Opening your own restaurant is an exciting business venture. Wanting to start a restaurant business and knowing how to open a restaurant are two different things, however.
If you have a passion for food, food service, or bringing people together over a meal, the restaurant business might just be for you.
Starting your own restaurant can be challenging, especially considering all the competition in the restaurant industry. Statistics show that the number of Americans dining out continues to increase, however, so there are plenty of potential customers to go around. Take the right steps to open up a restaurant to work towards building a successful restaurant business.
Pick a Food Concept or Type of Restaurant
First, you have to decide what kind of restaurant you want to open. If you don’t already have a clear idea in mind, brainstorm and decide what type of restaurant you plan to open. Having a clear concept is vital to guide your decisions every step of the way.
Your restaurant concept includes a few factors, all of which will inform restaurant branding, name, location, menu, budget, equipment – basically every other decision you will make. Consider the following:
- What type of service do you want to offer?
- Quick serve or full service?
- Fast food, mid-scale, or upscale?
- Casual or formal dining?
- What type of food will you offer?
- Who is your target demographic?
- What is your brand?
All of these questions are important to answer from the start, as they will influence the rest of your planning.
The type of food you plan to offer can affect your hours, staff, and more. If you plan to open a bakery and coffee shop, you’ll likely open early in the morning and close earlier in the evening. If you want to open a bar and restaurant, you’ll open later in the day and close late at night. You can also choose types of food by ethnicity, like Italian, Thai, Mediterranean, or other cuisines.
Target demographics can also help define your restaurant’s brand. A family style neighborhood restaurant will bring in a different crowd than a trendy bar and restaurant. Considering your target customer personas can help with making choices like menu, pricing, layout, marketing, and other aesthetic choices.
Name Your Restaurant and Lock in Branding
Once you have a concept for your restaurant, you get to pick a name! This is one of the fun parts of starting your own restaurant.
There are plenty of directions you can take when naming your restaurant. You might already have an idea in mind, or you might have to spend time brainstorming until you find the perfect name. Many restaurant names include the following:
- Your name or family name
- Restaurant location
- Food concept
- Play on words
- Restaurant theme
Consider what defines your restaurant and try to choose a name that represents what you’re going for. The most important thing is that your restaurant’s name is unique and memorable.
Once you’ve chosen a name, lock down branding for that name. Buy a website domain that matches your chosen name, as well as social profiles on Facebook, Instagram, Twitter, and so on. Try to develop a splash page for your restaurant’s website before it opens. That way, when news of your upcoming restaurant is released, the press and interested customers can find your website. This is also useful for restaurant SEO purposes.
Write a Business Plan
When opening any new business, it is absolutely vital that you write out a detailed business plan. If you don’t make a plan, you’re setting yourself up for failure. There are numerous factors to consider when opening a restaurant, so you should have a thorough plan to make it clear what you want to achieve with this new business. One of the most important parts of the business plan is writing a restaurant mission statement to clearly set your goals, values, and more.
A standard business plan should include the following:
- Executive summary
- Company description
- Market analysis and competitive analysis
- Management and organization
- Financial projections
You’ll also need a restaurant marketing plan – this can be included in your business plan, but it should be thorough. Many new restaurants fail to put enough effort into marketing, which can seriously limit their success.
Plan Your Menu
If you’re passionate about food, planning the menu might be the most exciting part of the process. Your menu will inform the equipment you’ll need to buy, food suppliers, and even staff, especially the chefs. Some restaurant owners find their executive chef at this stage in the process as well, since a main chef may want influence over the menu as well.
Early on, you don’t necessarily need every detail of every recipe figured out. Have a good idea of what style of food you plan to serve, what ingredients you’ll need, and how much you’ll spend on food inventory.
Later on, you can solidify and design your menus and confirm all recipes and processes for your kitchen. You can also tweak the menu as your restaurant evolves to maximize profitability and keep customers interested.
Set a Budget and Obtain Funding
The cost of opening a new restaurant is often expensive, so it’s important to start budgeting early. Factor in rental costs, equipment, food inventory, staff salaries, permit costs, marketing, and necessary start up capital, and the expenses can pile up. Figure out what you’ll need to get started, as well as daily upkeep costs until you can become profitable. If you aren’t good with budgeting, you may need the help of an accountant.
Once you know how much money you need, it’s time to obtain proper funding. Start with your own resources, but don’t bankrupt yourself. You can also enlist the help of investors, look for a partner, crowdfund, or apply for a loan for your new business.
Pick a Location and Lease Commercial Space
Location, location, location. The location of your restaurant could make or break its success. If you’re in a bad neighborhood or an area with little foot traffic, it may be difficult for patrons to find you, or they may not want to travel out of their way.
Pick a location that makes it easy to get customers in the door! Your restaurant should be easy to see, so an area with lots of foot or car traffic can get it more attention. Parking and accessibility should also be a consideration.
A popular shopping and dining area is a great choice, but you should also consider your competition. It may not be wise to open a steakhouse two doors down from another popular steakhouse. Weigh the pros and cons of an area with lots of other restaurants and commercial shops.
Location will also affect your finances, so don’t forget to take that into account. You have to be able to afford your rent, and certain areas like cities will also bring higher taxes and higher wages for employees. The cost of living in that area will affect both costs and profits, however, as an affluent area can expect higher prices for meals.
Also consider your target demographic when choosing your location. It wouldn’t make much sense to open a pricey, upscale restaurant in a low income neighborhood, as your neighbors would be less likely to become customers. Make sure the area’s demographics match your target demographic.
Once you’ve found a location, carefully read over the lease and be sure that you understand all of its parameters. Ensure that the space is large enough, and that it is compatible with the equipment you’ll need to install, especially in the kitchen.
Apply for Permits, Licensing, and Insurance
The food service industry faces a lot of regulations, both federal, state, and local. It’s important that you have a thorough understanding of these regulations and follow the law when it comes to health codes, permits, and licensing.
You’ll also need insurance for your new business. There are various policies you may need for yourself, your employees, and to protect against issues like liquor liability, food contamination issues, and more.
There are a lot of hoops to jump through with food service businesses, and more permits and licenses than you may have considered. It may be helpful to consult a lawyer during this part of the process. A lawyer can help ensure that you follow all compliances, maintain all health codes, register file taxes for your business correctly, advise on safety regulations, and more.
Design Your Restaurant’s Layout
Once you’ve rented a commercial space for your restaurant, you can begin to design your layout. We recommend you do this before purchasing equipment and furniture to fill the space.
You never have as much space as you think you do, and the space will fill up quickly. Take thorough measurements and draw up a blueprint of how you plan to design your restaurant’s layout. This way, you know how much space you have for kitchen equipment, and you can get an idea of your restaurant’s capacity in terms of seating.
Purchase Equipment and Find a Food Supplier
Now that you know how much space you have, you can begin purchasing equipment, furniture, and more. Shop around to find the best prices, especially for expensive kitchen equipment. You may be able to find less expensive used equipment that is still in good shape.
Furnishing your restaurant can be exciting, as your dream starts to come into reality. Again, shop around for the best prices. Match your furniture and decor to the aesthetic you imagined for your restaurant and to create an experience for your guests. Branding is important, so be sure that the look of your restaurant is in line with your brand.
You should also find reliable food suppliers. These will vary depending on what food you plan to serve, so you may need one or multiple. Research and test out different suppliers to find the best quality for the best price you can afford. Food quality is not a place to cut corners. Low quality food will hurt your reputation, prevent customers from coming back, and worst case scenario could make people sick or close your restaurant for health code violations.
Hire Restaurant Staff
You can’t run the whole restaurant on your own! When the time comes to hire staff, sit down and consider each role that you need to fill, both front and back of house.
Hire right the first time so that you don’t have frequent staff turnover. This means vetting your applicants and knowing which questions to ask in an interview to weed out any issues. Find employees with experience and the right personality for their roles. While a server should be friendly with great social skills, your chef does not have to be as outgoing.
Every restaurant is different, so the staff you will need will vary. Consider filling these roles when hiring staff:
- Executive chef or chefs
- Kitchen staff (line cooks, sous chefs, prep cooks)
- General manager
- Food runners or bussers
You may also hire other managers or assistant managers to take over certain responsibilities, like a food and beverage manager to deal with inventory.
Write clear job descriptions that detail responsibilities and expectations for each position. You should also determine pay before hiring anyone – figure out a fair wage based on cost of living in your area, skills needed, and more. Once hired, be sure to thoroughly train all employees on processes, rules, and other expectations.
Create a Marketing Plan
With all of your restaurants operations in order, it’s time to draw in a crowd for your opening. Marketing is essential to a restaurant’s success. There are plenty of other restaurants, but good marketing will help drive customers to your restaurant over others. While a good marketing plan will get customers in the door, the quality of service, food, and experience is what will earn you repeat customers.
You should have already obtained a website and social profiles for your restaurant. There are various methods to advertise your restaurant’s opening, both on and offline.
Contact local press and local restaurant review sites to let them know that there is a new restaurant opening. Use social media to share details as the opening approaches – everyone loves food photos. Invite food bloggers or influencers for a sneak peak or a special discount in exchange for promoting your restaurant.
Check out our free restaurant marketing plan for more ideas on how to bring in new customers! In an industry with such heavy competition, there is serious value in a good marketing plan. A study from Cornell University suggests that about 26% of new restaurants fail within the first year – beat the odds by constantly filling seats!
Host Your Restaurant Opening!
With all the moving parts set in place, it’s time to open your restaurant! You can choose a grand opening or go for a soft opening with a smaller crowd. The choice depends on your budgets, promotional plans, brand style, and other factor. Weigh the pros and cons of a grand vs. soft opening and choose what works best for your business.
After the excitement of your restaurant’s opening, it’s important to stay on top of day to day needs, budgets, and procedures. Keep promoting your restaurant and work to improve and you’re sure to find success.
Need help with marketing for your new restaurant? Does your current restaurant need to generate more leads, reservations, or customers? Contact Restaurant Clicks for help making your restaurant more successful, or check out our blog for more helpful information!