F&B Business: Definition, Types, Starting Tips

Some people are certainly familiar with the term F&B (Food and Beverages) business, which is another term for the culinary business. Culinary ventures are favored by both professional businessmen and those interested in starting a business because the F&B business offers various products that attract buyers and still have room for innovation.

To broaden insights into the F&B business, let's discuss the definition, types, and some tips for starting an F&B business.

Definition of F&B Business

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Based on its origin, the F&B business is defined as a business in the food and beverage sector with various scales of operations. This business is often referred to as the culinary business, which not only sells food and drinks but also provides a certain experience to its customers.

All businesses involving food and beverages, including fast food, cafes and coffee shops, snacks, and other snacks, fall into the food and beverages (F&B) category.

The F&B business sector is favored by many people not only because it can be run from small to large scales but also because of the profits that can be obtained.

4 Types of F&B Businesses

The F&B business can be countless, ranging from snacks, Indonesian cuisine, Western food, coffee shops, warmindo, street vendors, and many more. They can all be categorized into the following 4 types of F&B businesses:

1. Culinary SMEs (Small and Medium Enterprises)

Source: Freepik

Micro, Small, and Medium Enterprises (MSMEs) are small-scale or even home-based industries managed by individuals, groups, or certain institutions. A business can be called an MSME if it has business assets ranging from 50 to 500 million rupiahs per year.

MSMEs operating in the culinary sector are recorded to number around 1.5 million (BPS, 2022). With such a large number, culinary MSMEs still have the opportunity to continue growing, with the GDP value of the F&B business growing by 4.62% in the second quarter of 2023 compared to the previous year.

2. Restaurants

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A dining establishment is called a restaurant if it meets standards in reception, service, facilities, and ambiance. Defined by Soekresno, a culinary expert, a restaurant is a commercial business professionally managed with the aim of offering food and beverage services to the public.

There are various types of restaurants that can be found around the world, including ala carte, table d’hote, specialty, continental, family restaurants, cafes, canteens, terrace restaurants, discotheques, pubs, grill rooms, etc. Some of these can also be found in major cities in Indonesia.

3. Food Courts

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A food court is typically depicted as a spacious area consisting of several food vendors bound by certain systems and rules. As one type of F&B business, food courts are commonly found in shopping centers, airports, office locations, parks, or other public places.

In Indonesia, food courts are also known as Pujasera (Pusat Jajanan Serba Ada or All-in-One Food Centers), which can be indoor or outdoor with many tenants or booths. These food courts can provide dining facilities on-site or operate on a pay & go (takeaway) basis. They offer a variety of items, from heavy meals to light snacks and beverages.

4. Hotel F&B

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Not all hotels offer food and beverage services. However, some hotels provide restaurants that can be visited by hotel guests and the public.

Restaurants in hotels usually have different concepts from regular restaurants. Typically, 5-star hotels will implement fine dining, table d’hote, or table service with a complete menu of appetizers, main courses, desserts, and drinks in one package. But some hotel F&B establishments also offer buffets or ala carte options at more affordable prices.

5 Tips for Starting an F&B Business

Starting an F&B business requires thorough preparation, including capital, resources, concept, and your mentality as an F&B entrepreneur. Here are at least 5 tips to help you start your F&B business more confidently:

Source: Freepik

1. Determine the Target Market

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Targeting the market is the first and foremost thing to do when starting a business, including if you want to open an F&B business. Targeting the market is important because if you choose the wrong target, your F&B business may end sooner due to a lack of customers.

The target market you aim for will determine the strategic steps to be taken. It can also provide insights into innovating on products or services in your F&B business later on. Determining the target market will provide guidance on choosing the best location, product price range, suitable promotions, and marketing strategies to use.

2. Innovation in Products or Services

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The vast opportunities in the F&B business attract many people to try their hand at culinary entrepreneurship. This makes the level of competition in the F&B business relatively high. Moreover, the number of culinary businesses in Indonesia has exceeded 11 thousand, meaning you will compete in the same market as many other culinary entrepreneurs.

To stand out among other F&B businesses, you need to innovate your products or facilities that support your business management. For example, try a POS system from ESB that integrates with online ordering systems (ESB Order) to provide convenience for customers.

3. Maintain Quality by Finding the Best Suppliers

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The taste and quality of food and beverage products are key factors in the F&B business. One way to ensure this quality is to find and use the best suppliers. You can use the ESB marketplace, ESB Goods, which can be directly integrated with ESB POS or ESB POSLite.

This is especially important for F&B businesses operating on a franchise system. It will be difficult to ensure the availability of the same raw materials between outlets unless you use the Close Loop system available in ESB Goods. With this system, you can ensure that every franchise sources its raw materials from the same supplier.

4. Targeted Marketing Strategy

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Remember! No matter how good your product is, if many people don't know or have never heard of the brand name, it will be very difficult to sell the product. Therefore, you need to develop a targeted marketing strategy.

Regardless, a newly opened F&B business still needs to promote itself, whether on a large or small scale. Promotions have been proven to increase sales by between 10% and 50%. Conversely, reducing promotional costs will affect sales performance. Every 1.5% reduction in promotional costs will decrease sales volume by 1% (International Journal of Education and Research Vol. 7, 2019).

Promotions can be done at minimal cost or even for free. For example, free review promotions on the Ayomakan platform. Additionally, promotions can take the form of special offers for members at your restaurant. This way, customers will enjoy coming back repeatedly.

5. Appropriate Business and Management Systems

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Your F&B business can be considered successful when operational management, resources, and finances are in good condition. Therefore, it is important to determine the business system, operational and resource management, and financial management to be used.

Good business and management systems can increase efficiency. Conversely, if efficiency is poor, company revenue can decrease by up to 30% per year. That's why as an F&B entrepreneur, you need to use ERP (Enterprise Resource System) tools like ESB Core to manage your business more efficiently.

An F&B business is not just about food or beverage production, there are many things to prepare, especially regarding operational management, resources, and good financial management.

Starting an F&B business can be easier with the help of specialized software that integrates ordering, recording, management, and reporting. Hopefully, the tips and reviews above will help you start your F&B business.