Everything You Need to Know for Opening a Restaurant

So, you have a fabulous idea for a new restaurant. You have been dreaming about all the details and perfecting your recipes. But you have one big problem: you have no idea what all goes into opening a restaurant or even owning a restaurant.

That is why we have created a restaurant opening guide for this year. We will dive into all the basic steps of the restaurant business you will need to take to go from opening a restaurant to running a restaurant.

Helpful topics in this restaurant opening guide will include:

  • How to build a restaurant people will love from the bottom
  • The cost to open a restaurant
  • Creating a business plan for a restaurant
  • The basics of restaurant management

With this guide, you will learn everything you need to know for a successful restaurant opening and restaurant management this year.

Steps for Opening a Restaurant and Managing It

Below you will find some easy-to-follow steps that will help you not only in your restaurant opening, but also in restaurant management down the line.

Opening A Restaurant

Image Source: Pexels

Studies show that nearly 60% of newly opened restaurants fail within the first three years. POS Sector, a restaurant management software, says this can often be blamed on the following eight points:

  • Low start-up capital
  • Poor knowledge about competition
  • Wrong location
  • Poor restaurant promotion
  • Inconstant offer
  • Bad partnerships relations
  • Poor inventory and staff management
  • Lack of original ideas

The steps listed below for opening a restaurant will address these restaurant business problems before they even happen.

As you continue in restaurant management, it is valuable to remember these problems too. But, in the mean time, we will focus on how to build a restaurant from the ground up.

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Create a Clear Concept

The first step in opening a restaurant is to nail down your concept. This is the vision of the restaurant. Newly opened restaurants that succeed will have had a clear concept from the start.

Ask yourself the following sets of questions to get the ball rolling on casting a vision for your restaurant opening:

  • Customers: Who is your ideal customer? How old are they? How do they like to be serviced? What trends are they enjoying? Would they prefer fine elements or are they intrigued by a more rustic vibe?
  • Food: What will your food’s point of view be? Casual or fine dining? Midscale or upscale? Is it a traditional cuisine from a part of the world? A fusion? Deli, coffeehouse, or seafood restaurant? Want to source locally? (68% of people are more apt to choose a restaurant with locally produced food.)
  • Diets: Do you want to focus on any particular diet need: vegan/vegetarian, gluten free, etc.? Will your food focus on health specifically?
  • Name: What name resonates best with your vision? Is it catchy? Is it easy for potential customers to Google? Is there another business nearby with the same name?
  • Location: What location interests you? A high-end neighborhood or a hipster community? Waterfront or tucked away? Will you want to be by open parking? How much space will you need? What rent costs are manageable for newly opened restaurants? Would you like to be close to businesses?

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Write a Business Plan for a Restaurant

Those in the restaurant business will agree, a large or small restaurant business plan may be the most important step for opening a restaurant and for continued restaurant management.

Not only will you have to articulate your restaurant business concept precisely; a business plan for a restaurant will also need to discuss other imperative details of cost to open a restaurant any financers will be interested in knowing, such as:

  • Anticipated startup needs
  • Market research
  • Long-term projections
  • Budget
  • Detailed plans for getting from here to there
  • Marketing methods
  • Hiring practices and salaries

If you need help with a business plan for a restaurant, Toast offers a small restaurant business plan template that can help get you started.

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Search for Financing

After you have finished the planning work, it is time to find financing to cover the cost to open a restaurant and build a restaurant from the start. Newly-opened restaurants may have surprises along the way, so it is important to have enough money to cover them.

Here are a few ideas to get financing for running a restaurant that will cover the high cost to open a restaurant:

  • You: If you have the capital or if you are willing or capable of getting a loan, financing the restaurant setup yourself can sometimes be an easy option.
  • People you know: You may hear not to mix family with business, but you should at least be aware that it is a valid option. If you feel this would put you at odds, avoid it and move on to finding other investors.
  • Investors: These investors may have vested interest in being a part of your restaurant management, or they may only exist to provide financial resources.
  • Programs: Check to see if there are any local programs (especially those connected with the restaurant business) helping young entrepreneurs opening a restaurant or other startups.

Get All Restaurant Management Licenses and Permits

One of the most important steps of opening a restaurant is to ensure that you are always compliant of all ordinances and safety measures. Start off on the right foot by lining up all necessary restaurant business permits or licenses right away.

Restaurant Management

Image Source: Pixabay

Look more into these potential restaurant business licenses before you build a restaurant:

  • Federal Employer Number
  • Business license
  • Seller’s permit
  • Certificate of occupancy
  • Foodservice license
  • Liquor license
  • Sign permit
  • Worker’s compensation insurance
  • Health permits
  • Music license
  • Any special local permits

There may be more restaurant management licenses or permits you need for owning a restaurant (or some you do not need), so check into all local rules in your area.

Design Your Menu Offerings

Owning a restaurant is at its very core all about the food and drinks. Whether you or your team of chefs will be creating the menu, this is one of the most important steps in opening a restaurant.

Most likely, the basis of your menu was in you business plan for a restaurant. But now, you can begin fine-tuning it.

Test your menu. Have you or your head chef make a multiple-course party for your family and friends. Ask them to give you the most detailed responses as to why they do or do not like each dish.

Also, do not forget to make sure you menu itself looks good and is both easy to read and free from typing errors. GrubHub offers tips on writing great menu descriptions that will get your customers ordering your tasty dishes.

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Choose Your Interior Elements

Before finally opening a restaurant to the public, you will take some of your dreams about what your restaurant may look like and make them a reality.

If you choose to forego an interior designer, you will have to make sure all the elements go together, express your vision, and do not add excess cost to opening a restaurant.

Also consider what type of technology for running a restaurant you will be using for both ordering and point of sale systems.

Will you want basic paper/pen or will you want your servers to take orders on devices? Know that nearly 40% of people with a smartphone would like to pay their tabs over smartphone app.

Hire Employees

One of the most important steps of a restaurant opening and continuing restaurant management is choosing who to hire. It is also a top cost to open a restaurant, so it should take much consideration.

Running a restaurant will typically include the following staff members (and possibly more):

  • Head chef and other cooks
  • Manager
  • Servers
  • Bussers
  • Hosts
  • Bartenders

Figure out exactly how many team members you will need for opening a restaurant. Over 90% of restaurants employ fewer than 50 people.

To help you anticipate restaurant business human resource costs, the website Payscale offers approximate averages of some of these positions:

  • Restaurant Manager = $43,191
  • Executive Chef = $55,218
  • Sous Chef = $39,977
  • Servers = $2.15 – $10.35 hourly, $1.44 – $18.69 tips

Write up job descriptions and start the search. Remember, you also need to offer startup training to show your new staff exactly how your restaurant setup will be. Create restaurant management manuals on everything from dress code to conduct expectations.

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Stock Your Kitchen

Depending on what type of restaurant setup you have, stocking the food will cost different percentages of your budget. You should expect somewhere between 25% and 38% range of sales to go back to stock.

Part of restaurant management is deciding where to save and where to splurge. This is something you will start figuring out more easily as you gain experience in the restaurant business.

When it comes to stocking while opening a restaurant, here are a few tips:

  • Comparison shop to get the best deals
  • Do not be afraid to go simple
  • Make avoiding any waste a large priority

Market Your Restaurant Opening

Opening a restaurant does not do any good if nobody shows up. The only way to have a packed house each night is to build a restaurant marketing strategy.

Here are a few ideas you can implement for running a restaurant that markets well to the community:

  • Social media: Why not take advantage of free marketing that can reach your ideal market? Tell Facebook that you are new to the restaurant business and why they should care about your restaurant
  • Network locally: Hit the streets and let all the homes and businesses near you know that you are opening a restaurant. Think about offering discount coupons or free gift certificates to get them in the doors. You can throw a big party for well-connected members of your community.
  • Website: Owning a restaurant website that highlights the quality and vibe of your restaurant business is extremely valuable.
  • Local business groups: Joining local groups that connect the area’s business owners is a great way to get the word out and to also make connections you may need now or in the future in and out of the restaurant business.
  • Visual marketing: Create signs, fliers, banners, etc. that will catch people’s eyes as they drive by. Newly opened restaurants should show up loud and proud to their new neighborhood.

Conclusion: Opening a Restaurant with Confidence

With this information on the steps of a restaurant opening, you will be able to start moving in the direction of your own restaurant business this year.

Don’t rush through the process. Take your time to piece together your vision and create a fabulous large/small restaurant business plan. Pay attention to each of the details, so you can love the restaurant setup process.

Before you know it, you will be in restaurant management with your very own restaurant.

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