A frozen food store or frozen food shop is a retail outlet that sells different types of frozen food. Please note that the term frozen food refers to food items that are exposed to freezing temperatures to preserve them from decay. The most common frozen foods are fish, chicken, turkey, prawns, beef, et al.
Available statistics show that the frozen food market size was valued at $291.8 billion in 2019, and is estimated to reach $404.8 billion by 2027, registering a CAGR of 4.2% from 2020 to 2027. According to FFI, the share of Americans who consume frozen food daily or every few days rose from 35 percent in 2018 to 39 percent in 2020.
Steps on How to Start a Frozen Food Store Business
Table of Content
Conduct Market Research
The first step in the market research process for your frozen food store business is to develop market-based research questions in line with your overall business goal and objective. In this regard, you should source for information that will help you maximize your business, give you a reliable clue of what your potential market will be looking out for from a frozen food store, and also help you operate your frozen food store with less stress.
a. Who is the Target Market for a Frozen Food Store Business?
- Restaurants and canteens
- BBQ stands
- Every business that makes use of frozen foods.
b. Is Frozen food Store Business a Profitable Business?
Yes, the frozen food store business is profitable and the industry is growing. Please note that the rise in CAGR is attributable to the increasing demand for frozen products from developing countries and also increased demand from the foodservice industry.
c. Are There Existing Niches in the Industry?
There is no niche area in the frozen food business because the frozen food business is a niche area in the supermarket and grocery stores industry.
d. Who are the Major Competitors?
- C&S Wholesale Grocers
- Nestle SA
- SuperValu Inc
- Sysco Corporation
- US Foods
- Babeth’s Feast
- American Frozen Foods
- Malincho Euro Market & Prestige Liquor
- Cruisin USA Frozen Custard
- Red Mango Frozen Food Stores
- CRF Frozen Foods
- Grocery Babu LLC.
- Carando Gourmet Frozen Foods
- India Bazaar Grocery Store
- SunOpta Frozen Foods
- Ajinomoto Windsor, Inc.
- R K Grocery
- Smith Frozen Foods
- High Liner Foods USA Inc
- Food City USA
- Freddy’s Frozen Custard & Steakburgers
- Dannon Co Inc
e. Are There County or State Regulations or Zoning Laws for Frozen Food Store Business?
Yes, there are county or state regulations and zoning laws for frozen food stores, and players in this industry are expected to work with the existing regulations governing such business in the county or state where their business is domiciled. In addition to that, it is important to state that in the United States, government agencies and departments routinely grant variances to rules and regulations.
Often, you only have to fill out a short form. In other cases, your request may have to be publicly heard before your city council, zoning board, or other body. Please check with your zoning or planning department to find out what options are available to you.
f. Is There a Franchise for Frozen Food Store Business?
Yes, there are franchise opportunities for frozen food store business, and here are some of them;
- MyMenu Franchise
- G.I. Friday’s Franchise
- Cool Factory Franchise
g. What Do You Need to Start a Frozen Food Store Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Shop facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Wholesale supplies of different types of frozen foods
- Startup Capital
Memorable Frozen Food Business Names
- The Lords© Frozen Food Store, Inc.
- Bally Bronze® Frozen Food Store, LLC
- Organic© Frozen Food Store, Inc.
- Food Solutions® Frozen Food Store, Inc.
- Fresh Pot™ Frozen Food Store, Inc.
- Jenny Benson™ Frozen Food Shop, LLC.
- Monica Blaze© Frozen Food Store, LLC
- Nancy Moore® Frozen Food Store, Inc.
- Grace Foods© Frozen Food Store, Inc.
- Mother Theresa© Frozen Food Store, Inc.
- Susan Longjohn® Frozen Food Store, LLC
- Coast Line® Frozen Food Store, LLC
- Ewelina Victor™ Frozen Food Store, LLC
- Georgia Gusto© Frozen Food Store, Inc.
- Venessa Mcintosh® Frozen Food Store, Inc.
- Honduras Sisters™ Frozen Food Store, Inc.
- Celine Maxwell™ Frozen Food Store, Inc.
- Doris Kunde© Frozen Food Store, Inc.
- One Stop® Frozen Food Store, LLC
- Nelly Benson™ Frozen Food Shop, Inc.
Register Your Business
a. What Type of Business Structure is Best for Frozen Food Store Business?
Even though there are several options when it comes to the business structure of a frozen food store business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Frozen Food Store Business?
- General Business License
- Health and Safety Permit
- Food Handler’s Permit
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Frozen Food Store Business?
You don’t need any certifications to open a frozen food store.
e. What Documents are Needed to Open a Frozen Food Store Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a frozen food store business, usually you may not have any need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Frozen Food Store Business?
To be truthful, the cost of starting a frozen food store varies significantly. But a standard frozen food store can cost anywhere from $30,000 to $100,000 depending on size, whether or not it will be a constructed cold room or just freezers. Your retail storefront will require another $50,000 investment minimum and your start-up supplies will run you another $10,000 to $50,000.
b. What are the Costs Involved in Starting a Frozen Food Store Business?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $1,300.
- Marketing, Branding and Promotions – $1,000.
- Business Consultant Fee – $2,500.
- Insurance – $1,400.
- Rent/Lease – $15,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $5,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and equipping the shop – $15,000
- Website: $600
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Frozen Food Store Business?
- The size of frozen food store business
- The choice of location
- The required licenses and permits
- The type of facility
- The cost for branding, promotion, and marketing of the frozen food store
- The cost of equipping the frozen food store
- The cost of insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
No, it is not compulsory to build a new facility for your frozen food store, but if you have the required finance, it will pay you to build your facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Frozen Food Store Business?
- Supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Shop Manager (Owner) – $45,000 Per Year
- Merchandise Manager – $32,000
- Sales Boys and Sales Girls – $26,100 Per Year
- Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Frozen Food Store Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Our frozen food store will be located in a fast-growing community in San Antonio, Texas. We have been able to secure a one-year lease of a vacant shop within the city’s largest shopping mall. We are fortunate to secure a facility with an option of renewal for 5 years at a rate that is favorable to us.
b. Products and Service
- Baked goods
- Fruits and fruit juices
- Other related grocery products.
c. Mission Statement
Our mission is to establish a frozen food store that will make available a wide variety of organic and non-organic frozen foods throughout the cities where we will establish our store.
Our vision is to establish a standard frozen food store in San Antonio, Texas that will be a pacesetter in our city.
d. Goals and Objectives
The goals and objectives of a frozen food store are to provide a retail outlet where people can purchase a wide variety of frozen foods.
e. Organizational Structure
- Shop Manager (Owner)
- Merchandise Manager
- Sales Boys and Sales Girls
- Security Guard
a. SWOT Analysis
- Ideal location for a frozen food store business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Access to wholesale supplies of frozen foods.
- Financial constraints may restrict the publicity and branding of the business
- A new business that will be competing with well-established frozen food stores in the city.
- Inability to retain our employees at the teething stage of the business.
- A rise in the number of people who want frozen foods within our market space (The surging popularity of healthy eating is expected to benefit the industry and attract new customers)
- Online market, new services, new technology, and of course the opening of new markets.
- Pandemics such as Covid19 (Revenue of the Frozen Food Wholesaling industry declined in 2020 amid the adverse economic effect of the COVID-19 pandemic.
- The arrival of a new frozen food shop within our market space
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Frozen Food Stores Make Money?
Frozen food stores make money by selling the following products;
- Baked goods
- Fruits and fruit juices
- Other related grocery products.
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- Introduce your frozen food store by sending introductory letters alongside your brochure to households, restaurants, hotels, and other key stakeholders throughout the city where your frozen food store is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business to give your business an online presence
- Directly market your products.
- Join local frozen food store business associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product/Service?
There is no fixed cost for frozen food because there are different types of frozen foods (fish, chicken, turkey, prawns, beef, etc.
b. How Much Profit Do Frozen Food Store Business Owners Make a Year?
It depends, but available reports show that frozen food store owners make over $55,000 annually.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the frozen food store business
- The types of products retailed in the shop
- The location the frozen food store is covering
- The management style of the frozen food store
- The business approach of the frozen food store
- The advertising and marketing strategies adopted by the business.
- The number of years the frozen food store is in business
d. What is the Profit Margin of a Frozen Food Store Business Product/Service?
The profit margin of a frozen food store business is not fixed. It could range from 15 percent to 35 percent depending on the type of frozen food retailed in the shop.
e. What is the Sales Forecast?
Below is the sales forecast for a frozen food store business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $120,000
- Second Fiscal Year: $240,000
- Third Fiscal Year: $380,000
Set Up your Shop
a. How Do You Choose a Perfect Location for Frozen Food Store Business?
- The demography of the location especially as it relates to people that eat frozen foods
- The demand for frozen foods in the location
- The purchasing power of businesses and the residents of the location
- Accessibility of the location
- The number of frozen food stores, grocery shops, and farm markets in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Frozen Food Store Business?
- Manhattan, New York
- Pittsburgh, Pennsylvania
- Boston, Massachusetts
- Montclair, New Jersey
- Brooklyn, New York
- Chicago, Illinois
- Durham, North Carolina
- Los Angeles, California
- Green Bay, Wisconsin
- Dallas, Texas
c. What Equipment is Needed to Operate a Frozen Food Store Business?
- Deep freezer
- Weighing machine (Scale)
- Different sets of knives
- Cutting boards
When it comes to hiring employees for a standard frozen food business, you should make plans to hire a competent shop manager (owner), merchandize manager, sales boys and sales girls, and security guard.
Launch the Business Proper
No frozen food store business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the frozen food store business, you will be able to officially inform people in your city that your frozen food store is open for business.
a. What Makes a Frozen Food Store Business Successful?
- Choose a good location and shop facility to launch the business
- Make sure your shop is stocked with different types of frozen foods
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your frozen food store
- Leverage on all available online and offline platforms to promote your frozen food store
b. What Happens During a Typical Day at a Frozen Food Store Business?
- The shop is open for the day’s work
- Goods are properly arranged in the freezer
- Walk-in customers are attended to
- Deliveries of orders are made
- Stocks are taken and reports are written and submitted
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Frozen Food Store Business?
- Customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Bargaining skill
- Work experience in a retail shop environment
- Experience in managing people
- Experience in business administration
- Experience in handling frozen foods and related grocery products.