If you’re dreaming of running your own restaurant one day, or already have the wheels in motion to follow your dream, you’ve no doubt asked yourself “how do I start a restaurant?” There are many steps involved in taking your foodservice idea from a dream, to a reality.
Take a deep dive into our in-depth guides below to discover some of the most important aspects of starting and running a successful restaurant. (Hint: They’re listed in order of what you should tackle first when opening a restaurant.)
Restaurant Business Plan: A Step-by-Step Guide
All restaurants should start with a business plan.
Choosing the Best POS System for Restaurants
Find out which POS is best for your restaurant.
Restaurant Menu Design and Creation: The Ultimate Guide
Design the perfect menu.
Restaurant Staffing Best Practices: How to Staff a Restaurant
Assemble your dream team.
3 Steps to a Beautiful Restaurant Website Design
A beautifully designed website is essential.
6-Step Restaurant Marketing Plan: How to Promote Your Restaurant
Tips & ideas for promoting your restaurant.
Restaurant Social Media: Building an Effective Social Strategy
Learn to use social media to gain new customers.
Short on Time? No Problem.
Here is our 8-step process to take your foodservice business from dream to reality.
Gain experience in the restaurant industry
Arm yourself with the knowledge and experience of working and running a restaurant to make sure you give yourself the best chance to be successful.Read More
Define your restaurant concept
Ask yourself the 5 W’s (and How) of starting a restaurant to get a firm grasp on your concept, your customer, location, and purpose.Read More
Write your restaurant business plan
A crucial step for starting your restaurant, is writing a restaurant business plan. Creating a business plan will help you fine-tune your message and have a crystal clear plan.Read More
Tally up your start-up costs
One of the most important parts of your business plan is knowing your startup costs. Pay close attention to these numbers and budget accordingly.Read More
Register your business and apply for permits
All new restaurants must be registered, and just about everything related to your business needs a permit. Get this paperwork started ASAP as they can sometimes take awhile to get.Read More
Find a suitable location
Location is key. Find a space that is the right size, is suitable for the type of restaurant you want to run, and in a location that will attract attention.Read More
Create your menu
Get your creative juices flowing. Be sure to consider your restaurant concept and your customers carefully, and tailor your menu to them.Read More
Assemble your dream team (staff your restaurant)
Hiring the right people is crucial to the successful operations of your business. These are the people on the frontlines with your customers, cooking the food, and making the drinks. Be sure to hire people with the right attitude and applicable experience.Read More
Before you cash in your life savings to open a restaurant, you’ll first need to arm yourself with a wide range of hospitality experience. Work as many positions as you can – back-of-house, front-of-house, and administrative positions. When you gain experience in a variety of restaurant roles, you’re also gaining valuable perspectives on the special challenges every staff member faces. This understanding will make you a great manager when you open your own restaurant.
Reach out to local leaders you admire in the restaurant space and absorb any and all insight they have to offer. Read and learn from experts and successful restaurant owners.
Danny Meyer, a renowned restaurateur, wrote a bestselling book, Setting the Table, detailing his successes, failures, lessons, and experiences. Soak up information like the kind Meyer’s has to offer and fill your mind with stories of success.
Scope out and dine in busy venues to gain a customer perspective. Ask yourself:
- What do they do well?
- What could they improve on?
Use the information you gather to create a vision for how you’d like your restaurant to operate.
Ask yourself these six classic questions to get a firm grasp on your concept, customer, location, and purpose.
1. What will your concept be?
Are you a pizza shop, a fine dining restaurant, or a quick service venue? Perhaps it’s your dream to open the best date night place in town known for its small bites and craft cocktails, or maybe you envision a rustic farm-to-table eatery aimed at offering healthy, eco-friendly alternatives.
Consistency is key, so hammer out a foolproof concept that will stand the test of time.
2. Who will you cater to?
Think carefully about the market you would like to dive into, and what demographic your restaurant will appeal to. Whomever you aim to serve will become the lifeline of your business, so plan accordingly.
For example, if you are going to market yourself as a family friendly venue, think about all the features a family will need to have a great experience:
- room for strollers
- high chairs
- booster seats
- change tables in restrooms
In addition to these aspects, consider which promotions and family friendly foods you’ll have on your menu to drive traffic through the door, along with all other specifics that pertain to this demographic.
3. When will you open?
The exact date will be tentative, but it’s important to have a timeline and most of your ducks in a row well before your launch. Consider what kind of an opening you’d like to have – soft, grand, or both, and in which season you’d like to launch.
For example, if you have an outdoor patio it may make sense to open your doors in April or May so you’re prepared for the summer.
4. Where will you open?
Location is one of the most important indicators of success and longevity, so choose a high-traffic, visible place where your niche will be met with eager consumers.
Also consider how your venue will separate itself from the haystack of venues surrounding it. If you are opening up the fourth Mexican restaurant on the block, understand your competition and plan to stand out.
5. Why do you want to be a restaurant owner?
This is a deep, personal, and necessary question to ask yourself, one where true motivations are explored. Do you love healthy food and want to make it available on the go? Are you interested in creating a community around the food your grandmother cooked when you were a child? Do you love the restaurant industry and want to be your own boss?
Whatever it is, dig deep and get to the core of your passion. Allow the ‘why’ to be your guide during the hard work, determination, and time that will go into getting your restaurant off the ground.
6. How are you going to make your venue a success?
You can’t expect that merely opening the doors to your venue will cause patrons to pile in. Instead, you have to think strategically about how you will offer consumers something unique, and how you will get the word out about your restaurant.
Whether you use a PR firm, social media marketing, or have a grand opening with special guests, having a plan in place will help to drive regular traffic.
The answers to the questions in step two will help you shape your restaurant business plan – a crucial step for starting your restaurant.
We suggest taking some time to read our in-depth restaurant business plan guide to learn about everything you need for your business plan.
Tips to keep in mind when working on your business plan:
Collect Relevant Materials
Gather links, articles, quotes, and information that may benefit you as you are writing, and use them for inspiration or include them within the appropriate sections of your business plan.
Go through the business plan template the first time and make tons of notes for each section, then come back to it later and flesh out your ideas further.
Refine and Rework
If a section stumps you, make a note and move on, then revisit it later when you have more information or more clarity.
Use Graphics and Images
Visuals will clarify your message when you feel it’s necessary. Create Pinterest boards or folders of images to keep you inspired and help you get visual. Then, when you are writing your business plan, go back to your boards to pull in graphics that get your idea across better than words.
Your final business plan will include these 8 sections:
- Executive Summary: A one-page overview of everything in your business plan.
- Business Overview: Your contact information and basic profile.
- Business Description: Your restaurant in detail, from the menu to the interior design elements.
- The Marketplace: Where your business fits in the market.
- Sales & Marketing: How you will attract and keep customers.
- Business Operations: How your business will run day-to-day.
- Financial Plan: How you expect to make money and manage your finances.
- Summary: Wrap up and thank you.
Just as Rome wasn’t built in a day, your business plan will take time. It can take anywhere from weeks, to months, to years to get a solid grasp on what it is you’re creating. As time passes and you continue to work on it, you’ll fine-tune your message and have a crystal clear plan on your hands.
Tally Up Your
One question that is asked often when starting a restaurant is “how much does it cost to open a restaurant”? One of the most important parts of your business plan is knowing your startup costs. Mismanaging these numbers in the beginning can be fatal to your restaurant – and the sole reason for your restaurant’s demise.
Pay close attention to these numbers and budget accordingly.
The New York Times reported that restaurants should pay approximately 10% of revenue on rent, but other sources stipulate that a lease will cost more than five to eight percent of the restaurant’s total revenues.
Everything from the spatulas to the industrial refrigerator must be accounted for. According to a Forbes article, ovens, ranges refrigerators, fryers, freezers, and bar glass cleaners can cost anywhere between $100,000 to $300,000 and upwards. That’s one pricey kitchen!
Then there are hundreds of little items you won’t initially think of that also need to be worked into the budget: pots, pans, storage containers, dishes, cutlery, glassware, thermometers, and more. The best way to break this down is to create an extensive list of all items, then break down nice-to-haves versus must-haves. The goal here is to grow your kitchen equipment by priority as your restaurant grows.
Technology and POS
Your POS might be the most important technology decision you make. As the main means of sales tracking and communication between the customer to the server to the bar and kitchen, choosing a restaurant POS that’s cost effective, scalable, and contains all the capabilities you need is essential to the success of your operations from all angles.
An ineffective POS system will cause errors (which is not good for first customer impressions) and weigh down management as they try to get staff trained. A modern point of sale subscription will cost about $70 to $400 per month depending on your restaurant’s size, in addition to the cost of the hardware (iPads, cash drawers, stands, etc.).
Renovations and Decor
Converting a blank space into a kitchen and restaurant will require significantly more investment than working with a space already designed for a restaurant. So renovation budgets will differ greatly depending on the kind of space you go for.
As far as decorating, RestaurantEngine urges us not to forget about the cost of decor: chairs, tables, dressings, light fixtures, linens, and art deco. “Startups would do well to remember their average meal price and spend accordingly on decorating. The trick is to make dramatic statements without overspending. Search sites like Pinterest for decorating ideas on a budget.”
Food and Beverage Expenses
Many factors contribute to how much of your start up budget goes into food costs, like your food suppliers and your menu. Until you have the numbers to create forecasts, your first month will be a lot of “going with the flow.”
Some say a good way to mitigate costs is to have vendors send weekly prices, but others negate this strategy because it’s no recipe for consistency. With smaller local suppliers you’ll be able to build a relationship that lends itself to promotional pricing and savings.
In a 2014 report by Baker Tilly, the average full-service restaurant is looking at a spend between 30% and 35% of gross sales to payroll. A limited service restaurant would spend between 25% and 30% on payroll. And for any restaurant, management salaries should be 10% of sales or less.
There’s no one-size-fits-all number for insurance costs, as every city has their own smorgasbord of requirements; the final number is affected by the location, square footage, and number of employees. Often restaurants will have to put down deposits for each type of insurance, which can add up quickly due to the varied types of insurance needed. These include property insurance, general liability, general risk insurance, liquor liability, workers compensation, unemployment insurance, life insurance, fire insurance, loss of business insurance, and food contamination insurance.
Be sure to check with your lawyer and city requirements to make sure you obtain all of the insurance required.
Licences and Permits
Restaurateurs are subject to a number of permits and licenses, many of which come with their own nominal fees. For example, New York’s Food Service Establishment Permit can cost upwards of $280, whereas Toronto’s Food Safety Certification requires enrollment in a course, passing an exam, and costs about $50.
Other certificates, licenses, and permits may include the following: Food Protection Certificate, Food Service Establishment Permit, Electrical Permit, Liquor Sales and Events Permit, Gas Authorization–Restaurant Equipment, Portable Fire Extinguisher Requirements, Grease Interceptor Information, Range Hoods, Recycling and Waste Removal, Required Posters and Signs (hand washing, no smoking, recycle, etc.), and Resuscitation Equipment for Restaurants.
Again, to be absolutely sure you are compliant, check with your local city hall or lawyer.
Sales and Marketing
“Build it and they will come” works in many circumstances, but rarely for restaurants. There’s of course the odd exception, but with so much competition, it’s best to generate some buzz before you open your doors.
Your essential marketing costs will be menu development and your website, which will cost anywhere from a couple hundred dollars for a freelance professional or helpful friend to several thousand for a professional design firm. Non-essential but extraordinarily helpful costs will be sidewalk signage (there’s a huge ROI in a chalkboard!), coupons, advertorials, and social media advertising. Of course, media nights and other guerrilla marketing incentives work well, too.
Have you budgeted $25,000 for playing Adele’s “Hello” without a license? We didn’t think so. But you could be fined between $750 to $30,000 for every song played if you haven’t licensed the rights –which might have you singing “Bye, Bye, Bye” instead.
You have two options to cover any music played in your venue: pay performance rights organizations (PROs) directly, or pay for a pre-licensed solution.
Accounting, interest on borrowed funds, administrative costs, lawyers, and more. A large slush fund will be needed to handle extraneous costs, because if there’s one thing you can count on as a restaurant owner, it’s that there will always be a hand in your back pocket.
Paperwork isn’t one of the first things you think of when you think of a restaurant, but it’s a necessary evil of running a business. The following are a couple of necessary documents you’ll need to apply for, fill out, and purchase.
Register Your Business
Once you have a solid business plan, you can begin taking the necessary steps to register your business. All new restaurants must be registered with their state, and the guidelines vary depending on the type of business you’re opening: a sole proprietorship, partnership, LLC, etc.
Visit your state’s licence online centre; a quick Google search of your state name plus “business licence” should bring up a government website with a thorough breakdown of each business type, how you can register, and access to the forms you’ll need to complete.
Typically the costs run from about $100 to $300, depending on the business type.
Apply for Permits
One of the most important aspects of opening a restaurant is having the appropriate permits in place well in advance.
You’ll need a permit for just about everything related to your business: food, alcohol, construction, outdoor seating, etc. If you are planning to renovate, serve alcohol, or have outdoor seating, you should begin the application process for each permit as soon as possible, as they can take a long time to be approved.
In terms of staffing, one or more of your staff members will be required to have a Food Protection or Food Handler’s Certificate. Someone with this certification must always be on premise during operational hours.
Prior to opening you will be required to pass several inspections such as a cooking safety inspection and a health inspection. Make sure you familiarize yourself with the legal requirements of opening a restaurant, such as understanding employee rights, consumer protection, best practices, and public accommodation and discrimination laws. In addition to this, you will need to abide by your state’s health and safety regulations for both your business and your employees.
Find a Location
Finding the right space for your venue may very well be one of the most daunting and costly undertakings you will experience during this process.
Key things to remember when you begin your search:
Location Is Key
Location is a tricky thing. This is why it’s so important to first understand your target market and how your concept and restaurant will thrive in it. Choose a location that will cater to your customer base and is in a visible area, so passersby will be able to spot your venue as they walk by, especially if you’ll be depending on walk-in traffic.
It may be your dream to open a 150-seat eatery in the center of town, but be realistic. You may have to adjust your plans to match a location, or take a hard look at the space and decide if you are willing to make it work.
Make sure you have enough space to comfortably accommodate your guests while still leaving adequate room for kitchen staff to do their job properly. Trying to cram too much into a small space will leave your staff and guests feeling claustrophobic and uncomfortable.
Be Careful with Turn-Key Restaurants
Be wary of venues that are presented as fully stocked and ready to open as is. Turn-key venues often come with old POS systems, furnishings, and hidden problems, as well as the reputation of the previous place (for better or for worse).
If you think a turn-key might be your best option, do your research: find out why the previous restaurant failed, do a cost analysis to understand how much needs to be done, be cautious of any claims of instant success, and of course, re-brand.
Get to Know Your Neighbors
Speak with surrounding venues and business owners to learn more about the neighborhood’s history, BIA, and local concerns. Hear their unfiltered opinions and ask lots of questions. Then weigh your options thoughtfully before making a decision on signing a lease.
Once your concept is defined and you have your space, permits, and menu in place, it’s time to hire your staff. Hiring the right people is crucial to the success of your business.
Before you create a job posting online or elsewhere, think about your ideal employee. What traits and experience do they have? Think about the number of years of experience you require, the other jobs they’ve had, and the specific skills or certifications they should have.
Consider what is teachable and what isn’t, then write a detailed job description listing your specific requirements and desires. If certain skillsets are make or break – for example, if you expect cooks to have three plus years of experience – then specifically outline that in your posting.
Where to find great employees:
Your friends, family, and colleagues in the industry can be an amazing resource for finding the perfect employee. Since you already trust these people, you can ensure their recommendations are reliable and dependable.
Online Job Sites
With so many sites out there, you can easily reach a vast number of potential employees. But to ensure that you aren’t flooded with unqualified applicants, remember to use reputable job posting sites geared to the type of employee you are looking for.
“Help Wanted” Signs
A simple posting in your restaurant window or on your social media accounts might be just the thing to help you find ideal employees. Passersby and possibly regulars may apply or share the news that you’re looking for someone. Part of your dream team may be right in your own backyard!
Check out our restaurant staffing guide to get more insights and tips on how to staff your restaurant.
Starting a restaurant is hard work, but if done correctly, it can be immensely rewarding and profitable.
Do your research thoroughly and take your time creating, planning, and building your restaurant. If you follow the guidelines and protocols listed in this guide, then you’re already off to a great start.