What do you need to open a restaurant? A plan, for starters. From developing your restaurant concept to hiring staff, we walk you through everything you need to know to cook up a popular restaurant.
1. Decide on a restaurant type.
There are just as many different types of restaurants as there are styles of food — okay, maybe not quite as many. But there are a number of different restaurant types for you to choose from, such as:
Fast food restaurants
Fast food, or quick service restaurants, are all about speed. These joints have limited seating options since the majority of the food is designed for take out.
Fast casual restaurants
Fast casual restaurants bridge the gap between fast food and casual dining. They’re just as speedy as fast food, but there’s a bigger focus on the quality and freshness of the ingredients. They may have some seating options, but there’s no table service as many customers take their food to-go.
Casual dining restaurants
Casual dining restaurants offer full table service, with a focus on affordability. These restaurants offer a relaxed atmosphere, where you can enjoy good food and service, whether you’re wearing designer jeans or sweatpants.
Family dining restaurants
Family dining restaurants are similar to casual dining, but they cater primarily to — you guessed it — families. As such, these restaurants are more likely to offer menu items for all three meals of the day. They also may serve fewer alcoholic beverages, or none at all.
Fine dining restaurants
Fine dining restaurants strive to be the cream of the crop. These restaurants are upscale in atmosphere and gourmet in food. They offer the best service, with the highest prices.
How to open a franchise restaurant
Opening a franchise restaurant allows you to leverage the tenured marketing and name recognition of a huge restaurant business, while still getting to be your own boss and put your own twist on things. The steps for opening a franchise restaurant will vary from restaurant to restaurant, but almost all of them share the same initial step: funding. In order to apply to be a franchisee, you’ll need to provide an upfront investment and show that you have the financials to back it.
2. Develop your restaurant concept.
You probably already have an idea of how you want your restaurant to look and feel. That’s your restaurant concept. Whether you’re opening a tiki burger joint or a family-style pizza restaurant, your restaurant concept will influence almost every aspect of your restaurant. Your restaurant concept will inspire your name, menu offerings, customer service, decor, marketing, and every bit of your branding — from your logo to your uniforms.
3. Make your menu.
Once you’ve got your concept nailed down, start working on your menu. You can always work out the final details later, but sketch out a rough draft with your core entrees, appetizers, and desserts. Your menu items will help you determine what equipment you’ll need to buy, and the food suppliers you’ll need to partner with.
When dreaming up your menu, consider your ideal customers, and the food and price points they’ll be interested in. Brainstorm a few specialties (these are the items you’ll hope to see often on Instagram and Yelp).
4. Create your business plan.
We hate to tear you away from the creative elements of opening a restaurant, but it’s time for some paperwork. Your restaurant business plan will serve as your guide throughout the opening process, helping you stay on track, on budget, and on time. Here’s what to include:
- Executive summary
- Restaurant overview and description
- Restaurant concept and sample menu
- Management structure and staffing needs
- Target market and location
- Competitive analysis
- Marketing and advertising plan
- Financial projection and summary
For more help with this step, check out our 8-step guide to drafting a business plan.
5. Fund your restaurant.
When you made your business plan, you calculated your startup costs and operating costs.
You know how you plan to generate revenue, and you’ve got a good idea of how long it will take for you to break even and turn a profit. Now, you just need the cash to make it happen.
How to open a restaurant with no money
If you’re like most restaurateurs, you’ll need to explore funding options from investors, the Small Business Administration, or a short-term loan or business line of credit from your bank.
You can also get equipment financing or buy gently used equipment. Remember: you’ll need to purchase everything you need to cook and serve your food, as well as additional items to offer takeout, create ambiance, and manage your overhead (like point-of-sale and payroll software).
How much does it cost to open a small restaurant?
It depends on your restaurant type, concept, and location. Startup costs for restaurants average between $175,500 and $750,500.1
6. Find and lease a space for your restaurant.
When choosing a space for your restaurant, it’s good to consider a place with good visibility from the street, and plenty of room for parking and foot traffic. You’ll want to rent a location in an area close to your target customers, and far from your closest competitors.
Finally, consider the interior of the space. Is there room for you to construct the back-of-house and front-of-house areas you’ve envisioned?
7. Get all the necessary restaurant permits and licenses.
In order to protect the public from foodborne illnesses, restaurants are subject to a number of regulations at the federal, state, and local level. It’s a good idea to hire an attorney to help you acquire all the necessary business licenses, including liquor licenses and food handler’s permits.
You’ll also need to determine what business structure you’ll use for your business, be it a sole proprietorship, limited liability company, general partnership, S-corp, or C-corp.
When you’re ready, trademark your restaurant name and register your business with the IRS to get an Employer Identification Number (EIN) so you can pay federal, state, and local taxes. Hire an accountant to help you make sense of all the required business taxes.
8. Protect your restaurant with the right insurance.
There’s a lot of liability inherent to managing a restaurant business, from spilled trays of food to broken glass. Protect your restaurant with the business insurance essentials. These include:
- General liability insurance, which protects your business from the financial consequences of accidents that cause bodily injury, property damage, or personal injury to third parties.
- Professional liability insurance, which protects your business from costs associated with third-party claims of professional negligence.
- Business equipment protection, which provides coverage for all that expensive restaurant equipment you purchased.
- Business Owners Policy, which bundles general liability insurance together with commercial property insurance and business interruption insurance.
9. Hire your staff.
The people you hire will bring your restaurant concept to life, whether it’s the top-tier service provided by your waitstaff, or the delicious food cooked up by your chefs. Common restaurant positions you’ll want to hire for may include:
- Kitchen manager
- Front-of-house manager
- Head chef
- Sous chefs
- Prep cooks
- Line cooks
- Food runners
10. Market your restaurant.
At last, it’s time to start thinking about how to bring customers in through the doors. There are a number of marketing strategies that work well for restaurants, from social media marketing to word of mouth. You might:
- Host a soft opening for influencers and press to build excitement (and give your staff a test run)
- Offer discounts to local residents and first-time customers
- Create a profile on Yelp and Google My Business
- Accept reservations on OpenTable and Resy
- Advertise your grand opening in local newspapers
Ready, set, restaurant!
Opening a restaurant takes a lot of work, but any successful restaurateur will tell you it’s a labor of love. Follow these steps and you’ll be well on your way to a busy grand opening!
- Decide on a restaurant type.
- Develop your restaurant concept.
- Make your menu.
- Create your business plan.
- Fund your restaurant.
- Find and lease a space for your restaurant.
- Get all the necessary restaurant permits and licenses.
- Protect your restaurant with the right insurance.
- Hire your staff.
- Market your restaurant.