How to Open a RestaurantLast updated on 6/27/2018
With 58% of American adults eating out at least once a week, the restaurant industry continues to thrive. While foodservice trends come and go, it’s certain that many Americans will continue to enjoy meals prepared outside of the home. Starting a restaurant takes a lot of work, but with expert planning, you can start a successful restaurant business.
How to Start a Restaurant
Opening a restaurant requires juggling many moving parts and can feel like a difficult undertaking. But the procedure is a more manageable feat when broken down. If you're curious about how to open a restaurant, we've created an 11-step guide to navigate you through the process.
1. Choose a Restaurant Concept and Brand
When starting a restaurant, it's important to have a clear concept and brand. Your restaurant concept includes the service style of your restaurant, the food you serve, and the ambiance of your restaurant. This goes hand-in-hand with your brand, which forms your restaurant’s identity, personality, and mission. Your brand is the intangible force behind your restaurant concept, and your restaurant concept is kind of like your brand in action.
Based on your brand and concept, your dining room should emanate a specific atmosphere and communicate who you are. This creates a memorable and meaningful experience for people who will want to come back. Choosing a unique and functional concept that targets a certain demographic is among the most important factors in creating your concept and brand.
Are you a brightly lit, fast-casual spot that is outfitted in modern artwork with a mobile point of sale system? Or are you an upscale Mediterranean restaurant adorned with plants and flowers on the walls? Are you a dimly lit bar with a killer whiskey list and frequent live jazz? The energy, word choices, and attentiveness of your staff will also communicate what your restaurant is about.
2. Form Your Menu Items
Before you open your restaurant, you'll want to establish some basic food items that your menu will feature. Deciding what will be on your menu is important when figuring out the equipment you need, the staff you will hire, and the crowd you hope to draw.
At this point, your menu does not need to be completely designed nor do your recipes need to be completely fleshed out, unless your whole concept singles out certain item(s), like a pizza place. However, you should have a solid idea of the fare you will serve at your eatery. Later in the process of opening your restaurant, you should engineer your menu to increase profits and continually update your menu as you gain information about which food items sell well and which do not.
3. Write a Restaurant Business Plan
Writing a thorough restaurant business plan is essential for reaching to investors and applying for restaurant loans to start your restaurant. It will also help you develop your strategy and flesh out the feasibility of your restaurant’s details. Below are the main components of a restaurant business plan.
- Executive Summary
- Company Overview and Description
- Market Analysis
- Business Offerings
- Marketing and Public Relations Strategies
- Financial Projection
4. Obtain Funding
Estimate the total startup costs you will need to get your restaurant started and the amount needed to keep your restaurant functioning on a day-to-day basis. You should then create a budget and predict the next year to know how much you will need to stay in business.
After this, assess how much money you have available to use as startup funding, and determine how much more you will need. Remember to include the costs of any licenses you need. Consider applying for restaurant loans to obtain funding to cover your restaurant’s costs.
5. Choose a Location and Lease a Commercial Space
When choosing a location for your new restaurant, the following features are among the most important:
- Visibility and accessibility. Select a spot that can be seen by those driving or walking by. You should also look for an area that gets plenty of passersby on foot or in cars. In addition, consider if there is parking and ease of access by foot or car.
- The demographics. Ensure the target market of your restaurant matches the demographics of the area.
- Labor costs and minimum wage. It’s important to ensure that the labor costs of an area don’t cut into your profits. You will also want to have an idea of what employees might expect to make based on the location.
- The competition of the area. Some nearby competition can help with marketing. But it’s wise to have enough of a distance that you can still guarantee a solid pool of customers who won’t be easily drawn to another similar place.
When it comes to choosing a space, we recommend leasing. It allows you more flexibility in the case that you decide to expand or have other businesses issues or changes when first starting out.
6. Permits and Licenses
To open a new restaurant, you'll need to obtain several federal, state, and local permits and licenses. It can be worthwhile to have legal counsel when filing for restaurant permits and licenses to make sure you complete every necessary step.
7. Find an Equipment and Food Supplier
A constant, reliable source of equipment and ingredients at reasonable prices must be established and maintained to ensure restaurant success. A wholesale restaurant supplier, like us, can help you find many of your needs in one place. We specialize in high-quality restaurant equipment and have a full time customer service team who are experts on our products.
8. Design a Restaurant Layout
When starting a restaurant, you'll want to put careful thought into how you can organize your entire layout to meet the goals set forth in your menu and theme. Your primary goal should be to create a systematic flow from front-of-house to back, from the receiving hostess all the way back to the kitchen. Once your basic layout is established, you can design and decorate your dining room.
9. Hire the Right Staff
One major step of opening a restaurant is hiring staff to carry out the operation of your restaurant every day. Consider all roles that need to be filled at your particular restaurant before hiring staff. This may include human resources management and supervisors, food and beverage purchasing, receiving and storing products, food preparation, foodservice, food cleaning and dishwashing, marketing and sales, public relations, accounting and auditing, and bar services.
For both front- and back-of-house staff, look for candidates with prior experience and a supreme ability to multitask and to work quickly and efficiently. All employees should work well with others and be able to stay calm under pressure. Front-of-house staff in particular should exude exceptional social skills.
Though the list will vary based on the unique needs of your restaurant business, there are a few fundamental positions you will likely need to fill when opening your restaurant:
- Executive chef
- General manager
- Sous chef
- Prep cooks
- Food runners and bussers
10. Advertise Your Restaurant
Advertising is critical for various reasons. First and foremost, prospective customers should be able to find basic information about your restaurant. Secondly, they should feel enthused to try out your new eatery. Below are some tips to create excitement around your restaurant:
- Use social media. Create Facebook, Twitter, and Instagram accounts to share news, photos, and tidbits about your restaurant. The photos and descriptions should communicate your brand. Consider including images of food or behind-the-scene processes to draw in potential guests. Make sure to use high-quality photos.
- Build an attractive website. Your site should be easy to navigate, and the design should represent your brand. Include basic information about your restaurant, including your address, phone number, hours, and menu.
- Create a Yelp account for your restaurant. Potential guests will easily be able to find your restaurant if it’s listed on Yelp, as it is a directory for businesses. Guests can also leave opinions after visiting. Since it is a well-known website, joining Yelp will also increase your authority, especially if you have a high rating and positive feedback.
- Put an ad in the local paper. This will help create awareness about your new restaurant. You could even try and get a featured story or mention in an article.
- Use a mobile loyalty program. You can sign your restaurant up for a mobile app loyalty program that will appeal to the growing number of consumers who use smartphones. Through this app, you can engage guests by rewarding them for continued business.
- Create an email list. When sending out creative emails that communicate your brand, it’s essential to use relevant content for each group of customers. For example, sending dine-in specials to reservation customers or sending delivery coupons to online ordering customers are both great ideas.
- Offer promotions to new guests. Give first-time guests a free drink or small dessert. Customers will remember your exceptional hospitality, and they will be more likely to recommend your restaurant and to return themselves.
- Consider hosting a grand opening and other events. This can take place after your soft opening or in place of it. You can host other events to create continued buzz around your restaurant, such as wine tastings, live music, cooking classes, or themed fixed menus.
11. Host a Soft Opening
You've heard the old adage "Practice makes perfect." The same goes for restaurant openings. Consider hosting a soft opening for a limited number of people before opening your restaurant's doors to the public. This "test run" strategy allows you to hone in on specific meal times to see where your staff could be more efficient. From private parties for friends and family to sneak peeks open to the public, there are several soft launch strategies. Here are a few popular ones:
- Offer a "beta" menu that offers half of what is on your complete menu. It reduces stress on new staff, and encourages customers to come back to see the full menu reveal.
- Don't operate all day. Consider offering just breakfast and lunch for 4 days, then dinner on the fifth.
- Host a "sneak peek" happy hour with select menu items and signature drinks.
- Hold a friends and family only opening with complimentary dishes, with the intent of inviting them to help train your staff.
- Hold a soft opening for neighboring homes and businesses. This will help you gain local fans, in hopes that they will return and suggest your restaurant to visiting friends and colleagues.
Getting your new restaurant off the ground can feel like a daunting task. However, as the restaurant industry continues to grow, and foodservice trends continue to diversify, there is always room for another extraordinary eatery. With detailed planning and successful execution of your unique ideas, your restaurant business can flourish.