Tuesday 15 October 2019

Problem solver: Local Enterprise Boards can supply a useful menu when starting a food unit

Businessman Feargal Quinn answers your questions

Q: I am thinking of starting a food business but I am not sure what steps I should be taking. Can you provide me with some advice?

It is great to hear about start-up businesses and I applaud you on taking the initiative. The simple answer is to go to your local Enterprise Board and request a mentor with food experience. They will guide you on your journey.

However, you want to be sure that there is a gap for your product in the marketplace. Have you thought about what your objective is for setting up this food business? Is it a hobby business, or do you need to make a reasonable salary for yourself?

Then you need to match this objective against the product you are likely to produce as not all products generate sales large enough to pay a full-time salary etc.

Another practical step you could take would be to visit some local supermarket owners and chefs and get their opinion on whether they see an opportunity for your product or not. Before you approach anybody, ask yourself the question "why is my product different and why would somebody buy it from me?"

If you can create justifiable reasons for this, then the chances are you will be quite successful. There is very little room in the market for 'copycat' products and typically their sales are minimal.

Assuming your research has all been positive and you are getting clear indications that there is an opportunity for your product in the market, the most important advice I can give you is to ensure that you invest in the packaging and branding phase as this will help greatly to support strong sales. Let me know how things go, as I am always keen to hear about food start-up businesses.

Q: Do you think the big supermarkets have become too powerful at the expense of their suppliers?

Power is bad when it is abused and good when it is put to positive use. I meet many food producers who have become highly successful on the back of supplying some of Ireland's and the UK's largest retailers and have learnt to meet the commercial requirements while making a profit.

I also regularly read about supermarkets making demands for additional margins and supports. In particular, I see regular coverage about farmers not getting a fair price for the products they produce.

'Fair price' is probably a good description of what the outcome of any negotiation should be. If somebody is producing or growing something and not making a profit on it, then that is wrong.

I also believe that buyers should have a different set of rules when dealing with smaller, early-stage producers, and only apply small retail margins and possibly create shorter payment terms.

However, when larger suppliers negotiate with a big supermarket, it can be very tricky. The supplier's job is to get the highest possible price for the product and the retail buyer's job is to pay as little as possible for the product.

The recent horse-meat scandal is an example of where that process had simply gone too far, causing the supply chain to take short cuts in order to recover some profit.

In Superquinn, we always had to fight hard to stay competitive because of our relatively small size when compared with some of our competitors.

We fought some hard battles with suppliers, some of which were well publicised, but I hope fairness always prevailed. It should be about give and take.

A buyer might do a tough commercial deal with a supplier but, equally, that supplier should have a sense that, while they might not have achieved their ideal price, the process was fair and they leave the meeting with a sense that they can grow sales with that retailer.

Q: Would you buy into the same sort of business again? If not, why?

That's a complex question, indeed. I have really enjoyed the decades I have spent in food retailing and learnt so much along the way. When I started, food shops were places where staff served you over a counter, where every customer had an account and where trading hours were much shorter.

In fact, Superquinn was one of the earliest self-service supermarkets in Ireland, the first to have an in-store bakery, the first to have self-service salad bars, the first in Europe to start a customer-loyalty scheme etc. In other words, we were ahead of the market and ahead of our competitors every step of that journey.

Time moves on and so does the marketplace. I believe it would be possible to start a food retail concept that differentiates itself from the mainstream market but whether that shop could become a chain, I couldn't be certain.

In Superquinn, we were lucky to get in at the early stage of the food retail revolution in Ireland. That retail cycle has moved on now and to find a gap is more difficult.

In saying all that, I relish a challenge and with the right idea, I would certainly love the adrenalin rush associated with creating a new food retail concept that would set the benchmark in Ireland. You might have even sparked new thoughts in my mind with your email. . . just don't tell my wife, who thinks I retired from retailing years ago.

Irish Independent

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