Discuss about establishing a restaurant business in United kingdom………..
TABLE OF CONTENTS
The catering industry is one of the fastest growing in the world. Most urban settings are full of fast food centres and restaurants because of the increasing number of people who are eating away from their homes. The UK enjoys good political stability, business friendly regulations and a very stable currency (Robert, n.d.). The establishment of the business in this country will require a lot of careful planning to comply with the various legal requirements. The business will be a fast food restaurant located in London, dealing with the provision of meals to the general public. London is a populous city with people of all ages residing there. There are more than 8 million people who reside in this city (Finner, n.d). It is therefore a good location because of the customers’ availability. The company we are starting will be a limited liability partnership. This means that the liability for its debts will be shared between the individual owners and the company. This will avoid the entire burden falling on me as a sole trader. It will also protect the owners from bankruptcy proceedings in case the venture doesn’t succeed, which can claim individual property for the case of a sole trader.
The first step in setting up this business will be to clearly look into the legal requirements and their structure in the UK. According to Mathew (2001), there are two main types of law that is applicable here; there is the public law that deals with matters that concern citizens versus the state and there is private law that handles matters between individuals and private organizations. Most of the legislations are Acts of Parliament but there is also common law where decisions made by higher courts like the court of Appeal become binding to the lower courts. The first step will be to look for a partner with whom we shall operate the business.
There will be an agreement signed between the two of us and it will highlight the following: the particular share capital of each shareholder based on the amount of capital that each one of us will contribute. Secondly it will show the responsibilities of each shareholder in running the business. It will also show how we shall share the expenses, losses and profits that will accrue from the business. Finally it should give guidelines on the process to be followed in case the company decides to wind up. It is also important to seek the advice and input of a registered lawyer to advise us on the suitability and applicability of the agreement.
There are various legal processes that shall be required to comply with in the process of undertaking this business venture:
The company must use legally registered recruitment agencies to competitively source for employees who will discharge its various functions. According to Kheng (1988), Employment agencies are registered as per the Employment Agencies Act of 1973. The employment contracts should comply with the relevant laws like the National Minimum Wage Act 1998 which stipulates that the minimum wage should be 6.08 pounds. The employees will then be given a formally written agreement which will stipulate very clearly the terms and conditions of the employment contract. It must have details on the working hours, remuneration, holiday allowances, paternity or maternity leave, annual leave, dismissals and notices periods among others.
There should be a clear insurance policy that will cover the company’s areas of engagement with the different kinds of stakeholders like the general public who will form majority of the customers, the employees and other groups of customers like institutions. This is because the company will engage in providing good quality services and any omissions that will injure any of the stakeholders may result to heavy penalties. These penalties can be a very heavy burden to the victim and may cause irreparable harm. As Henry (1998) asserts, early liabilities can kill a business. There should also be covers for the machines and equipment operating being operated in the premises.
The terms and conditions of any contract entered into should be very clear to all the stakeholders i.e. the employer, suppliers employee. It should clearly stipulate the requisite remedies in case of breach. This will prevent the parties from seeking interventions of employment tribunals which according to Meyer (2012), last year they handled more than 200,000 claims. The company should specifically look out for implied terms of contract which are not written down.
The company should have a protectionist policy over their business names, trademarks, production processes and other intangible assets of the company. Alexander (1992) further explains that as it does this it should also be on the lookout not to infringe on the same for others. What the business will consider intellectual property should be registered with the Intellectual Property Office so that they can have the legal backing when taking action on anyone infringing on their rights. Valerie (1993) says that a business must be able to jealously guard what they have invested a lot in achieving.
Health and Safety
The required standards in regard to safety in the premises, use of work equipment, manual handling of equipment and the use of protective clothing should be set in order to avoid accidents. According to Rickly (2000), regulations in a particular workplace should be written and available to all the stakeholders’ .The health of the workers should also be enhanced through regular medical checkups so that they do not endanger the customers as they can have a very negative impact on the business.
Real Estate Engagements
The process that the company engages in when seeking to lease the premises from where it will operate should be elaborate and transparent. It should enlist the services of competent real property dealers. This will be of great importance to the company even when it grows and seeks to acquire its own premises.
The company will need to contact the Environmental Agency to be informed whether the business it seeks to engage in will require registration or exemption for environmental safety. This is because environmental concerns can be a hindrance to the operations of the business. The authority will carry an assessment in comparison with other registered businesses and advise us on what procedures we need to adopt to avoid breaking the laid procedures in this area. According to Howard (2004) a company must be alive to the fact that harming the environment will also harm the customers.
The company will come up with a good business plan that will incorporate the following main areas:
The restaurant will endeavour to offer quality services to our customers while ensuring we meet our financial goals and objectives. It will encompass the virtues of fairness, understanding and generosity among the members of staff, customers, management and all other stakeholders. We shall also give the exact location of the premises so that any prospective stakeholder who wants to find us can do that with ease.
If the company will have met its objectives within the first six months we shall open another branch within the same locality to ensure we capitalise on the growing popularity of our services and products.
Analysis of the industry
Despite the stiff competition that the industry will face, the number of people having meals outside their homes continues to grow at a higher rate. This is due to the change in people’s lifestyles, resources and also the inability to prepare their own meals as per their likes. The food business is very big in the UK as witnessed in the presence of many establishments all over the country and others are even opening branches in other countries abroad.
Future Opportunities and Trends
The restaurant business will continue growing due to a continuous rise in the number of people who prefer eating away from home. The orders from some of the companies who offer their employees prepared food will continue rising as companies seek to completely outsource these services.
Because the population is big the company is assured of a continued customer base as long as it maintains its quality in all its areas of operation. This city is also frequented by a lot of tourists. The population also incorporates all age groups and therefore there will be wide acceptability of the company’s services among the whole population.
The company will engage in fair competition with other service providers to guarantee its market share. It will endeavour to attain this through innovative and aggressive marketing strategies that will be attained through employee motivation and good customer care skills.
There are two tax regimes in the United Kingdom; one that acts as the source of revenue for the central government i.e. HR Revenue and Customs and the other which is a source of revenue to the local government. The main taxes that the company will pay are those that go straight to the central government. The only taxes that the company will pay to the local authority are the business rates which are charged on all non-domestic residences. The company will then be required to pay Corporation tax on its profits every year on the profits that it makes. It will also be expected to register with the Value Added Tax Department if it expects revenues of more than 73000 pounds per annum. Value Added Tax on all applicable purchases. The non-food items that will be bought by the company will attract a rate of 20%.Food items attract a value added tax of 5%. There are other food items that are exempted from value.
Added tax like necessary medical equipment will be paid. The company will also pay National Insurance Contributions as per the employer and employee classification. The company will also pay capital gains tax especially when it seeks to expand and start acquiring new property. The company will also pay income tax plus the employees in its engagement. These tax obligations must be met within the tax year of the UK which runs from 6th April to 5th April the proceeding year. This is because non-compliance can lead to heavy fines on the business and the employees.
As the company seeks to comply with all the laws and regulations, it must insist on the specific laws that concern the protection of their customers. According to the Food Safety Act 1990 health and environment inspectors are allowed to come and inspect the premises. After carrying out the inspection the outlet will be given a rating and the scores are displayed at the entrances .That will determine how often they will be coming for inspection. It will also have a very big impact on the customers who come to buy the products because a poor rating will make them go elsewhere and the business will suffer. Failure to have complied with the set health standards on cleanliness and food safety in the storage and handling can lead to heavy penalties and can even lead to closure of the business. It is therefore important for the company to ensure the employees are highly qualified in their respective areas so that the standards set are not compromised. The company will also comply with The Food Standards Act 1999. This legislation seeks to ensure that the right procedures are followed in the preparation and the handling of food before it reaches the consumer. Therefore those who are engaged in the food preparation process must be fully qualified.
The company must also continuously train their staff on the latest quality standards. This will make the individual staff who may commit these omissions to be individually liable in case they breach any of these procedures. The company will also comply with the Sale of Goods Act 1979. The Act seeks to protect the customer from wrong impressions that may be created in their minds by companies who may be seeking to boost their sales. If the company displays any products then they will be deemed to be in stock and available for sale. Any description that the company will give of a particular product will be assumed to be true and exact. A customer who buys a take away item and then finds the quality to be different from the display can sue the company for damages and the company will suffer a lot in its reputation. Also any samples that may be issued will be deemed to be of exact quality like the main product and fit for consumption which is the intended purpose.
The Health and Safety at Work Act 1974 should also be followed. All the workers should be safe while engaged in their various duties. They should be properly equipped with good knowledge in operating the equipment at work without posing any risk to themselves, other employees, customers, or the environment. This will also rid the company the damage claims that may result from these omissions. When these procedures and regulations are enforced the restaurant will get good ratings which will make it a viable competitor in the business. These high ratings will guarantee good business and expansion. The workers will also be rated highly and they will benefit in their career.
The government of the UK has put in good measures to ensure that the business environment is conducive to investors both local and foreign. It is therefore important for any investor to ensure he meets all the legislative requirements before starting the business. This will ensure he does not suffer from penalties imposed by the government and also his business gets a very good rating which will ensure continuity and prosperity. The investor will also be able to access the several credit facilities provided to legitimate businesses in the United Kingdom by both local and foreign banks.
Alexander, G. (1992) Intellectual Property Law, Pan Macmillan Publishers, P.22
Finner, B. (n.d “Population distribution in the UK” (Online). Available from http://www.ukmajorcities.com/ (Accessed on 10th April 2012)
Henry, R. (1998) Guide to Business Law, Penguin Books. P.63
Howard, S. (2004) Business Perspectives, Harper Collins Publishers, P.41
Kheng, L. (1988) Environmental Law Policies, Pearson Educational Publishers, P.57
Mathew, L. (2001) Business Relations, Bloomsbury Printers, P.66
Meyer, R. (2012) Industrial Relations, Russell Publishers, P.16
Rickly, L. (2000) Commercial Regulations, Egmont Press, P.71
Robert, A.( n.d) “ The stability of UK Markets” (Online). Available from http://www.ukbusiness.com/ (Accessed on 10th April 2012)
Valerie, N. (1993) Intellectual Property Protection, Elsevier Press, P.64
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