Checking out the local food scene and eating at a plethora of different restaurants is, without a shadow of a doubt, one of life’s ultimate pleasures.
Every day in cities across the globe, talented and entrepreneurial individuals are opening restaurants, bistros, and eateries covering an endless rainbow of cuisines and styles, and bringing new colours and flavours to their appreciative public.
It isn’t hard to see why so many people dream of running their own restaurant. Not only can a restaurant be a launchpad for an entire business empire, it’s a job which provides plenty of room for creativity and expression, especially for those who are passionate about food and great service.
What You Need to Know Before Opening a Restaurant
If you’re considering opening a restaurant in the near or far future, the chances are you’re already aware of some of the steps you’ll have to take to get it off the ground. Make no mistake, while the rewards of running a restaurant business are many, it’s a career path that comes with no shortage of challenges, too.
At Beambox, we’ve been working closely with restaurant owners nationwide, and have picked up plenty of advice regarding how to set up a food business and get things ready for that all-important opening night.
Let’s dive right in and look at the essential steps any prospective restaurant owner will have to take, long before they’ve even served their first breadbasket.
How Hard is it to Run a Restaurant?
How long’s a piece of string? The fact of the matter is, that starting any business is often an enormous challenge, jam-packed with unexpected twists and turns along the way.
Restaurants and food businesses aren’t for the faint-hearted. Not only do you need to tick all of the boxes regarding finance, location, design, staffing, and marketing in much the same way you would any other brick-and-mortar business, but you also have to maintain sky-high standards day in, day out.
After all, your restaurant’s reputation is on the line with each and every serving. What’s more, the long shifts, tight profit margins, often uncomfortable working environments, and increasing demands of the public present a mountain of extra challenges to overcome.
Get it right, and you’re onto a winner. Restaurants that blend business acumen with innovative or consistently reliable offerings, great service, and savvy price points (among a host of other positive attributes) can go on to become regional, national or even international franchises. Even if your ambitions are a little more humble, there’s plenty of success to be found in this corner of the hospitality industry.
That being said… are you going to get there without some seriously hard graft and dedication? It’s highly, highly unlikely.
Can You Open a Restaurant With Little or No Money?
The short answer: no.
Businesses, especially brick-and-mortar businesses with staff, product overheads, and all the associated costs involved with opening a restaurant require money to get anywhere close to becoming a reality.
The longer answer is, of course, a little more complicated. While the average cost for opening a restaurant sits somewhere between 100 and 500 thousand dollars, you don’t necessarily need a whole lot of start-up capital to get things underway.
There are plenty of investment groups which specialise in the hospitality and food industry. With a powerful pitch, a unique vision, and an iron-clad business plan, many would-be restaurateurs have succeeded in attracting investors - or angel investors, who will jump in with capital after being moved by a specific vision - who will provide the funds required to get the business off the ground.
The problem is that a lot of non-industry specific investors are likely to be more than a little hesitant to put their money into a new restaurant. The industry itself is considered a relatively high-risk area for investment, with limited returns and premature closures far from unusual.
If you’re looking to attract investors to provide startup funding or more, it’s always a good idea to not only have the aforementioned rock-solid business plan, but also some hard-earned evidence to back up your foodie ideas.
Recent years have seen restaurants launched off the back of food pop-ups, food trucks, market stalls and other launchpads for more permanent food businesses, as they’ve been able to provide evidence of the success of their product and ability to build hype.
Another potential route would be to look out for a local or regionally-based restaurant incubator - a sort of quasi-investment group made up of collaborating chefs, business owners and investors, who take tried-and-tested concepts and provide capital for new food businesses.
Essential Steps to Opening a New Restaurant
As we’ve already mentioned, the road to opening your restaurant can be a bumpy one, with plenty of potential pitfalls and issues that will arise along the way.
However, if your passion for entering this exciting, fast-paced, and potentially highly rewarding industry has not wavered, it’s time to start looking at the practical steps you’ll need to take in order to give your dream some wings.
It goes without saying that a lot of advice and guidance for opening a restaurant is going to be somewhat location-specific. What might work in Manhattan, for example, isn’t necessarily going to fly in rural Kansas, and vice versa. However, if you’re seriously considering opening a food business, it’s highly likely you’ve already decided - at the very least - which city you plan to base it in.
We’re going to look at some of the more universal pieces of advice and stages of the restaurant opening journey, which will most likely apply wherever in the world you choose to launch your business.
While not completely exhaustive, this list of steps and checkpoints will cover the fundamentals you need to - hopefully - get those ideas off the ground, and bolster your path towards a successful career as a restaurateur.
What Type of Restaurant Do You Want to Open?
Let’s start at the very beginning. While the lines between restaurant styles have definitely been loosened in recent decades, and food and dining trends change with the wind, there are still identifiable restaurant types to think about. Knowing what type of restaurant you want to launch should be the first checkpoint on your roadmap towards opening your business.
Roughly speaking, there are ten key types of restaurants out there, each with a specific target audience, service style, menu type, and general ambience or vibe. These are:
- Fine Dining
- Casual Dining
- Modern Casual Dining
- Fast-Casual or Bistro
- Fast Food
- Family Restaurant
- Cafe or Coffee House
- Buffet or All-You-Can-Eat
- Delivery Only
If you’re not sure which restaurant-style best suits your vision, it’s probably a good idea to note down the fundamentals of what your restaurant aims to do best. Think about the price point you’re looking to set, the target audience you want to attract, the level of formality you’re comfortable with, and the kind of location you have in mind.
Are you interested in high-end eating experiences and twelve-course tasting menus? Are you looking to present a laid-back ambience with fusion food? Are you keen to create a child-friendly vibe or quick service to delight passing trade? Answering all of these questions, and truly envisioning how your restaurant looks and feels, will help you decide with crystal clarity what sort of eatery style is right for you.
A key part of this decision-making process also comes down to service style. With restaurant businesses, the ‘product’ is the food itself, and how the customers obtain the product will help inform a massive array of decisions which feed into the rest of the business setup.
Again, while there are plenty of shades of grey involved, there are essentially five service styles to consider when starting to visualise how your restaurant will run. These are:
Waiter Service: It’s a tried and tested classic, involving customers taking their seats and the table and relying on a waiter or server to take orders and deliver the food and drinks directly.
Small Plates or Banquet: Increasingly popular and on-trend, this is essentially a variation of the waiter service, but usually involves lots of dishes being brought to a communal table - often delivered ‘when ready’ - which are then shared.
Self-Service: Customers queue at a counter, where they can order, collect, and pay for their food. Most common in fast-food restaurants and concession stands, or at eateries which form a part of a larger business e.g a store, mall, or entertainment venue.
Semi Self-Service: Customers will make their orders and payments at a counter, but the dishes are brought to the table by a waiter.
Buffet: Your patrons will join a buffet line, where they will serve themselves from a selection of pre-prepared dishes.
Again, it’s likely that you’ve already envisioned the kind of service style you want for your dream restaurant. However, pinning down these decisions right at the beginning will inform every decision that comes after, from the conceptual aspects of your business to decor, ambience, and staffing.
Think Carefully About Menus, Price Points and Profit Margins
You’ve considered the style of restaurant you want to set up, and you’ve thought long and hard about your star dishes and the concept of your cuisine. Now it’s time to get a little more specific.
Determining menu items isn’t just about coming up with a list of dishes you’d like to serve. You’ll have to think carefully about the quality of ingredients you’ll be using, how best to showcase them, and crucially, how much to charge.
Are you developing a tasting menu showing off the talents of your head chef? Are you highlighting a particular national or regional cuisine or foodie trend? Are you offering an all-day a la carte menu, or will you have a more affordable bistro-style option for weekday lunchtime diners?
All of these questions will help you decide on pricing. As a general rule, restaurants should look to make between 150 - 200% profit on their menu items, with that figure increasing when it comes to drinks. Remember, the food and drink is your product, and those profits don’t just need to cover the cost of the ingredients, but all of the rest of your overheads.
Don’t forget, you’ll also need to factor in sales tax, seasonal price changes, and most likely a number of other hidden costs, too.
Formulate a Restaurant Business Plan
All of the decisions and details we’ve looked at so far will put you in a far stronger position to formulate a business plan to give your ideas traction.
A business plan for a restaurant is much the same as one for any other industry - it’s got to include the finer details alongside the bigger picture, alongside the evidence and analyses to back up your vision with facts and figures.
It goes without saying that every business plan should be unique. However, certain pieces of information are indispensable, such as:
A market analysis, preferably undertaken by a professional
Your restaurant name, style, and overall concept
Your menu, or at least a draft
Funding requirements and existing capital
Information about location and bricks-and-mortar overheads
Marketing budget and plan
Equipment and staffing costs
A summary and elevator pitch
We know that nobody loves agonising for hours and days over business plans, but getting a rock-solid document or presentation together is nothing short of essential. As mentioned, restaurants are seen as risky businesses, so banks and investors will need to see a foolproof plan before even considering releasing capital.
Your business plan isn’t just for them, however. It’s also for you. Your restaurant business plan will become essential for a number of key decisions, and it’s likely to evolve during the planning stages, providing a key point of reference to regularly consider.
Do You Need Funding to Open Your Restaurant?
We’ve already touched upon the issue of funding for your restaurant, and the importance of investors, angel investors, and banks offering business loans when it comes to getting your ideas in motion. There is, of course, an increasingly popular ‘third’ option when it comes to securing capital: crowdfunding.
The past few years have seen an explosion of crowdfunding sites such as Kickstarter and Gofundme, which have hugely helped many restaurateurs secure their dreams through public engagement.
The most effective examples tend to come from restaurateurs or chefs who have already built up a positive foundation or community of fans, most commonly through pop-ups, food trucks and market stalls.
By offering rewards through crowdfunding sites - for example, branded merch or free menu items etc - many of these entrepreneurial would-be restaurateurs have been able to hit their fundraising targets through public donations. There have even been cases of restaurant crowdfunding efforts going viral, and far exceeding their original goals… although obviously, such cases are far from the norm.
If you don’t need external funding, then you’re either in an extremely fortunate position, or you’re pursuing a food business dream that by its very nature can be done on a relatively small budget.
Be Clued-Up On Restaurant Regulations
It’s not the most fun-filled aspect of setting up a restaurant, but it’s one that cannot be overlooked. Depending on where you live and the type of food business you want to open, your ideas - and budgets - are sure to be influenced or altered in some way or another by local or state laws, licensing regulations and associated red tape.
From alcohol licences to live music licences, hot food serving regulations, health and safety legislation, building type licences, individual city rules, and much more besides, you’re going to have to do some serious reading as part of your planning. It’s not exciting, it’s often frustrating, but it could save you a whole lot of trouble in the long run.
Find the Perfect Restaurant Location
The location you choose for your restaurant will come down to a huge number of factors, many of which we’ve already started to cover. These will include (but are far from limited to):
The vibe and ambience you want to achieve
Your target audience
Whether you want a rental property or wish to buy a location outright
Whether you’re looking for an intimate location or somewhere with passing traffic
Whether you want to be a standalone business or have a restaurant as part of a bigger business, for example, a mall, sports arena, etc.
When shopping around for possible restaurant venues, pay close attention to just how much work needs to be undertaken to get your restaurant into shape, and include it in your budget.
You may prefer to move into a building which was already a working restaurant, and therefore has a kitchen space and dining area - at the very least - already set up. Alternatively, your vision may work better if you’re starting completely from scratch, and converting a different type of venue into a restaurant for the first time.
Think About Themes, Furnishings, and Layouts
The ‘theme’ of your restaurant - that is, factors such as colour schemes, quality and type of furnishings, and other interior design decisions - will most likely be intertwined with the cuisine, type of service, and level of ambience you’re looking to achieve.
While it’s great fun to start looking at mood boards and colour swatches for a restaurant theme, it’s hugely important to consider the layout at the same time. Once you’ve found the perfect venue for your restaurant, take measurements of absolutely everything, walk around the space, and envision factors such as table size, foot traffic, and accessibility for customers and staff alike.
You’ll need to know exactly where your seating area will be, where the POS will be, whether you’ll have a bar built into your restaurant, and important features such as washrooms, cloakrooms, and emergency exit routes.
Source your Supplies
As we’ve stated, when you run a restaurant business, your profits are solely dependent on the food and drink that you sell. Once you’ve decided on a menu and have ascertained what quality of ingredients you’re going to be using, it’s of the utmost importance to seek out a wholesale supplier or suppliers who share your vision and can deliver the items you require.
There are countless options to choose from, ranging from small and independent farm-to-table suppliers to massive conglomerates working with businesses nationwide, and from highly specialised businesses to ones offering one-size-fits-all options.
What’s key is to work with a trusted, transparent, and reliable supplier; you’re going to depend on their commitment to quality, punctuality, and fairness of pricing more than you could even imagine, so be sure to do your homework and gather word-of-mouth recommendations before you sign up.
Put Together Your Restaurant Team
Great restaurants are truly collaborative efforts, and we’ve all experienced eating out at places which offer flawless service obviously driven by great communication and dedication… and we’ve all probably experienced the exact opposite, too.
As a restaurant owner, you’re going to be responsible for putting together a winning team comprising chefs, waiting for staff, cleaners, and everyone else involved in the smooth running of your business. Starting a restaurant is always going to involve seeking out hardworking, reliable individuals who understand and share your vision, and it’s far from an easy task.
It’s always easier to enter the hiring process with a very specific action plan, and a clear knowledge of the skills and attributes you’re not willing to compromise on.
Some restaurateurs work with agencies to find the best talent, some list job openings online, others rely on networks of restaurant owners or family connections. Whichever option you choose, be sure to sit down for a face to face interview with all prospective staff, and allow yourself to be picky - this is your dream on the line, and it’s never easy to put a dream in the hands of someone else.
Build Some Hype for Your Restaurant Opening
You’ve picked the location. You’ve written and trialled your menu. You’ve put together a dream team of star-quality staff members, and the paint has dried and the furniture has been built. It’s time to start gearing up for the big launch.
Ideally, you want a packed opening night, with every cover booked and buzzing energy that crackles with anticipation. Quite simply, this isn’t going to happen by itself - you’re going to need to build some hype and work on promoting your launch.
At the very least, you want to get some press releases out to local papers and foodie magazines, letting people know what to expect and when your opening should be. You’ll also have to get on social media, making specific accounts solely for your new restaurant, where you can show off your dishes and design, and invite views, likes, and community feedback.
Some restaurants may want to encourage higher volumes of punters for the first day or week with a set of price reductions. We’d advise caution on this front - while it may ensure a busy opening period, it may not result in return customers or a loyal local community.
Create Exceptional Service with Guest WiFi
Let’s face facts: having quality guest WiFi at your restaurant is going to make a world of difference for your customers, and will help give your business a selling point that simply can’t be overlooked.
Nowadays, your diners want to upload photos of your mouth-watering dishes to Instagram the minute they’re set on the table, share their thoughts about your impeccable service on their social media and review sites, and maybe catch up on some work between bites. It’s simply the way things are in the industry today, and love it or loathe it, failure to provide a top-notch WiFi service is going to put off prospective customers and leave you missing out on vital word-of-mouth marketing possibilities and more.
Here at Beambox, we specialise in providing fantastic WiFi to businesses in the hospitality industry, and helping business owners just like you gain the edge over your competition. With packages to suit restaurants and bars of all sizes, it’s never been a better moment to see what Beambox can do for you.
Open Your Restaurant and Reap the Rewards
The bottom line? Get people talking about your new restaurant venture any way you can. Make video content for YouTube and TikTok, plaster beautiful photos over Instagram, invite conversations with Facebook polls and run teaser campaigns across town and in your wider community. The effort you put in will pay off from day one, and should hopefully build the momentum you need to get through your tricky first quarter.
People are, by and large, more interested in food-based experiences and trying new dishes than ever before. Capitalise on curiosity, cover all the basics, deliver quality dishes, and ensure every customer has a great time, and you’re in for a fighting chance of lasting success.