HomeBUSINESSHow to Open a Restaurant: The Ultimate Guide

How to Open a Restaurant: The Ultimate Guide

The foodservice industry is one of the fastest-growing industries in the world. In 2019 alone, the food retailing and food services industries supplied around $1.79 trillion worth of food. If you love food and want to share your love with other people, you’ve probably done some research on how to start off and have a vision of what your restaurant should look like. Since this is a very competitive industry, it is vital to know the right tips on how to open a restaurant that will stand out.

In this guide, we will go over some of the most important steps to know how to open a restaurant and help you avoid some common mistakes.

Have a Business Plan:

The first step towards opening a successful restaurant is having writing a business plan. With a successful business plan, you can explore how to open a restaurant. This is your roadmap to building a thriving business. When writing a business plan, you should think about your target audience and what you want to achieve.

The plan should include details such as:

  • The kind of restaurant you want to run
  • Your target market
  • Your competitors
  • The location of the restaurant
  • Your value proposition
  • How your customers will locate you
  • Your staffing plan
  • Marketing plan
  • The resources you need
  • How you will make money
  • How long it might take to make a profit
  • Your boundaries
  • Your endgame

When you do this right, you will have a clear picture of what you should do and how you should do it to ensure that the restaurant is a success.

Choose a Name and Business Structure:

Having a unique name can help the business stand out. If you are using a unique name for the restaurant, remember to file the “doing business as” (DBA) name with the state’s agency. This will ensure you do not lose the name to another business.

Once you have a name select the business entity type you want. Remember, your business structure will affect how you file the state and federal taxes. The type of business structure you choose will depend on the number of partners you have and your vision.

Some common structures to choose from including sole proprietorship, partnership, C-Corporation, S-Corporation, and a Limited Liability Company (LLC).

Pick a Location and Define a Niche:

There are several types of restaurants in the market, and every restaurant has its unique character and target market. Additionally, it takes skill and expertise to run some restaurants smoothly. When defining your niche, it will be ideal to know what is missing in your preferred location.

Narrow down the list to the type of restaurant missing in that location and what you can deliver. You can also look into some of the top trends in the industry. When choosing a location, consider factors such as:

  • Demographics
  • Accessibility and visibility
  • Local competition
  • Labor costs
  • Buying a restaurant space or leasing

Several experts recommend leasing, especially for start-ups. This is because leasing gives entrepreneurs more flexibility if they expand or include other changes in the business. Remember, your location can build or destroy the business.

To get the best location, you should be ready to go deeper into your pockets. Though a less popular location may be more affordable, you will have to invest a lot in your marketing strategies.

Therefore, with your vision, budget, and target market in mind, hunt for a location that has the features that will help market the business.

Design the Restaurant:

Once you have a location, you will be able to know how many people can fit in it and how best to design it. You will know the kind of pieces of furniture to buy and the quality of furniture that matches the location.

Picking restaurant furniture is very important. To ensure you get the best and a good price, you can check out furniture stores for deals and discounts. Buy from stores with the best restaurant furniture in stock. Do not underestimate the value of good furniture in a restaurant.

If possible, work with a professional interior designer. When designing, consider:

  • Ambiance and decor
  • The furniture
  • Seating capacity

When designing the kitchen layout, consider storage, meal cooking, food preparation, service, and more.

Get Licenses, Permits, and Insurance:

There are several licenses and permits that you have to get before opening the restaurant. Since laws vary from state to state, get to know your state laws and the licenses that you have to obtain.

Generally, some of the permits and licenses you should have include:

  • Foodservice licenses
  • A business license
  • Liquor license (if applicable)
  • Outdoor seating license (if applicable)
  • Health department permits
  • Restaurant insurance
  • Americans with Disabilities Act compliance

Since the FDA updates the Food Code after every four years, ensure you check the latest code and update your restaurant as necessary.

Register the Restaurant:

This is a crucial step in opening a restaurant. First, you need to get a tax identification number for your restaurant. This number will help keep track of your business for tax purposes.

Apart from federal taxes, you will also have to pay employment and income taxes for the business. This can include unemployment insurance and workers’ compensation insurance. Note that filing procedures and registration vary from state to state.

Get to know your state’s requirements and business tax information and register as per your state laws.

Create a Menu:

This is one of the creative steps to explore how to open a restaurant. If you are a food lover, this will be one of your most enjoyable decisions. The menu you have will dictate the kitchen equipment you need, the skills you need, your target customers, and more.

For example, if you are services French pastries, you will need to hire a good pastry chef. If the menu includes local dishes, you should also have a chef who understands what the locals love most. Also, bear in mind the demographics.

How to Open a Restaurant: Staff Up

Do not overlook the importance of having the right staff when starting up. It would help if you focused on finding the best team and also retaining them. Staff turnover costs business money. You want to avoid this, especially when you are just starting to run your business.

Your staff has a critical role to play in the growth of your business. If you have the right ambiance and serve the right food but are not backed by friendly and professional service, you will lose customers and maybe your reputation.

When hiring both front-end and back-end employees, get to know if they share your values and vision. If they share the same values, they are likely to be more involved and more invested, creating a happy dining environment.

Remember, your bartenders, hostess, waiters, cook, and other staff in your restaurant are the face of your business.

Set up Accounting Documents:

You will need a lot of paperwork to run a restaurant. This includes having documents to track your profits, expenses, losses, and revenue. Additionally, you will need documents to apply for licenses, financing, and file your taxes.

At a minimum, you should have a balance sheet, income statement, and a cash flow statement. Since accounting is a crucial and sensitive part of the business, it may be best to hire an accountant or bookkeeper.

The right person should be experienced, qualified, and shares your business values. If possible, hire an accountant who is familiar with your state laws to ensure you file all your taxes on time.

Choose Your Tech Wisely:

The rise in technology has changed how several businesses, including how the restaurant business operates. To have a competitive edge, you need to invest in the right technology and tools. These tools also promote efficiency and sophistication.

One of the best tools to have in your restaurant is the right Point of Sale restaurant management system (POS). This software can integrate with other systems in your restaurant for a more streamlined management process.

The right POS can help:

  • Digitize the menu and bar lists
  • Manage inventory
  • Enhance a self-ordering process and whole ordering
  • Handle payroll
  • Manage staff
  • Gather data
  • Tip reconciliation
  • Front-of-house management,

By integrating this tool with other systems in your restaurant, you will increase productivity, optimize operations, enhance customer satisfaction and increase efficiency.

Get Funding:

Opening a restaurant is quite involving. Unless you had some good money set aside, you have to figure out how to get capital and more money to operate it. Entrepreneurs finance their businesses in various ways.

However, one of the most common ways of funding a business is getting a business loan. If you need a loan, you can consider several options such as:

  • SBA loans
  • Term loans
  • Short term loans
  • Equipment Financing
  • Line of Credit

The amount of money you need will depend on your location, style or service, menu, staff, decor, and the type of restaurant you want to open.

Find Suppliers:

You are one step closer to knowing how to open a restaurant. However, before you do this, you need reliable equipment and product suppliers. Your kitchen, bar, and dining area should be fitted with the right equipment that complements the décor.

Depending on your menu, you will need special equipment to ensure you can prepare the meals. Also, the size of the equipment will depend on the size of your kitchen and layout. Whether you choose to buy or lease the equipment, ensure they are of high quality.

You will also need to find a reliable supplier for food items and disposables. These are the items that you will order regularly. Therefore, pick a supplier who can meet your restaurant’s needs.

Market the Restaurant:

If you are venturing into a new location, you have to let your target customer and customers know of your presence. Advertising your restaurant will give people basic information about it so that they can know your location and what to expect from you.

The best advertising campaign should create excitement around your brand. Some of the ways to market the restaurant include:

  • Building a website
  • Creating a Google My Business account
  • Creating a Yelp account
  • Creating social media accounts
  • Offering promotions and discounts

When building a website, ensure that it is optimized for the search engines, is attractive, and is easy to navigate. Include basic information such as your phone number, menu, address, and business hours.

It is a good idea to hire SEO experts to build the website professionally. Social media sites such as Facebook and Instagram offer great marketing channels. Such sites also encourage social shares, which will give your restaurant extra marketing.

Once you have a social media account, upload attractive pictures and videos. Additionally, remember to be very active on such sites, upload fresh content daily and respond to questions and concerns.

Sites like Yelp, OpenTable, TripAdvisor, and Google My Business make it easy for customers to locate you and post reviews about the experience they have with you. Positive reviews will increase appeal, rating, and authority.

Host a Soft Opening:

Before officially opening up your doors, you need to create a buzz around your brand and restaurant. One of the best ways of doing this is by having a soft opening. A soft opening will work as a practice run for your staff and prepare them for the real deal.

You and your staff can invite your friends and family for the soft opening. This practice run will give you the chance to iron out any issues in your service delivery.

During the soft opening, you should have a trial menu with limited foot items or options, an event such as signature drinks, and a limited Schedule.

Your neighboring businesses or homes, friends, and family who you invite to the soft opening will also work as marketers and help get the word out about your business and what it has to offer.

Consider This Guide When Opening a Restaurant:

The foodservice industry is continuing to diversify. This also means that there is space for new restaurants to join the industry and take advantage of customer interests to make some money.

If you want to know how to open a restaurant, use this guide to help you successfully execute your dream.

Check out our website for more tips like these next.

I'm Bipasha Zaman, a professional author with vast experience in the research field. Presently, I work for many sites. Also, I have a strong passion for writing creative blogs.


Please enter your comment!
Please enter your name here

Popular posts

My favorites