Are you looking to open a restaurant? Well, this can be an exciting project. It can also be a lucrative business venture. For instance, a 2019 survey found that 56% of Americans dine at a restaurant, order take-out, or have food delivered to them at least twice a week. People love to eat out, and the restaurant industry continues to thrive despite the ups and downs of the economy.
Of course, starting a restaurant business requires a lot of hard work, diligent planning, and perseverance. It can get difficult at times. However, when you break this project down into "bite-sized" goals, then it becomes less intimidating.
Here is an 11-step guide on how to successfully open a restaurant.
- Select Your Concept
- Decide On Your Menu
- Develop A Business Plan
- Secure Funding
- Select Your Location
- Obtain All Necessary Permits And Licenses
- Find A Suitable Equipment And Food Supplier
- Design Your Establishment's Layout
- Hire Your Staff
- Market Your Restaurant
- Hold A Grand (or Soft) Opening
1. Select Your Concept
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The first step when you open a restaurant is to choose a definite concept for your restaurant. In other words, you need to ask yourself questions such as:
- What kind of food will my restaurant serve?
- What type of service style do I want to provide to customers?
- What kind of atmosphere do I want to create in my restaurant?
- Which demographics do I want to especially attract?
- What do I want my brand's "personality" to be?
You need to use your chosen concept as the "north star" for all future decisions. When you do so, you'll be able to provide a delightful, memorable experience for your patrons. For example, if you want to open an upscale Italian restaurant that caters to old-world tastes and traditional sensibilities, then you'll make very different design and staffing choices from someone who wants to start a fast-serve vegan smoothie shop.
2. Decide on Your Menu
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Now that you've nailed down your restaurant concept, it's time to think about menu items. Deciding on your menu is a key step when you open a restaurant. Your menu is the practical foundation of your business: it determines to a large extent the type of equipment you'll need, the type of service you'll offer, and the type of customers you'll attract.
In the initial stages, you don't have to plan out your menu down to the very last detail. However, you should have a basic idea of the type of food your restaurant will serve. This is important because switching out basic menu items at some point in the future could negatively impact all other aspects of the business. Imagine if an entrepreneur decided to change the menu items from bagels to pizzas after the bagel-making equipment had already been paid for and delivered!
3. Develop a Business Plan
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A business plan is a vital component to open restaurant successfully. Not only will a solid business plan help you to periodically refine your strategy and hammer out key operational details, but it will make your business an attractive prospect for any potential investors.
A well-designed business plan to open a restaurant will have the following key elements:
- Executive summary. This should be a brief, non-technical summary of your business plan specifically aimed at prospective investors. It should concisely describe what your business is, what you want, and how the investor will benefit from his involvement in the venture.
- Company analysis. This section provides some basic details on your proposed restaurant, such as its concept and menu. You may also want to include any unique qualifications you have to serve your target customers.
- Market analysis. In this portion of the business plan, you'll provide data and analysis on questions such as: What is the size of the targeted market segment? What other competitors are in the market, and how are they performing? The market analysis may be subdivided into different sections that deal with your local market, your targeted customers, and any local competition.
- Marketing plan. This section answers the question: How do you plan to market to your consumers? Messaging, brand positioning, and the advertising channels you intend to use should all be described in the marketing plan.
- Operational needs. You should detail the needed infrastructure that will enable your restaurant to successfully operate, such as rented space, furniture, tables and chairs, kitchen equipment, etc. Reaching out to specialists in each area can help you to develop a clear idea of your operational requirements. For instance, the floor planning experts at Moda Seating can guide you to a reasonable estimate of your furniture-related needs.
- Management team members. This section describes who will manage the restaurant, why they are qualified to do so, and how additional human resource needs will be met before the restaurant opens.
- Financial projection. This answers the question that every potential investor wants to know: What's in it for me?
4. Secure Funding
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With your business plan in hand, you now need to calculate the amount of money required to open your restaurant and stay in business for at least a year. If you're not independently wealthy, then you'll need to secure funds to launch your business. There are two basic ways to obtain the funds you need:
- Apply for a small business loan. You can go to a bank or small business bureau to ask for the necessary loan amount. You should prepare well for your interview. Bring along your business plan, and do detailed research on the area in which you plan to open your restaurant.
- Seek out private investors. Entrepreneurs in the restaurant industry may look for help from private investors instead of, or in addition to, small business loans.
As you seek out needed funding to open a restaurant, remember that many lenders will require you to provide some security in case your plan fails. For example, banks may require that you use your house as collateral for a loan.
5. Select Your Location
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After you've secured your funding, you'll be able to select the physical location for your restaurant. As you look for the perfect place to start, keep these factors in mind:
- You want your restaurant location to be both visible and accessible. Whether you should focus on attracting foot traffic, vehicle traffic, or both, depends on the unique demographics of the area.
- In the interests of visibility, you'll likely want to set up shop close to your competitors. However, you don't want to be too close, since potential customers may be enticed away from your restaurant.
- You want to pay your employees a fair price, but at the same time don't want their wages to cut too deeply into your profit margin. Your restaurant's location will likely feed into employee expectations as to what their hourly rate should be.
- Leasing space is generally better than buying. You may run into serious issues with the location at some point in the future, and if you do, it's good to have the relocation option in your back pocket.
6. Obtain All Necessary Permits and Licenses
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Before you open a restaurant, you are legally required to obtain certain federal, state, and local permits and licenses. Key permits and licenses include:
- Business license. This is a necessary license for any business owner/operator.
- Employer Identification Number (EIN). You must register an EIN with the Internal Revenue Service for tax purposes.
- Certificate of Occupancy. This permit proves that your building has passed inspection and is safe for occupancy.
- Food service license. The food service license provides evidence that your restaurant is following all regulations and guidelines related to food preparation, storage, and safety, and that you have been granted the license to sell food.
- Sign permit. In many areas, you need to obtain a sign permit in order to set up or modify permanent signage outside your building.
- Food handler's permit. This shows that your employees have passed a course on food safety for commercial kitchens.
- Liquor license. A liquor license allows you to legally sell alcohol in your establishment. In some areas you'll need to obtain both a liquor license and a beer and wine license if you plan to sell all three kinds of alcohol. You may need to apply for this license from your local Alcohol Beverage Control board.
Other permits and licenses that you may need to obtain, depending on the type of restaurant you want to open, include a music license, a dumpster placement permit, a valet parking permit, and a pool table permit.
7. Find a Suitable Equipment and Food Supplier
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Before your restaurant opens, you need to have all the necessary equipment on hand to make your menu items. After it opens, you need a steady supply of ingredients at affordable prices. It's important that you secure both a reputable equipment supplier and a food supplier to keep your business running smoothly.
Of course, the kitchen equipment that you'll need depends on the type of food you are going to serve (and how much food you plan to serve at one time). In addition, you'll need dining room equipment to make your guests' stay convenient and comfortable, and to promote the right kind of atmosphere.
Here are some examples of standard kitchen equipment that you may need to open a restaurant:
- Dry storage containers. These may include shelves, racks, and separate cabinets for cleaning and sanitizing supplies.
- Commercial refrigerators. You may only need small under-counter units, or you may need walk-in coolers for your specific restaurant model. The amount of storage space you'll need will determine which type of commercial refrigeration you choose. It's generally recommended to have enough space for at least one week's worth of supplies.
- Surfaces and equipment for food prep. These may include big cutting boards, knife holders, racks and storage containers, food processors, blenders, mixers, and similar machines.
- Cooking/baking equipment. Depending on your menu, you may need flat-top griddles, convection or deck ovens, broilers, microwave ovens, toasters, waffle irons, sandwich presses, vent hoods, and so forth. In addition to the big pieces of equipment, you'll also need all the smaller utensils that make cooking or baking possible, like pots, pans, baking sheets, skillets, tongs, peelers, spatulas, filet knives, and similar items.
- Dishwashing, sanitation, and safety equipment. You should buy a dishwashing machine large enough to handle the volume of dishware and utensils that you'll use throughout the day. Along with the dishwasher itself, there should be enough storage space to hold both dirty and clean dishes until they can be attended to. You also need to invest in large sinks, hand-washing stations, dispensers for your cleaning agents, spray bottles for your disinfecting and sanitizing solutions, non-skid floor mats, and fire extinguishers.
Apart from the kitchen, you may also need the following pieces of equipment for your dining room:
- Bar equipment and furniture. If you plan to have a bar in your restaurant, you may want to invest in a hand-washing station, refrigerators for beer, wine, and mixed drink ingredients, storage for glasses, and bar-specific utensils like shakers and stirring spoons. Of course, you'll also need to buy stools on which your regulars can sit and enjoy their beverages.
- Coffee and tea equipment. This may include an elaborate setup for making espresso or specialized tea drinks, or a simple self-serve container of hot coffee.
- Self-serve food and drink equipment. Many restaurants make a killing on soft drink sales, with profit margins of up to 90%. If it's suitable within the bounds of your vision, consider purchasing a self-service drink machine with all the popular options. In addition, if you plan to offer customers a buffet option you'll likely need heated displays, steam tables, and/or a refrigerated salad bar, along with takeout containers and plastic utensils like forks, spoons, knives, tongs, and straws.
- Restaurant tables and chairs. You'll need tables at which your customers can sit, either as standalone tables or as booths. You'll also need chairs, and possibly other pieces of dining room furniture like high chairs for infants, and chairs/booths for your waiting area. For some help in identifying the best way to furnish your restaurant, contact the experts at Moda Seating.
- Table settings. Table settings like dishes, coffee cups, water glasses, shot glasses, and silverware are an essential component for any dining experience.
- Sound system. Most restaurant owners prefer to play music in the background for their customers. For a small space you may only need a portable all-in-one sound system, whereas for a bigger establishment you'll likely need to link your playback device to strategically positioned speakers around the restaurant.
- Communication/sales aids. These can be as simple as a chalkboard with the day's special written on it, or as elaborate as an interactive kiosk. Of course, you should always have a menu handy for your customers: one for dining in, and one for take-out (if you offer it).
8. Design Your Establishment's Layout
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Once you've determined and/or purchased the type of equipment you'll need to start your restaurant, you must design the physical layout of your establishment. Your objective in doing so is to create a logical, systematic flow from the front of your restaurant to the back. At the same time, you want your floor plan to be consistent with your overall concept for the restaurant.
For example, many traditional restaurants set up their stand for hosts or hostesses near the front entrance, next to a designated waiting area. Beyond that is an open space that contains the main dining area. Finally, at the back of the restaurant is the kitchen.
In contrast, coffee shops and casual dining establishments often place their customer service area some distance away from the front door. This allows curious passersby to enter and explore undisturbed, until they are ready to order.
Whatever layout you think will be best for your business, it's always nice to have some assistance in the design process. You can request your own copy of Moda Seating's complimentary Floor Planning Guide as an exceptional tool for developing the perfect floor plan for your restaurant.
9. Hire Your Staff
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In the previous steps, you've been focused on building the right infrastructure for your new business. However, a company is only as good as the people that work there, and the same is true for your restaurant. Now is the time to advertise your job openings, sift through the applicants, and hire the candidates that will be the best match.
There are a number of roles that need to be filled so that your restaurant can operate smoothly each day. For example, you'll need to make sure that someone procures supplies and ingredients for the kitchen. Someone will need to take customer orders, and someone will need to prepare the food. You may want to have a host or hostess at the front door, ready to greet guests and seat them. You'll need to ensure that tables are cleaned after customers leave, and that dishes are washed and sanitized. Someone will need to handle accounting duties, and someone will need to take care of marketing. The list could go on.
The point is, you should carefully consider the different roles needed in your restaurant, and then hire to fill those roles. Some key positions may include:
- Prep cooks
- Food runners & busboys
10. Market Your Restaurant
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You are almost ready for Opening Day! However, before then you need to start marketing your restaurant. Not only do your prospective customers need to know basic information about your establishment (like where you are located, when you will open, what type of food you serve, etc.) — they also need to be excited about trying out your brand-new restaurant.
Here are some critical ways to advertise your restaurant:
- Develop a professional and attractive website. Consumers can learn a lot about a business from its website. While you may not need to pay top dollar for your site, you still should aim for a professional-looking appearance and an easy-to-navigate layout. In addition, your website needs to have all the key information that a customer would look for, such as your business hours, your address, your phone number, and your menu. In today's digital world, your website is like the "front door" to your restaurant for many prospective customers: it's the first thing they see, and will likely leave a lasting impression with them, for good or for ill.
- Generate buzz through social media. Use your social media accounts to share news about your restaurant, along with photos and images that contribute to your brand image. Try to engage with local residents; if they ask questions, do your best to respond quickly.
- Join online review sites. Create a listing with Google My Business, sign up for a Yelp account, and explore other websites that allow users to post reviews. This will enhance your credibility among your consumer base, and can be a huge driver for business if you garner a lot of positive reviews.
- Advertise through local media channels. Consider putting an ad in the local newspaper, or a press release about your soon-to-arrive "Grand Opening." Offer discounts and special promotions to new guests through the mail. Consider hosting a promotional event at a local venue, or renting a booth at an upcoming festival.
11. Hold a Grand (or Soft) Opening
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Once you've completed the 10 steps listed above, you may decide it's time for the Grand Opening. If you decide to jump right in, make sure that all of your staff members have been adequately trained for the big day. Keep the atmosphere relaxed and enjoyable. Try to make the experience a true delight for your guests, so that they'll want to come back for more.
On the other hand, you may decide to hold a "soft opening" instead. This is like a dress rehearsal for your restaurant: your staff gets to perform for a limited number of guests, and you get to identify areas for improvement and iron out some of the kinks in your workflow before opening your doors to the general public.
There are several ways to hold a soft opening, such as:
- Allowing an unlimited number of guests, but only offering a limited menu. This will make it easier on your servers and cooks as they get accustomed to the full menu selection.
- Limiting your initial hours of operation. For instance, you may only offer breakfast for the first week your restaurant is open, and then branch out to lunch on the second week.
- Hosting neighbors only. This strategy allows you to perform a "test run" on nearby customers. At the same time, you'll likely gain many local fans, which is a good starting point for any restaurant.
When you open a restaurant, it can take a lot of work. As with most projects, it will have its ups and downs. However, if you follow the 11 steps outlined above and put in the effort, you'll likely be able to enjoy a flourishing restaurant business for years to come.
About Moda Seating
Moda Seating is the pioneer of providing commercial seating online. Since 2008, Joel Strulovitch, the company’s founder, has been building upon his family’s tradition of providing quality commercial seating at affordable prices. Moda Seating has helped thousands of people achieve their dreams to open restaurants, hotels, event centers, and many other types of businesses where the patron’s experience is influenced by their physical environment.
If you’re in the process of opening a restaurant or other type of venue where the experience of your customers will be influenced by the environment you provide, then rely on Moda Seating. No other commercial furniture wholesaler has been helping merchants online longer than we have.
Feel free to download a PDF version of this guide by clicking the button below. And don’t hesitate to reach out to us for assistance. We’re happy to help!