How to Open a Restaurant
With over 13,000 restaurants opening every year in the US alone, the restaurant industry continues to attract some of the most eager and energetic entrepreneurs out there [1]. We also live in a time where there is so much diversity and creativity in the culinary space than at any point in recent history. Restaurant owners all over the world are bringing new cuisines to the masses every day, increasing the complexity and diversity of offerings.
Are you thinking of opening a restaurant and bringing your particular brand of cuisine to the public? That’s great! Here’s how to open a restaurant if you’re just starting out.
Ask yourself why
Before you get started creating a business plan and researching small business funding, you want to cover the basics. Ask yourself why you want to open a restaurant.
It may surprise you to know that many people who start a new business don’t even ask themselves this question. They get caught up in the excitement of the idea and don’t interrogate where their enthusiasm comes from.
And it’s important to know where that enthusiasm comes from because it could mean the difference between a successful business, and a struggling business. If you’re getting into the restaurant business because you love food and serving it to people at a fair price, that’s a great reason to open a restaurant.
However, if you’re only after money, good press, or trying to take advantage of a trend, then you will need to find other areas of the business to love because those things are unlikely to lead to long-term satisfaction with your business.
Create a business structure
Once you’ve identified your north star for starting your business, it’s to come up with a business structure that will best suit you and your business. You will need to decide how you wish to organize your business - whether you want it to be a sole proprietorship, a partnership, LLC, or corporation.
While it is entirely up to you which business structure you choose, it is far more common for restaurants to be LLCs or corporations.
This is because, with a sole proprietorship or partnership, there is no legal distinction between the company and the owners. If a lawsuit is filed against the company, or debt is in current by the company, the owners are liable. However, in LLCs or corporations, owners are distinct legal entities from their companies and any liabilities are on the company, not on the owners.
Pick a cuisine
This is perhaps the most fun part of opening a restaurant. Once you’ve decided on the basics, you’ll want to spend time really thinking about the kind of cuisine you want to serve.
Do you have any experience in serving a particular cuisine? If you’ve spent years working in Mexican restaurants, for example, you may be well placed to open a Mexican restaurant, since you’ll likely have a good grasp of what people expect and what you can do differently. The more experience you have with a particular cuisine, the easier it will be.
Your choice of cuisine may also be influenced by your location. If you’re planning on opening that Mexican restaurant, but your neighbourhood already has several Mexican options, then you may be better off choosing a different location or choosing a different cuisine.
Find a location
Such much of your restaurant’s success will depend on your choice of location. Your restaurant venue location can determine the type of restaurant you open, the customers you’re likely to attract, the prices you can charge, and the costs you’re likely to pay.
Here are some factors to consider when choosing your business location:
- Type of restaurant: The location you choose may determine the type of restaurant you open. You may have intended to open an Italian restaurant, but the neighbourhood you chose already has too many Italian restaurants to choose from. If this is the case, you may have to rethink the type of Italian food you serve or figure out some kind of USP that will set you apart from your competitors.
- Customers: It’s vital when opening a restaurant that you take the tastes of the locals into account. You must create a business that will appeal to the people near your location since they’ll be the ones that will support your business year-round. Attracting and retaining your customers should be your top priority.
- Prices: The types of customers you attract will determine your pricing strategy. Your clientele may be lower, middle, or high income, and you need to set your prices accordingly.
- Costs: Your location will most likely determine what you’ll pay for things like rent and utilities. If you choose to set up in an affluent, up-and-coming neighbourhood, you will probably be paying more in rent. Certain locations may also have higher costs for things like electricity, gas, and water.
Create a business plan
Without a plan, you’re setting yourself up to fail. A good restaurant business plan will clearly outline everything you want to accomplish in the first few years of your business while providing enough flexibility for unforeseen events. You should also have a clearly defined restaurant mission statement that will help you guide your business decisions in the future.
Having a great business plan for your business can help you attract investment. If potential investors can see what you have in mind for the business and how you plan to get there, it will inspire confidence.
Research funding
You need to spend money to make money, and every first-time business owner needs that initial seed money to help them get their venture off the ground.
There are many ways you can secure funding for your business. You can get a small business loan from a financial institution like a bank, get a grant from your local government to help small businesses and entrepreneurs, or seek private investment from funds, friends, and family.
Register your company name
After you’ve chosen a great business name for your new restaurant, you’ll want to register it with your local government.
It’s a good idea to do this as early as possible in the process. You will need to register a company name and a trading name. Your company name will be the name you pay taxes under, and your trading name will be the name that you trade under.
Most governments have registers of company names and trading names that people can review. If you adopt a trading name that is already in use, you may become open to legal action.
Research permits and licenses
Each country, state, and province will have different rules and regulations for licensing. Your review your jurisdiction’s requirements for permits and licenses for:
- Selling alcohol
- Food handling
- Zoning permissions
- Health and safety requirements
- Live performances
Invest in the right tech
Without the right technology, a business won’t be able to function. This is particularly true in a restaurant. The right tech can mean the difference between a shambolic service and an efficient, streamlined service.
With Epos Now’s complete Restaurant EPOS, you can manage every aspect of your restaurant right from your till.
- Easily connect to major ordering and delivery apps to create new revenue streams and meet customer expectations
- Track inventory, calculate costs and profit, simplify reordering and integrate with leading accounting software
- Leverage powerful sales reports on any device to boost profitability, reduce wastage and improve employee efficiency
- Track time-at-table and manage floor plans in real-time to boost table turnover
- Eliminate costly errors with automated ordering and seamless communication
- Streamline back of house operations with a comprehensive Kitchen Display System
- Group by course and order type to speed up preparation and reduce customer wait times
- Pass orders directly to your kitchen to improve order turnaround times and accuracy
- Receive online orders through into your kitchen as soon as they come in
- Eliminate manual paper tickets and confusion to improve service
- Respect social distancing and reduce the need for staff to manually submit orders to the kitchen
- Remove errors with a single view to any last-minute order changes
