How to Open a Deli: Planning and Setup Guide

Important elements to think about when starting your deli:

1. Define your niche — Decide on the type of deli you want to open, such as a traditional deli, gourmet deli, or a deli specializing in a particular cuisine. This helps you stand out and attract your target customer base.
2. Location — Choose a strategic location with high foot traffic, such as near office buildings, shopping centers, or busy streets. Ensure the location is convenient and accessible for your customers.
3. Licenses and permits — Obtain all necessary licenses and permits required to operate a deli, including health permits, food handler’s permits, and business licenses. Ensure compliance with local health and safety regulations.
4. Equipment and storage — Invest in high-quality equipment such as refrigeration units, slicers, display cases, and cooking appliances. Ensure you have adequate storage space to keep your ingredients fresh and organized.
5. Develop a menu — Create a menu featuring popular and high-quality deli items. Offer a variety of sandwiches, salads, meats, cheeses, and specialty products to cater to diverse tastes.
6. Trained staff — Hire skilled and trained staff who have experience in food preparation, customer service, and maintaining hygiene standards. Provide ongoing training to ensure consistent service quality.
7. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the LLC setup services.
8. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
9. Logistics — Plan the logistics for sourcing ingredients, managing inventory, and ensuring timely delivery of supplies. Establish relationships with reliable suppliers for consistent quality.

Step 1: Decide if the Business Is Right for You

Pros and cons

Deli industry trends

Industry size and growth

• Industry size and past growth – The global deli food industry was worth $305.12 billion in 2022.((https://www.marketdataforecast.com/market-reports/deli-food-market))
• Growth forecast – The global deli food industry is expected to expand 4.4% annually through 2028 to reach $432.24 billion.((https://www.marketdataforecast.com/market-reports/deli-food-market))

Trends and challenges

Trends

• Grab-and-go is gaining ground as more people eat meals on the run.
• Pre-made charcuterie boards have started popping up in delis, as easy snacks for people to serve when entertaining.

Challenges

• More grocery stores are expanding their deli options, increasing competition.
• Higher food prices are eroding profits. 

Demand hotspots

• Most popular states – The most popular states for deli managers are Minnesota, Wyoming, and Delaware.((https://www.zippia.com/deli-manager-jobs/best-states/))
• Least popular states – The least popular states for deli managers are New Mexico, Louisiana, and Mississippi.

What kind of people work in delis?

• Gender – 67% of deli managers are female, while 33% are male.((https://www.zippia.com/deli-manager-jobs/demographics/))
• Average level of education – The average deli manager is high school educated.
• Average age – The average deli manager in the US is 36.6 years old.

How much does it cost to start a deli business?

Startup costs for a deli range from $45,000 to $90,000. The largest expenses are the space rental, equipment, initial food supply, and an operating budget.

You’ll need a handful of items to successfully launch your deli business, including:
• Blenders
• Meat Slicers
• Food Processors
• Juicers
• Toasters
• Microwaves
• Countertop Griddles
• Panini Grills
• Fryers
• Steamers
• Refrigerated Display Cases
• Hot Food Display Cases

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$100 - $500	$300
Business licenses and permits	$200 - $500	$350
Insurance	$100-$500	$300
Website	$200 - $1,000	$600
Initial Marketing Budget	$300 - $500	$400
Space rental deposit	$3,000 - $5,000	$4,000
Equipment	$20,000 - $40,000	$30,000
Initial Ingredients Supply	$5,000 - $10,000	$7,500
Initial operating budget	$15,000 - $30,000	$22,500
Total	$43,900 - $88,000	$65,950

How much can you earn from a deli business?

Various products will have different prices, so these calculations assume an average sale price of $10. Your profit margin should be about 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 deli. Your biggest challenges will be:

• Funding the startup costs
• Finding a great location with plenty of lunchtime traffic
• Competing with grocery store delis

Step 2: Hone Your Idea

Now that you know what’s involved in starting a deli, 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.

Analyze your competitors 

Research delis in your area to examine their products, price points, and customer reviews.

• Make a list of delis that offer similar products. 
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

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 deli that makes homemade rye bread or that serves hot food options like potato pancakes or grilled cheese.

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

What? Determine your deli products

The possibilities for products that you can offer at your deli is endless and include:

• Selection of sandwiches
• Pasta, potato, tuna, egg, and vegetable salads
• Meats and cheeses by the pound
• Hot prepared meals
• Breads and pastries 

You could add a bakery section and offer desserts, or a small wine shop. You might even have a small restaurant section where customers can dine in. 

How much should you charge for deli products?

You’ll base your prices for various products on market prices, but also on your costs of ingredients and your other costs. 

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 deli location

You’ll need to rent a space for your deli, 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 Deli Business Name

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 “deli” or “delicatessen”, boosts SEO
• Name should allow for expansion, for ex: “Diverse Delights Delicatessen” over “Pastrami Paradise”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

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 below. 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 Deli Business Plan

Here are the key components of a business plan:

• Executive Summary: Provide a brief summary of your deli business plan, highlighting its key features and what sets it apart.
• Business Overview: Describe your deli business, including its location, type of cuisine, and the dining experience you aim to offer.
• Product and Services: Explain the menu items you’ll serve, such as sandwiches, salads, and beverages, and any additional services like catering or takeout.
• Market Analysis: Analyze the local market for delis, considering factors like customer preferences, demographics, and potential demand.
• Competitive Analysis: Identify other delis or eateries in your area and explain how your deli will differentiate itself in terms of food quality, pricing, or unique offerings.
• Sales and Marketing: Outline your sales and marketing strategies, which may include promotions, partnerships with local businesses, and online advertising to attract customers.
• Management Team: Introduce key team members involved in the deli’s operation, emphasizing their experience in food service or restaurant management.
• Operations Plan: Describe how your deli will operate daily, from food preparation and service to staffing and inventory management.
• Financial Plan: Present financial projections, including startup costs, pricing strategies, revenue forecasts, and expense estimates for your deli business.
• Appendix: Include any additional materials, such as sample menus, photos of the location, or testimonials from taste tests, to support your deli 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 delis. 

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 deli 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.
• 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.
• 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. 

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.

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 deli business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Deli Business Licenses and Permits

Starting a deli 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 deli 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 “Place Order”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

• Loyalty Programs and Specials: Implement a loyalty program to reward repeat customers, and regularly offer specials or discounts on popular items to keep customers excited about returning.
• Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Engaging Social Media Presence: Leverage social media platforms to showcase mouth-watering food images, behind-the-scenes glimpses, and engage with your audience. Encourage user-generated content by running contests or asking customers to share their favorite deli experiences.
• Themed Events and Promotions: Organize themed events or promotions, such as a “Sandwich of the Month” or a weekend brunch special. This keeps your menu exciting and gives customers a reason to visit regularly.
• Community Involvement: Engage with the local community by sponsoring events, participating in festivals, or supporting local charities. This not only fosters a positive image but also creates a sense of community around your deli.
• Online Ordering and Delivery Services: Ensure your deli is easily accessible through popular food delivery apps. Offering online ordering with efficient delivery services can significantly expand your customer base.
• Create a Signature Dish: Develop a signature dish that sets your deli apart. Whether it’s a unique sandwich, a special sauce, or a signature side, having something exclusive can create buzz and attract curious customers.
• Customer Feedback and Reviews: Actively seek and showcase customer reviews. Positive testimonials build trust, while addressing negative feedback publicly demonstrates your commitment to customer satisfaction.
• Themed Nights or Classes: Host themed nights, like a trivia night or live music, to create a lively atmosphere. Consider offering cooking classes or workshops related to deli cuisine to engage customers in a unique way.
• Local Business Partnerships: Partner with nearby businesses for cross-promotions. For example, collaborate with a local coffee shop for a breakfast combo deal or share promotional materials in each other’s establishments.

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 deli 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 deli business could be: 

• Delicious sandwiches, custom-made to perfection
• In a hurry? Grab and go the city’s best sandwiches 
• The best meats and cheeses in town 

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 deli business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in delis 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 delis. 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 deli business include:

• Counter Clerk – take orders, customer service
• Sandwich and Food Preparer – prepare sandwiches and other foods
• Baker – bake breads and other bakery items
• 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!

Starting a deli takes some capital, but it’s a great way to put your culinary skills to work. You’ll also meet new people every day, and if they love your food, they’ll keep coming back for more. 

Once your deli is successful, you could expand and open outlets across your town, even your state and beyond! You’ve got the 411 on the business side of things now, so it’s time to get to work and launch your new deli.

Q&A

Is a deli profitable?

A deli can be very profitable. You just need a great location and some creative sandwich options.

What is the growth potential of a deli?

A single location deli could grow by expanding their products to include baked goods or even wine. It can also grow by expanding to different locations or creating a deli franchise.

Can you start a deli on the side?

A deli is best started as a full-time business. It takes a lot of time, work, and dedication to be successful.

What sells best in a deli?

Fresh sandwiches are always popular, but customers may also buy deli meats and cheese by the pound, prepared meals, and loaves of fresh bread.