If you have culinary passion, knowledge, and business skills, it makes sense to open a restaurant. But beforehand, we hope you know that many restaurants fail during their 1st year mainly because of a lack of business planning. This does not mean your food service operation has to be extra complex. Indeed, the more streamlined it is, the better your restaurant's success chances. To help you navigate through the process, we have created a step-by-step guide. Let’s get right to it!
Steps to open a restaurant
1. Define your restaurant concept
The restaurant concept gives restaurant owners a way to let customers know what to expect and to offer some structure for the business operation. Here are a few popular concepts:
- Steakhouse
- Seafood
- Pizzeria
- Sandwich shop
- Coffeehouse
- Casual dining restaurants
- Fine dining restaurant
- Restaurants with a family-friendly atmosphere
- Ethnic restaurants
- Bakery
2. Create a strong business plan
Your restaurant business plan lays out your operating foundation. Strong plans usually include these elements:
- Executive summary, including the restaurant name
- Company overview & description, including the business model
- Restaurant industry analysis, including target market
- Menu specifics, including sample menu
- Marketing plan that has proven to be successful
- Operations plan, including staffing, payroll, customer service, and point of sale (POS system)
- Financial analysis
- Exit plan
3. Apply for the business license and permits needed to start your own restaurant
While you could look into hundreds of pages published by the Food and Drug Administration (FDA), we would suggest starting by finding the food service code & regulation department in your state.
Besides, here are some of the permits required for most restaurants:
- General business license (for particular requirements, visit the website of the Small Business Administration)
- Food service license (You may also need to apply for a liquor license)
- Certificate of occupancy
These licenses aside, you might also need:
- Sign permit
- Music venue license
- Food truck permit
- Food handler’s permit
- Dumpster placement permit
Further, check out the business insurance requirements for restaurants:
- General insurance
- Property insurance
- Auto liability
- Liquor liability
- Unemployment insurance
- Workers' compensation coverage as part of the employee benefits
- Life insurance
- Fire insurance
- Food contamination
- Loss of business
4. Do your homework to select the right location for your new restaurant
People often prefer a food business with accessibility, visibly pleasing traits, and points of interest that surround it. So, significantly, search for a handful of possible locations before determining the one for your new business. Here are some factors to consider:
- The rent
- Terms of the lease
- The location’s foot traffic
- The area’s available parking
- Proximity to other businesses (Their presence may work for or against your restaurant business)
- Restrictive ordinances (e.g., limitations on the day hours that trucks are permitted to load or unload)
- The area’s economic development plans (Should you know a place will boom, it may be wise to start a restaurant there before market prices rise)
- The site’s history
- The size and interior shape aligned with your new restaurant floor plan
- Labor costs (These restaurant startup costs will vary based on the cost of living in the location)
5. Find the right restaurant workers
A successful restaurant involves teamwork, dedication, and creativity between the business owner and the workers. To find the best team possible, take these steps:
- Estimate how many employees you will need and what skills and experience your restaurant requires the staff to have.
- Identify the roles. These may include the management team, head chef, kitchen staff, front-of-house staff, bar staff, marketing and public relation (PR) professionals, and accountants.
- Create an attractive job description.
- Post the job ad in media outlets and online.
6. Design the layout and space
Two components to designing your eatery’s layout are back-of-house and front-of-house space. Consider these factors when you design them.
Dining room layout
- Seating capacity
- Dining room furniture
- Decoration and ambiance
- Cleanability (for example, carpeting is not the ideal choice for a dining room considering its absorption of spills and odors)
Kitchen layout
- Cold and dry storage
- Food preparation
- Meal cooking
- Service area
- Warewashing
7. Gather restaurant equipment before opening a restaurant
Speaking of kitchen equipment, you may notice there is no one-size-fits-all model. Each restaurant type needs different equipment. Also, your kitchen layout and size will influence some of your choices, for instance, whether to save space by using double-stack units.
But on the other hand, restaurants tend to require the following:
- Utensils
- Plates
- Cookware
- Sinks
- Tables
- Shelves
- Freezers
- Broilers
- Dishwashers
- Ovens
- Electric or gas ranges
To reduce operating costs, consider finding an online supplier of commercial restaurant equipment with reasonable prices and fast delivery. Leasing equipment is another option.
8. Work on your restaurant menu
New restaurant owners need to decide which menu items to include, the language they should use to describe their food, and whether to give any background information. Crucially, your menu is designed in a way that encourages guests to spend more. For ideas in this regard, you may read this guide.
After finalizing your menu choices, use One2’s instant contactless menu system to create a profitable menu. This helps put new restaurants on the culinary map aside from ensuring their menu reflects their brand.
9. Arrange suppliers and vendors for your new restaurant business
We recommend having two vendors or three in each category. In this way, you can compare prices and have a backup in case some problem arises with one. Besides, have about two days' worth of stock to prepare for any emergencies.
10. Decide how to take payments from customers
As you first start a restaurant, making the first sale is a great milestone and it should be a smooth experience not only that time but also every time after. To this end, use the restaurant point of sale software from One2. It helps you with:
- Serving as a cloud-based point-of-sale system
- Online ordering and fulfillment
- Your business reporting
- Your inventory management
- Menu adjustments
- Loyalty programs
- Contactless payment options
- Built-in tipping that helps improve tip flow
- Website integration
- Search engine optimization (SEO)
Check out swiftly using One2
11. Create a marketing plan
Before opening a restaurant, build a marketing plan that drives awareness, attracts diners, and creates loyalty. Here are some tips to market your new business:
- Register with sites like Google My Business, TripAdvisor, and Yelp for potential customers to find your restaurant information.
- Offer promotions to new diners
- Host a soft opening (i.e., an unofficial business opening when friends of the business – family and friends of the restaurant owner and employees, supplier and vendor representatives, and neighbors to the business – are usually invited in). This helps you define demand, review your menu, generate a buzz, handle the flaws, and make future income.
- Host a grand opening
Related questions
1. What are some good tips on how to start a successful restaurant?
- Use the best ingredients you can afford
- Make a great first impression
- Develop a strong company culture
- Reduce some startup costs by using a ghost kitchen business model
- Stay resilient
- Stay true to your brand
2. How much does it cost to open a restaurant?
From $175,500 to $750,000
3. What trends in the restaurant industry restaurant owners should watch?
- Accepting mobile wallets
- Immediate customer feedback
- Pickup and online ordering
4. How to open a restaurant with little to no money?
- Start a ghost kitchen
- Run a home-based catering business
- Get restaurant funding (e.g., grant, small business loan, alternative loan, home equity loan, private investor, crowdfunding, retirement fund rollover)
- Ask if your local restaurant association can help
5. What degree do I need to open a restaurant?
Most commonly, a bachelor's degree
6. How long does it take to open a restaurant?
From 4 to 6 months
7. Did Mr beast open a restaurant?
It is a ghost kitchen.
