Guide to Starting Your Own Restaurant
Many people dream of owning their own restaurant, whether it’s a fine-dining establishment, charming eatery or bustling coffee shop. Unfortunately, most hopefuls had to shift gears as the coronavirus pandemic shuttered doors and led to industry-wide layoffs.
Although the world has since re-opened, the food industry continues to lag with labor shortages, a delayed supply chain and increasing inflation. According to a July 2022 report by the National Restaurant Association, more than 40% of restaurant operators worry the industry’s economic conditions will worsen in the next six months.
Of course, negative trends will eventually end, paving the way for aspiring restaurant owners to make their dreams a reality. In the meantime, you can plan your restaurant opening by following these nine steps.
1. Choose a Concept and Brand
Choosing your business’s concept is the fun part and a critical first step to launching your restaurant. Consider what type of restaurant you want to own, the service style and the cuisine.
Are you looking to start a fast-casual restaurant that offers build-your-own Mediterranean bowls? How about family-style Italian food or high-end French specialties? Maybe you dream of opening the next best breakfast spot.
Your brand should be more specific and help you gain recognition with the public —for example, the restaurant’s name and logo.
2. Build Your Menu
Deciding what menu items you’d like to feature should appeal to the masses, but choose wisely. Each item will determine the cooking equipment you’ll need and the skills required to make the meals.
You’ll also need to think about your restaurant’s demographics and location. College-age students are more likely to dine at a trendy cafe or build-your-own eatery than somewhere with an expensive menu. Likewise, the median income of your restaurant location should be high enough to support an upscale menu.
Serving delicious food is essential to your business’s success, but having a profitable menu is even more critical.
Write a Restaurant Business Plan
Restaurant business plans are a comprehensive overview of your intended establishment, breaking down the essential parts — financials, advertising, operations, competitor analyses and more.
A solid business plan is also important to summarize and provide details about your intended eatery to investors. Restaurants are expensive — consider inventory, rent, payroll, equipment, etc. — so acquiring adequate funding is necessary.
As a restaurant owner, you’ll want to keep operating costs low while delivering quality service to patrons. Seek funding by tapping into your savings or 401(k), crowdfunding, credit cards, obtaining a loan and using money gifts from family and friends.
3. Choose the Perfect Location
There are several factors to keep in mind when picking your restaurant location, including the following:
- Restaurant visibility and frequent foot traffic
- Easy accessibility and plenty of parking
- Your target market matches the demographics of the location
- Whether competitors are nearby
- Labor costs and costs of living for your chosen location — higher wages will attract employees
Also, consider whether you want to purchase or lease a commercial space for your business. Leasing provides greater flexibility if you intend to open another location or your restaurant plans change.
4. Obtain Permits and Licensure
Every restaurant owner must obtain the necessary permits and licensure from federal, state and local governments. An attorney can help you file the required permits before opening your restaurant.
Standard restaurant licensure requirements include a business license that ensures you can legally own and operate a business in the United States, a food service license and a liquor license if you intend to sell alcohol.
Additionally, file for your Employee Identification Number (EIN) immediately since it takes longer. Your EIN will allow you to hire staff and set up payroll in advance.
5. Purchase Equipment and Find a Supplier
All restaurants need refrigeration and cooking equipment — however, yours may require additional equipment, such as a woodfire pizza oven if that’s your specialty. Depending on square footage and kitchen needs, you might initially spend between $40,000 and $196,250 on equipment.
Finding a food supplier is also vital for stocking ingredients, cleaning supplies, to-go containers and disposables.
With the current state of the supply chain, patience is key. Whereas it used to take four to five months to set up your restaurant, it now could take about nine months.
6. Hire Staff
Recent labor shortages have posed severe challenges for restaurant owners. Between October 2021 and March 2022, there were 500,000 more hospitality openings than new hires.
Consider your restaurant’s work culture and the wages, benefits, training and incentives you’d like to offer staff. Ensuring your employees’ needs are met is a priority if you hope to retain talent in a tight market.
Positions you’ll need to hire for include general and kitchen managers, head chef and line cooks, dishwashers, bartenders, servers, hosts and bussers.
7. Advertise Your Establishment
Garner attention by creating a comprehensive marketing strategy. Your website should be attractive and easy to navigate with your restaurant’s contact details and menu in plain sight. Also, register with Yelp, Google My Business and reservation websites to get noticed.
Never underestimate the power of social media and promotional offers, as well. First-time guests will appreciate a freebie or discount, and it’s a great way to attract more customers.
It’s also worth investing in professional photography to capture featured menu items. Food photographers use expensive camera equipment with a 360° rotating center column to photograph food at every angle.
8. Have a Soft Opening
Hosting a soft opening is an excellent way to practice for your grand opening.
By inviting a limited number of people, you can offer signature items, figure out staffing needs and make preparations in a stress-free manner.
A soft opening can also attract the attention of nearby businesses and gain a few local fans early.
9. Food Service Will Always Be Essential
It’s understandable if the pandemic has you worried about starting your restaurant. However, the food service industry will always be essential to our culture and economy. With well-thought-out execution, you can open a successful eatery without issue.