How to Open a Sandwich Shop

Who doesn’t love a good sandwich? They’re the perfect lunch, and great any time. If you’re a creative sandwich maker, you could start your own sandwich shop and become the go-to lunch stop in your area. Alternatively, you could open a franchise outlet and become part of the $24 billion sandwich franchise market. 

But before you put the bread in the oven, you’ll need to dig into the business side of things. Fortunately, this handy guide has you covered with all the business information you’ll need to launch a lucrative sandwich shop. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Sandwich shop industry trends

Industry size and growth

• Industry size and past growth – The U.S. sandwich and sub franchise industry is worth $24.2 billion after declining .7% annually the last five years.((https://www.ibisworld.com/industry-statistics/market-size/sandwich-sub-store-franchises-united-states/))
• Growth forecast – The U.S. sandwich and sub franchise industry is projected to expand by 2.9% in 2023.
• Number of businesses – In 2023, 15,135 sandwich and sub franchise businesses are operating in the U.S.((https://www.ibisworld.com/industry-statistics/number-of-businesses/sandwich-sub-store-franchises-united-states/))
• Number of people employed – In 2023, the U.S. sandwich and sub franchise industry employs 396,817 people.((https://www.ibisworld.com/industry-statistics/employment/sandwich-sub-store-franchises-united-states/))

Trends and challenges

Trends

• Globally inspired and vegetarian options are in greater demand.
• Consumers want sustainable, humanely raised, and organic ingredients.

Challenges

• Sandwich shops are short on staff due to the preference for remote jobs.
• Higher food prices are cutting into profit margins.

Demand hotspots

• Most popular states – The most popular states for sandwich artists are Maine, California, and Oregon.((https://www.zippia.com/sandwich-artist-jobs/best-states/))
• Least popular states – The least popular states for sandwich artists are Colorado, Louisiana, and Alabama.

What kind of people work in sandwich shops?

• Gender –  65% of sandwich artists are female, while 35% are male.((https://www.zippia.com/sandwich-artist-jobs/demographics/))
• Average level of education – The average sandwich maker is high school educated.
• Average age – The average sandwich maker in the US is 36.7 years old.

How much does it cost to start a sandwich shop business?

Startup costs for a sandwich shop range from $45,000 to $90,000. The largest expenses are space rental, equipment, and operating budget. 

You’ll need a handful of items to successfully launch your sandwich shop, including: 

• Meat Slicers
• Food Processors
• Toasters
• Microwaves
• Countertop Griddles
• Panini Grills
• Fryers
• Steamers
• Refrigerated Display Cases
• Hot Food Display Cases (optional)

How much can you earn from a sandwich shop business?

Your sandwich prices will vary, but these calculations assume an average sale per customer of $10. Your profit margin after food and other costs should be around 20%. 

In your first year or two, you could have 75 customers per day, bringing in $273,750 in annual revenue. This would mean close to $55,000 in profit, assuming that 20% margin. 

As you gain traction, you might have 150 customers per day. With annual revenue of $547,500, you’d make a tidy profit of nearly $110,000.

What barriers to entry are there?

There are a few barriers to entry for a sandwich shop. Your biggest challenges will be:

• Funding the startup costs
• Finding a location with high lunch traffic
• Competing with other sandwich shops and franchises

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a sandwich shop, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a gourmet sandwich shop or a sub shop that also offers soup. 

You might consider targeting a niche, such as Asian-inspired sandwiches or hot sandwiches.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Building a mouth-watering sandwich menu for your shop

You’ll want to come up with a creative sandwich menu, depending on the concept you’ve chosen for your shop. In addition to sandwiches, you could also offer soup, chips, drinks, side dishes like macaroni and cheese, add-ons like pickles and yogurt and more. 

How much should you charge for sandwiches?

Most sandwiches cost $5-$8, and prices for other items vary. Be sure to consider your competitors’ prices as well as your costs when pricing your items.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market largely depends on your location. If you’re in an area filled with college students and young professionals, you might zero in on TikTok, Instagram, and LinkedIn. 

Where? Choose a sandwich shop location

You’ll need to rent a space for your sandwich shop, preferably in an area with high traffic for lunch, such as a metro area. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Sandwich Shop Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “sandwiches” or “subs”, boosts SEO
• Name should allow for expansion, for ex: “Global Bites Deli” over “Grilled Goodness Galore”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Sandwich Shop Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Provide a brief summary of your sandwich shop business plan, outlining your goals and objectives.
• Business Overview: Describe the concept of your sandwich shop, its location, and the type of sandwiches and services you’ll offer.
• Product and Services: Detail your sandwich menu, including the variety of sandwiches, sides, and beverages you’ll provide to customers.
• Market Analysis: Analyze the local market for sandwich shops, including customer preferences and potential demand for your offerings.
• Competitive Analysis: Identify existing sandwich shops in your area, highlighting their strengths and weaknesses, and explain how your shop will differentiate itself.
• Sales and Marketing: Outline your strategies for attracting and retaining customers, such as promotions, partnerships, and online presence.
• Management Team: Introduce key team members involved in your sandwich shop, emphasizing their relevant experience and roles.
• Operations Plan: Explain the day-to-day operations of your sandwich shop, from sourcing ingredients to preparing and serving sandwiches.
• Financial Plan: Present financial projections, including startup costs, revenue forecasts, and profit margins for your sandwich shop.
• Appendix: Include supplementary materials, such as sample menus, vendor contracts, or market research data, to support your sandwich shop business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to sandwich shops. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your sandwich shop will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a sandwich shop business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Sandwich Shop Business Licenses and Permits

Starting a sandwich shop business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You’ll need to check with your state and local governments for health and food service license requirements. You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your sandwich shop business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Toast, eHopper, or Lavu, to manage your menu, inventory, online pickup orders, and customer loyalty program.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Order To Go”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Loyalty Programs: Implement a loyalty program offering discounts or free items after a certain number of purchases to encourage repeat business.
2. Social Media Engagement: Leverage platforms like Instagram and Facebook to share mouthwatering images of your sandwiches, engage with your audience, and run promotions or contests to create buzz.
3. Local Partnerships: Collaborate with nearby businesses or offices for catering services, lunch specials, or cross-promotions to tap into local customer networks.
4. Creative Menu Specials: Regularly introduce unique and seasonal sandwich specials to entice customers to try something new and share their experience with friends.
5. Community Events Sponsorship: Sponsor or participate in local events, sports games, or community gatherings to increase brand visibility and connect with potential customers in person.
6. Referral Discounts: Encourage word-of-mouth marketing by offering discounts to customers who refer friends, family, or colleagues to your sandwich shop.
7. Student and Employee Discounts: Establish partnerships with local schools or businesses to offer special discounts to students or employees, creating a consistent customer base.
8. Online Reviews Management: Monitor and respond to online reviews on platforms like Yelp or Google, demonstrating your commitment to customer satisfaction and building a positive online reputation.
9. Themed Nights or Days: Introduce themed nights or days (e.g., “Taco Tuesday” or “Healthy Thursday”) to attract different customer segments and create a sense of anticipation.
10. Catering Packages: Develop catering packages for events, meetings, and parties, promoting your sandwich shop as a convenient and tasty option for group gatherings.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your sandwich shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your sandwich shop could be:

• Globally-inspired sandwiches to allow your tastebuds to travel
• Vegetarian sandwiches and soups to fit your lifestyle
• Need to grab and go? Gourmet sandwiches served fast

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a sandwich shop business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in sandwich shops for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in sandwich shops. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a sandwich shop business include:

• Counter Clerk – take orders, customer service
• Sandwich Maker – prepare sandwiches and other foods
• General Manager – scheduling, inventory management, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

Opening a sandwich shop could be a fun way to put your creative culinary skills to work, as well as a lucrative business opportunity. If your shop does well, you could expand to new locations in your area, or start a franchise and become the next Jersey Mike!

You’ve done your business due diligence, so now you’re ready to put on your apron and get your soon-to-be successful sandwich shop up and running.