How to Open a Chocolate Shop
With $20.6 billion dollars' worth of chocolate sold every year in the United States, opening a chocolate shop can be a lucrative investment. Sales for boutique chocolate shops alone increased 17 percent between 2006 and 20111, a trend that does not appear to be slowing any time soon. Cashing in on this trend requires considerable time and effort, not to mention the monetary investment, but the end reward of being a chocolatier and running your own business can be very appealing.
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One way that many people choose to get into the chocolate business is by opening a franchise. These are businesses that are well-established elsewhere, giving you a foundation to build on in exchange for an initial fee and ongoing royalties. You get to benefit from the company's business plan and brand recognition, while still running your own business. Opening a candy franchise can cost anywhere from $112,000-622,0002, including franchise fees, location, equipment, employees, and supplies to make the chocolate. Below are some popular chocolate franchises and the fees you might expect when franchising with each.
|The Chocolate Bar||$35,000||4 percent|
|Chocolate Works||$50,000||5 percent|
|Rocky Mountain Chocolate Factory||$24,500||5 percent|
|Chocolate Chocolate Chocolate Factory||$20,000||5 percent|
|Schakolad Chocolate Factory||$30,000||$600/month|
Whether you decide to open a franchise or your own concept, you need to find the perfect location for your chocolate business. The internet has made it possible to get a business started without even having a brick-and-mortar location, but the legalities of that can be tricky due to health codes, so it's important to do thorough research before deciding to go that route.
For a physical chocolate store, your geographic location can help you determine where your shop may be most successful. While foot traffic is not completely necessary for your chocolate store's success, it can help. Chocolate is often an impulse buy, and those walking by are much more likely than drivers to be tempted by the sights and scents of your sweets. An indoor or strip mall location or a storefront in a downtown shopping district may be a good option. You'll also want to consider the benefits of any tourist areas near you. The rent may be pricey, but vacationers often make time specifically for shopping, come with spending money, and may want to buy locally-made chocolates as souvenirs for their friends and family.
When considering locations, take note of the space you will have and how you can use it. A large window can be of great benefit, especially if the interior can be arranged in such a manner as to set up part of your work area in the window. Passers-by will be able to see you working on your handmade chocolates and can be tempted inside. While it is standard in most retail locations today, adequate air conditioning is a must, lest your chocolate creations end up as melted sludge.
Licenses and Permits
Opening any kind of business requires you to consider a number of legal concerns, but when creating and serving food products, you have extra licenses and inspections to consider.
- Any business that sells items to the public is required to have a business license or retail license. These are usually issued through local city or county governments, and your area may require one or both.
- If you will sell anything resale, whether chocolate or other items, you will need a seller's permit. These allow you to purchase your goods from suppliers without paying sales tax, which is only collected from the final customer.
- If you will be making your own chocolate (or any other food products), you must meet all local health codes and undergo an inspection to receive a health code permit. These can sometimes be obtained for home kitchens if you do not have a commercial kitchen space, but in many locations this is not possible. If you are unable to put a commercial kitchen space into your retail location, you may wish to consider renting a kitchen.3
- In some locations, you may need a fire department permit to ensure your location's safety or a sign permit for any exterior signs you may wish to install.
- Some local governments will require you to register a trade name, also known as a DBA ("doing business as").
- You will need to apply for an Employer Identification Number (EIN), which is issued by the federal government and used for handling the company's taxes.4
- If you will be selling alcohol, such as wine or liquor-infused chocolates, you will need to apply for a liquor license. These can take some time to be approved for and in most cases involve required training, so plan ahead and apply early.5
- If your chocolate will be sold by weight, you will likely have to purchase a legal-for-trade scale and obtain a weights and measures device registration with your local regulatory body, which may be a department of agriculture, weights and measures bureau, or consumer and regulatory affairs commission. This registration will sometimes require an inspection, and using the scale for sales before this is completed can incur some hefty fines.
Protect Your Business
In addition to licensing, you will also need to decide what kind of insurance your chocolate store will need. General liability is a must, as it covers any accidents that may happen on your property or any illness brought on by your products. This type of policy covers litigation expenses and damages, should the need arise. If you will have employees helping run your business, you should also have workers' compensation insurance. These policies ensure that your employees' medical bills are paid if they are ever injured on the job, and can, in some cases, also cover temporary or permanent disability costs6.
The FDA has some easy-to-follow guidelines on food labeling, which will be important if any of your products will be packaged or sold wholesale. Clearly-labeled packaging can also help protect your business from litigation from customers with food allergies. Another legal matter you may wish to keep in mind is protecting your intellectual property. While you cannot file a copyright for a recipe, if your chocolate shop sells candies with a distinctive shape, color, or pattern, you may be able to trademark the physical design so that others cannot copy your style.
Plan Your Menu
While it is important to keep your offerings new and fresh to hold the interest of returning customers, you should also work to put together a basic menu so you can know what supplies and equipment you need. Decide what you want your niche to be – will you create rustic-looking handmade chocolates, or will your products have a more polished, gourmet appearance? In some markets, there may be demand for organic or single-origin chocolate, which is chocolate made from cacao beans sourced from a single geographic region or crop. If your focus ends up being on unique or unusual flavors, you may want to consider including some basic milk chocolate flavors for children and less-adventurous customers. Once you develop your basic menu, be sure to stay on top of chocolate and food trends, so you can keep your offerings current.
Once you know what variety of chocolate you will carry – truffles, bars, and fudge are just a few of the options you may consider – you will need to decide on packaging. Pre-packaged gift boxes may sell well around the holidays, but many customers will want to pick out their own flavors. These can be sold in lined cardboard boxes, bags, and clamshells, or be wrapped in cellophane. You may wish to offer specialty boxes or wrapping for gift items, or seasonal wrapping for holidays such as Valentine's Day, Mother's Day, or Christmas. In addition to packaging, you will need to decide on pricing. Some chocolate shops price by the piece, while others sell by weight. Whichever you decide on, you may wish to add incentives to buy certain sizes, such as a minor discount if you buy a half-dozen truffles instead of five individual pieces.
Developing a menu enables you to turn your attention to the equipment you will need to create the items you plan to sell. Below is listed some of the equipment that may be needed in your chocolate shop's kitchen.
- Ingredient Bins: These offer a place to store dry ingredients, such as sugar, flour, and spices. These are available with easy-access lids, and in a variety of colors and sizes to make storing your supplies simple.
- Work Tables: These tables, topped in either hardwood or stainless steel, provide a large work surface on which you can craft your chocolates.
- Double Boilers: A double boiler provides a way for you to use gentle heat to temper chocolate or warm other candy ingredients as needed.
- Commercial Ranges: Whether you have the room for a full range or a small hot plate, either can provide the heat you need for tempering chocolate and heating ingredients.
- Commercial Mixers: These powerful mixers enable you to combine large quantities of ingredients, and are available in capacities as small as 8 quarts and as large as 444 quarts.
- Pans and Pan Racks: Pans give you a place to prep and assemble your final product, and a pan rack helps with storage and keeping pans of hardening chocolates out of the way until they are ready to be put on display.
- Food Allergy Products: If you plan on offering nut- or dairy-free items for customers with allergies, these color-coded storage containers, labels, and utensils can help you prevent cross-contamination.
- Pastry Tubes and Bags: For delicate or detailed work, these pastry bags and decorative tips can help you add the decorative touch your chocolates need.
- Display Cases: These display cases are available in a variety of sizes and colors, as well as refrigerated and non-refrigerated models, so you can find the case perfectly suited for displaying your chocolate.
- Digital Price Computing Scales: These legal-for-trade scales can calculate a price after unit prices are programmed in. Some can be connected to point-of-sale systems to make the payment process simple for you and your customers.
Having the best-tasting chocolates in town can't make you a cent if people do not know you are there. There are many ways to get your name out as a new chocolatier, and you may need to take advantage of several of them to get the most benefit. Make use of the local press and social media to get your chocolate shop's name out and to generate excitement over your opening. Consider having a grand opening celebration and be prepared with samples to win over your potential customers.
Take advantage of holidays, particularly those that involve gift-giving. If you are in an area with heavy pedestrian traffic, consider using sidewalk signs to help catch the attention of those passing by. Take advantage of whatever your specialty is, whether that be handmade goods, organic chocolate, single-source cocoa beans, or any other theme your store has, and use it in your advertising to help you reach your target audience.
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2. Candy Franchises. Entrepreneur magazine. Accessed February 2016.
3. Business Permits. Entrepreneur magazine. Accessed February 2016.
4. Apply for an Employer Identification Number Online. IRS website. Accessed February 2016.
5. Legal Libations in Your New Restaurant. KaTom Restaurant Supply Learning Center. Accessed February 2016.
6. Candy Shop Business Insurance. USA Business Insurance Services. Accessed February 2016.