One of life’s ultimate pleasures is enjoying delicious food at a fabulous restaurant with impeccable service. But to provide that service to others is an even greater joy. If you’re one of the people dreaming of how to open a restaurant, this is for you.
Every day in cities across the globe, talented and entrepreneurial individuals open eateries of every genre and style. They bring new ideas and flavors to an appreciative public. But doing this is hard work. This job requires endless hours, passion, flawless instincts, and financial backing.
Keep reading for the key steps to starting your own restaurant, how much it costs, and additional business tips.
How To Open a Successful Restaurant: Where To Start
Don’t worry. We won’t throw you into the deep end of how to open a successful restaurant. Before discussing finding a business model, marketing plan, or picking what cuisine to serve, let’s cover the basics.
While the rewards of running a restaurant business are many, it’s a career path with no shortage of challenges. At Beambox, we’ve been working closely with restaurant owners nationwide. We’ve picked up plenty of advice regarding setting up a food business and prepping for that all-important opening night.
Let’s dive right in and look at the essential steps any prospective restaurateur must take before serving their first breadbasket.
How Hard is it to Run a Restaurant?
Here’s a little reality check. According to recent statistics, 60% of new restaurants fail within the first year. We’re not trying to scare you from taking the leap.
But in reality, starting any business is an enormous feat, jam-packed with unexpected twists and turns. Grit, determination, and luck are vital ingredients to the recipe for a restaurant’s success.
Entering the food service world isn’t just about skill or money. It’s not even all about your team or location. It’s all of those things plus consistency. That’s the secret sauce. You have to maintain sky-high standards day in and day out.
Why? Because your restaurant’s reputation is on the line with each serving. It’s not just about creating one perfect product once. It’s about recreating that magic night after night. Moreover, the long shifts, tight profit margins, and increasing demands of the public all present a mountain of extra challenges.
That’s why it’s all the more satisfying when your risk and investment pay off. When your food establishment turns out to be a winner, it’s the best feeling in the world. Restaurants that blend business acumen and great service go on to become regional, national or even international franchises. Even if your ambitions are a little more humble, plenty of success exists in this corner of the restaurant industry.
How To Open a Restaurant With No Money
Are you wondering how to open a restaurant with no money? Then prepare yourself again for another reality check. The reality is you can’t open any business with literally no money. Every endeavor, whether in the restaurant industry or something else, needs seed money.
Even if you’re using your home or putting together a tiny farmer’s market stand, there’s always an investment element. You have to buy ingredients and materials to start. If you have anyone working for you or if you’re producing any kind of marketing materials, that’s an extra expense. Ultimately, the bigger your business gets, the more you have to chip in.
Businesses, especially brick-and-mortar businesses with staff, product overheads, and all the associated costs of opening a restaurant, require money. That’s how they become a reality. Now, if your actual question was: can you start your own restaurant with little money? We’ve got more to say on the matter.
How Much Does It Cost To Open a Restaurant?
The average cost for opening a restaurant sits between $100 and $500,000 (depending on the economy and your location). Restaurant startup costs are no small matter, and it takes more money to keep a good thing going.
Ready for the good news? You don’t necessarily need a lot of start-up capital to get things underway. Plenty of investment groups specialize in the restaurant industry. Many would-be restaurateurs attract investors with a powerful pitch, a unique vision, and an iron-clad business plan.
Even better, some find angel investors who jump in with startup capital after being moved by a specific vision. They’ll provide the funds required to get the business off the ground.
So how do you find financial backing? Research and learn as much as possible about the culinary industry. Get to know the area and think critically about what would set your spot apart.
Looking for a way to start a restaurant at a lower cost and without an investor? Pivot from a traditional brick-and-mortar setup to a more affordable option. So many restaurant owners have launched successful businesses by starting small. They create pop-ups, food trucks and market stalls.
This way, they can put their food out there while gaining a loyal client base and profits. Doing this is also a great way to build proof that your product can sell. That way, if you want to attract investors, you have the evidence to back you up.
Another potential route is to look out for a local or regionally-based restaurant incubator. This quasi-investment group comprises chefs, owners and investors who take tried-and-tested concepts and provide capital for new businesses.
10 Steps To Opening a Restaurant
We’ve got some of the initial hiccups out of the way. Now it’s time to get into the steps to opening a restaurant.
A lot of advice and guidance for opening a restaurant varies depending on your location. For example, what might work in Manhattan may not fly in rural Kansas, and vice versa. However, if you’re seriously considering opening a food business, you’ve likely already decided which city you plan to be in.
We’re looking at the more universal pieces of advice for how to start a restaurant and keep it going.
1. Opening a Restaurant: Choose the Type of Restaurant
Are you interested in starting a restaurant? Let’s start at the very beginning. The very first thing to consider is how to select a theme for your restaurant. Think about whether there’s a particular type of cuisine that you know how to cook or that you love. Or, if there’s a style of restaurant, you have a unique spin on it.
On top of that, it’s a good idea to look at local food and dining trends. That way, you can see what does well near you. Investigate the most popular types of restaurants in the US and see if one aligns with your interests. Knowing the restaurant type you want to launch should be the first checkpoint on your roadmap toward opening your business.
Roughly speaking, there are ten main restaurant types. Each has a specific target audience, dining experience, menu, and general vibe. These are:
- Fine dining restaurant or full-service restaurant
- Casual dining
- Modern casual dining
- Fast-casual or bistro
- Fast Food restaurants or quick service restaurants
- Family restaurant
- Cafe or coffee house
- Pop-up or food truck
- Buffet or all-you-can-eat
- Delivery only
If you’re unsure which restaurant concept best suits your vision, decide what your restaurant aims to do best. Are you interested in high-end eating experiences and twelve-course tasting menus? Are you looking to present a laid-back ambiance with fusion food? Are you keen to create a child-friendly vibe? Answer these questions, and you’ll have a clearer path forward.
2. Picking a Service Style
Next, you must also decide on the food service style you want to use. Again, you can mix and match serving formats. But generally speaking, there are five main styles of service to consider:
Waiter Service: It’s a tried and tested classic. Customers take their seats at the table, and a waitperson or server takes orders and delivers the food and drinks.
Small Plates or Banquet: Increasingly popular and on-trend, this is a variation of the waiter service. But usually, it involves lots of dishes brought to a communal table—often delivered ‘when ready’—then shared.
Self-Service: Customers queue at a counter, where they can order, collect, and pay for their food. This is most common in fast-food restaurants and concession stands. You’ll also see it at eateries that are part of a larger business. (Think a store, mall or entertainment venue.)
Semi-Self-Service: Customers will make their orders and payments at a counter, but a waiter brings the dishes to the table.
Buffet: Your patrons will join a buffet line, serving themselves from pre-prepared dishes.
On top of that, you should also think critically about your customer service policies. Deciding these sorts of things may seem trivial now. But they’re all a part of the process. The clearer your vision, the better your odds at success.
3. Starting a Restaurant: Think Carefully About Menus, Price Points and Profit Margins
You’ve considered the style of restaurant you want to set up. You’ve thought long and hard about your star dishes and cuisine concepts. Ready to get more specific?
Determining menu items isn’t just about creating a list of dishes you’d like to serve. You’ll have to think carefully about the quality of ingredients you’ll be using and how best to showcase them. More importantly, you have to figure out how to set prices for bars and restaurant drinks and food.
Are you developing a sample 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 guide you through menu pricing. Generally, restaurants should profit between 150 - 200% on their menu items. That figure increases for beverages. Remember, the food and drink are your product. Those profits don’t just need to cover the food costs and operating costs. They also have to account for all of your overhead restaurant costs and labor costs.
Don’t forget. You’ll also need to factor in sales tax, seasonal price changes, and other hidden costs.
4. How To Start a Restaurant: Formulate a Business Plan
The last three points we mentioned about how to start a restaurant probably crossed your mind before. Or, at the very least, they made sense as something you’d have to think about for the food industry. But here’s what makes or breaks a restaurant that few people think about beforehand. That’s right; we’re talking about formulating a business plan to give your ideas traction.
A solid business plan for a restaurant is much the same as for any other industry. It should contain the finer details alongside the bigger picture. On top of that, it needs 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 concept, name and style.
- Your menu, or at least a draft.
- Funding requirements and existing capital Information about location and bricks-and-mortar overheads.
- Marketing budget and plan.
- A general timeline for breaking ground, launching, and maintenance.
- Kitchen Equipment and staffing costs.
- A summary and elevator pitch.
- Contingency plans, aka, a plan b, c, and d.
These are all important questions for business plans no matter your industry. Nobody loves agonizing over business plans, but getting a rock-solid document or presentation together is essential. As mentioned, restaurants are risky businesses, especially in the eyes of banks and investors. They need to see a foolproof plan before considering releasing capital.
Your business plan isn’t just for them, of course. Above all, it’s also for you. Your restaurant business plan exists to guide you through the ups and downs. That doesn’t mean that it’ll stay the same. If anything, a great restaurant plan should adapt and adjust to changing circumstances. But having one serves as your North star.
5. Securing Funding for Your Restaurant
We’ve already touched on some of the funding issues for starting a restaurant when talking about the business planning process. Like the importance of investors, angel investors, and banks offering business loans. There is, of course, an increasingly popular ‘third’ option for securing capital: crowdfunding.
The past few years saw an explosion of crowdfunding sites such as Kickstarter and Gofundme. These resources put the power of lifting entrepreneurs into the hands of the people. They’ve helped many restaurateurs secure their goals through public engagement.
The most practical examples come from restaurateurs or chefs who built up a positive foundation or community of fans. They usually do this through pop-ups, food trucks and market stalls.
Not sure how to drum up online support? Try offering rewards on your crowdfunding site. For example, branded merch or free menu items help many would-be entrepreneurial restaurateurs reach their fundraising targets through public donations.
Additionally, your fundraiser page might go viral if you have enough charisma, luck, and interest in your idea. Sharing your information all over the net is a surefire way to exceed your original goals. Of course, you can’t depend on becoming an internet sensation since it’s far from the norm.
What if you already have the money to get your business off the ground? Then congratulations! You can skip this step. Just make sure you have a firm grasp on your finances, and a nest egg tucked away for rainy days.
6. How To Open up a Restaurant: Clue-up on Restaurant Regulations
Regulations and rules aren’t the most fun aspect of opening a restaurant. But they’re an important part of the puzzle. Local or state laws, licensing regulations and other types of associated red tape all influence how your business takes shape. Here are a few examples of regulations to keep in mind:
- Liquor license
- Business license
- Restaurant licenses
- Blue laws
- Live music licenses and noise ordinances
- Hot food serving regulations
- Health and safety legislation
- Food safety regulations (including planning for health department visits)
- Building codes and licenses
- Individual city, precinct, state, and county rules
You don’t want to pour love, money, and time into a project only for someone to shut you down. Be sure to read up on all the rules in your area. If you’re unsure where to find the information, consult the internet, another local business owner, and a lawyer.
7. Find the Perfect Restaurant Location
Let’s get back to the exciting, creative parts of this process. In our opinion, finding the perfect location for starting your restaurant is thrilling. Looking at actual, physical locations makes your idea feel real. You can picture the kitchen, the decor and the conversations customers will have at tables.
The location you choose for your restaurant comes down to many factors, many of which we’ve already started to cover. These will include (but are far from limited to):
- The vibe and ambiance you want to achieve.
- Your budget.
- Your target market and audience.
- Whether you want a rental property or wish to buy a location outright.
- Whether you’re looking for an intimate area or somewhere with passing traffic
- If you want to be a standalone or part of a bigger business, i.e., a mall, sports arena, etc.
When shopping for restaurant venues, pay close attention to how much work it’ll take to renovate. You don’t want to be swept up by a beautiful but impractical money pit. Nor do you want to blow your budget on an overly-ritzy location that you could do without.
A smart, safe strategy for starting a restaurant is to move into a building that previously housed a restaurant. That way, you already have the bones of what you need, like a kitchen space and dining area. Depending on the scenario, it might come with supplies or tools from the previous occupant.
Alternatively, your vision may work better if you start from scratch and convert a venue for the first time. Again, it all depends on your goals and your means.
8. Think About Decore, Furnishings and Layouts
The ‘details’ of your restaurant tie into the overall theme of your establishment. So it’s vital to figure out your cuisine, service type, and ambiance before you dig into these finer points. However, once you’ve checked those big tasks off your list, start thinking about smaller factors. Such as color schemes, quality and type of furnishings, and other interior design decisions.
An intelligent way to organize your thoughts on this score is with a vision board. If you like tangible ways of planning, you can make a physical board with cutouts from magazines and paint chips.
But if you’re more of a digital doer, fire up the old Pinterest board. The advantage of using a site like Pinterest is adding product links to one place. That way, when it’s time to click “purchase” on the perfect item for your business, it’s just a click away.
While it’s fun to make mood boards and color swatches for a restaurant theme, it’s essential to consider the layout. Once you’ve found the perfect venue for your restaurant, take measurements of everything. Then, walk around the space, and envision factors such as table size, foot traffic, and accessibility for customers and staff.
You’ll need to know exactly where your seating area will be in the dining room. You have to envision where to plug in the restaurant POS system and whether you’ll have a bar built in. Even more importantly, you must take into account essential features such as bathrooms, ADA access and emergency exit routes.
9. Source Your Supplies
We’ve said it once, and we’ll say it again. When you run a restaurant business, your profits depend solely on the food and drink you sell. Once you’ve decided on a menu and what quality of ingredients you’re using, seek out a wholesale supplier. You want someone who shares your vision and can deliver your desired items.
There are countless options, ranging from small and independent farm-to-table suppliers to massive corporations working nationwide. Whether you want a highly specialized service or don’t mind a one-size-fits-all approach, you’re sure to find your perfect fit.
What’s key is to work with a trusted, transparent, and reliable supplier. You will depend on their commitment to quality, punctuality, and fair pricing. Be sure to do your homework and gather word-of-mouth recommendations before you sign up.
10. Put Together Your Dream Team
The task of how to open a restaurant isn’t a solo endeavor. Great restaurants are truly collaborative efforts. We’ve all experienced eating out at places that offer flawless service. Excellent services come from excellent communication and dedication. We’ve all probably experienced the exact opposite, too.
As a restaurant owner, you’re responsible for assembling a winning team of servers, runners, cleaners, cooks, baristas or bartenders, etc. You need a stellar back-of-house and front-of-house team. Starting a restaurant always involves seeking hardworking, reliable individuals who understand and share your vision, and it’s far from easy.
And, of course, every restaurateur needs to have a keen eye when hiring a chef. After all, what’s a restaurant without a chef? Pick the right one, and you might even learn how to win a Michelin star.
Enter the hiring process with a concrete action plan and knowledge of the skills and attributes you won’t compromise.
Some restaurateurs work with agencies to find the best talent. Some list job openings online, and others rely on networks of restaurant owners or family connections. Whichever option you choose, sit down for a face-to-face interview with all prospective staff, and allow yourself to be picky. In the end, this is your name on the line. You want to have total trust in the people who join you on this wild ride.
How To Open a Small Restaurant
While going through these steps on how to start a restaurant, were you thinking it all sounds a bit…big? Perhaps you envisioned opening something smaller, like a diner or gastropub. Maybe you wanted a quick grab-n-go lunch spot.
So do the rules of how to open a small restaurant differ from any other food establishment? No, not really. Small business owners opening a new restaurant require all the same skills.
The only thing that’s going to shift is your scale and budget. For example, you might qualify for a small business loan. But you’ll still need all the other elements like a restaurant business plan, staff, theme, etc. However, to give yourself a leg-up, look into small business administration courses or networking with other small businesses.
How To Open a Restaurant: Building Hype for Your Opening Day
You’ve picked the location. You’ve written and trialed your restaurant menu. You’ve assembled a dream team of star-quality staff members. The paint’s dried, and the furniture’s ready to go. You’re no longer just wondering about opening a restaurant someday; it’s happening. It’s time to start gearing up for the big launch.
Ideally, you want a packed opening night, with every table booked and buzzing energy crackling with anticipation. Quite simply, this isn’t going to happen by itself. You’ll need to build some hype and work on promoting your launch.
Firstly, decide what kind of opening you want. Do you want a soft opening or a grand opening? Then, come up with a marketing plan. Research restaurant marketing ideas and trends or trending cafe marketing tips to start.
Consider the role you want digital and social media marketing to play in advertising your business. Brainstorm ideas for social media posts for your restaurant and look into building a website or Google Business account. Once you’re further along, you can get into the weeds of how to market your restaurant. Like thinking about things such as customer segmentation.
Then, think about local marketing. Search your contacts and put out feelers so you can put together a press release for magazines and foodie bloggers. Make friends with other community members and restaurant owners who can talk up your opening day.
It’s also not a bad idea to put a banner on your storefront announcing the big day. Add a poster with times and events to your door for even better engagement. Once that’s all done, take a deep breath and enjoy the big day with friends and family.
Some restaurants may encourage higher volumes of customers for the first day or week with 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 Restaurant Service With Guest WiFi
Let’s face facts: having quality free guest WiFi at your restaurant will make a world of difference. It’ll comfort your customers and give your business a small but irresistible selling point.
Nowadays, diners want to upload photos of their mouth-watering dishes to Instagram the minute they’re set on the table. They’re used to sharing their thoughts about your outstanding service on their social media and review sites. And, of course, some people catch up on some work between bites. If you’re thinking of how to open a restaurant, you don’t want to miss out on all that free advertising.
At Beambox, we specialize in providing great WiFi to hospitality businesses and helping owners gain an edge over their competition. Ready to learn more? Start your Beambox free trial to begin growing your business today.