special damages, direct or indirect, resulting from the use of the information contained in this article, which was not prepared by Popular. Popular is dedicated to providing financial services and is not dedicated (directly or indirectly) to providing services related to this content. If you require any related service, you must request advice from a competent professional of your choice.