How to Open a Restaurant

To begin, acknowledge the depressing statistics:

During their first year of operation, 17 percent of new restaurant ventures fail. This statistic excludes food truck businesses and only includes brick and mortar establishments.

New restaurants have a median lifespan of 4.5 years. Nonetheless, new restaurants open on a regular basis. That first statistic can be flipped to say that 83% of new restaurants succeed.

And, if 17% of restaurants fail and the median lifespan is 4.5 years, that means many restaurants will be open for a long time.

Before you open your doors, here’s everything you need to know.

Why You Should Open Your Own Restaurant

The following are the top five reasons to open a new restaurant:

  • You adore eating out.
  • You’re a small business owner who aspires to be a community’s cornerstone.
  • You want a business that reflects your personality and allows you to be your own boss.
  • You enjoy the daily social scene of making and meeting new people.
  • You enjoy working in a business that is different every day.

The Restaurant Industry in the United States

Restaurants were among the small businesses that were hardest hit by the pandemic.

There will be over one million restaurants in the United States by 2020. 9.9 million people were employed in these restaurants. By 2021, the number of restaurants had fallen to around 625,000, with each employing about 16 people. In 2021, the average gross sales for restaurants will be $1.2 million.

How Much Does It Cost to Start a Restaurant?

The purchase or lease of a facility is the most expensive aspect of a future restaurant. Whether you buy or lease, you can expect to pay between $250,000 and $2 million per year for the space.

Even if you buy an existing restaurant, renovations will cost between $10,000 and $1 million.

Finding the best facility for your restaurant concept is the most important part of your new business research. If you make a mistake there, it will have a negative impact on the success of your restaurant. So, how much does it cost to open a restaurant? The answer is that it will vary greatly, and the final cost will be determined by your operations.

17 Simple Steps to Open a Small Restaurant

Every business owner, including restaurant owners, takes steps to open their doors. However, there are many steps that are unique and necessary to take in order to create your dream restaurant:

1. Decide on a Niche

Select a Specialty Breakfast, lunch, or dinner. What is your preferred method of service? Do you specialize in a particular cuisine, such as Italian, Greek, or Vietnamese? Is it better to go to a family-friendly restaurant or a fine dining establishment?

Quick service restaurants vs. fast-food restaurants vs. full-service restaurants? Which of those restaurant concepts is best suited to your objectives and target market in the food service industry? With your niche identified, the next step is to consider how to come up with a restaurant name that best describes the establishment.

2. Pick a Location

Remember that whether you buy or lease, the facility is the most expensive part of your restaurant’s costs. And even if a facility is exactly what you want on the inside, it may not thrive because it is not in the right location. Granted, knowing where to start a restaurant is important, but you’ve probably also seen a restaurant in the middle of nowhere. So, while the location is important, good food will bring customers no matter where they are.

Is it, for example, possible to handle food and supply deliveries? Can prospective customers find it, and is it close enough to customers to support your expected sales volume while also hiring employees?

3. Restaurant Business Plan

Plan out every detail before opening a restaurant. You’ll need an excellent written business plan, which will help you if you apply for a loan from a financial institution.

Here are some essential components of a solid business plan:

  • A brief summary
  • Mission Proclamation
  • Overview of the company/business description
  • Market Analysis/Market Group
  • Menu Example
  • Comprehensive financial data for you and any partners
  • Marketing Strategy

4. Create a Business Entity

A limited liability company, or LLC, is the preferred business structure in the food industry. Your personal assets will be protected because the LLC will keep your business and personal assets separate.

Seek legal counsel before making a final decision.

5. Research Licenses and Permits

Here are the fundamentals. According to state and local regulations, you may require additional licenses and permits.

  • A business permit
  • Liquor permit (if required)
  • A license for foodservice
  • Permit to operate and other local health department requirements
  • Food handlers permit (for restaurant employees who prepare and serve food) (these permits are part of food safety regulations).
  • Permission is granted to erect a business sign. Size and lighting regulations vary by location.
  • Employer Identification Number (EIN)

6. Get Your Taxes in Order

To pay federal and state payroll taxes, you’ll need your EIN. You’ll also use your EIN to pay sales and restaurant tip taxes.

A new “health tax” is being implemented in many states. The health tax is levied on the sale of unhealthy food products such as soda.

7. Open a Business Bank Account

A separate account allows you to keep track of your finances more easily. A business credit card is also required.

8. Get Business Insurance

You’ll need commercial property insurance if you’re buying or owning a building. You will also require general business insurance for the restaurant, as well as its equipment and supplies.

If you intend to deliver food with the help of employees, you will need commercial auto insurance for those vehicles. If you have employees, you must provide workers’ compensation and unemployment insurance.

9. Look into Small Business Loans

The Small Business Administration is one of the best financial resources for restaurant funding. The SBA 7 (a) loan is the crown jewel of SBA loans, offering a low-interest small business loan to businesses with fewer than 40 employees. Contact an SBA cooperating lender for a bank loan for more information on SBA small business lending for restaurant loans.

10. Sign the Lease

Before you sign the lease, have it reviewed by an attorney.

11. Design Your Restaurant Space

A well-designed workflow is essential in the food preparation area.

In the dining room, you can let your personality shine through while also using the decor to attract your target customers. Make sure your restaurant design, whether large or small, complements your menu and your customers.

12. Create Your Menu

When you first start out, try to keep your menu as simple as possible. Make it a point to “cross utilize” food supplies when planning your menu. If the crab meat from today’s crab patties is not sold, it can be used for crab dip tomorrow.

13. Find a Food Supplier

Remember that food suppliers are also in the business of making money and supplying the local competition.

You can obtain ratings on available vendors from the Better Business Bureau.

14. Purchase Restaurant Equipment

Here are a few highlights: Ovens (pizza ovens), ranges, exhaust equipment, griddles/grills, deep fryers, rotisserie ovens, refrigeration and freezers, cash register/restaurant pos system, security system, tables and chairs, utensils, dishes, pots and pans Also, keep in mind that you can always purchase used commercial kitchen equipment, which will save you a lot of money.

The ability to wash and rinse dishes in water that has been heated to the required temperature is essential in all restaurants.

Disposable Catering

There are many reasons to use disposable catering suppliers. The first reason is that it can save you time and money. You won’t have to worry about washing dishes or getting rid of leftovers. Everything can be disposed of quickly and easily.

Another reason to use disposable catering suppliers is that it can help keep your food clean. If you’re using reusable plates and utensils, there’s a chance that they could harbor bacteria. But with disposables, you can be sure that your food will be safe to eat.

And finally, using disposable catering suppliers can help reduce your carbon footprint. Disposable products are often made from recycled materials, so they don’t require new resources to be created. That means less pollution and a healthier planet for everyone.

15. Start a Marketing Campaign

Don’t forget to budget for restaurant marketing as you raise funds for your new venture. Here are a few ideas to help you promote your restaurant:

When you open, please have an open house. Support the local community by sponsoring a youth team, providing food for local events, and so on. Use your website and Facebook page to promote restaurant specials and events. Holiday specials for Mother’s Day, Father’s Day, Valentine’s Day, and other holidays are available.

16. Employ Staff

The general manager is in charge of hiring and firing, purchasing, and marketing.

Assistant manager, hostess, cashier, wait staff, line cook, and head chef are also important positions. Prepare to pay more than the minimum wage in order to attract and retain employees. The number of employees required is determined by the scope of your operation.

17. Launch Your Business

Invite the local media to the ribbon-cutting ceremony for the grand opening. Provide food samples.

18. Grow Your Business

Collaboration with other businesses is one way to increase community engagement. Join forces for a special event. For Mother’s Day, for example, collaborate with a florist and a spa, with all three businesses offering a package deal.

Using message boards on the sidewalk, successful restaurants with in-town locations increase foot traffic. If your location allows it, consider adding outdoor dining.

19. Be a Successful Restaurant Owner

Dance with the one who brought you. In other words, if your Wing Night or Sushi Night is a huge success, don’t change it. Please add to it.

Always be on the lookout for trending food options, such as the popularity of the Keto Diet or vegetarian options.

Is a restaurant profitable?

The key is to sell more than you spend (food, labor, equipment, expenses, utilities). Know the specifics of your expenses so that you can keep them in line with your earnings, and you will have one of the most profitable restaurants in the area.

Can I open a restaurant with no experience?

Yes. In fact, many owners contribute their business and marketing expertise to the venture while knowing very little about it. Keep in mind that location is the most important factor. After that, only the best should be hired.

Need help with our free SEO tools? Try our free Keywords Suggestion ToolKeyword Density Checker, Keyword Position.

Learn more from business and read How to Start a Food Blog.

John Harper

#1 File Information bestselling author John Harper loves to dispel the myth that smart men & women don’t read (or write) romance, and if you watch reruns of the game show The Weakest Link you might just catch him winning the $77,000 jackpot. In 2021, Netflix will premiere Bridgerton, based on his popular series of novels about the Why Files.

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