11 Steps on How to Open a Restaurant

3) How do you raise capital to start a restaurant?

Opening a restaurant relies on sound financial planning. In the early planning stages, new owners must estimate operational costs and determine how to acquire funding. Calculating an economic analysis is helpful before the restaurant opens and figuring out the break-even point. After crunching the numbers, apply for funding.

For most restaurants, financing stems from these sources.

-Loans: small business loans are available through credit unions and banks. Private lenders can also offer funds, but pay attention to their repayment terms.

-Savings: Some entrepreneurs decide to pay for all expenses out of pocket. However, this is a risky move, especially in the restaurant industry.

-Partnering Up: adding another owner or two can quickly solve financing problems if the restaurant is open to it. Usually, the owners share the costs of the business based on their respective company percentages.

-Grants: small business grants are available through various local and national organizations, so some research is worth the effort here. Sometimes, a business can find funding through their city or even state.

4) Procure Restaurant Licenses and Permits

New restaurant owners will quickly learn that making sure that licenses and permits are in order before opening is paramount. Some of these will depend on the county or state, so check in with officials well before the opening date. Standard business licenses, food handler’s permits, and liquor licenses will be necessary, and forgetting even one permit can shut down the restaurant, so be careful. Also, everyone involved with the new place should be aware of current food safety regulations. It may help to create a list of standards for everyone to go over.

5) Choose the Correct Location

Sometimes, restaurant popularity all comes down to its location. When selecting a commercial space for the new establishment, consider overall visibility and the amount of foot traffic. Also, be aware of the neighboring restaurants, schools, offices, and other places that might contribute to or take away from the business.

It also makes sense to match up the restaurant’s floor plan with the size and shape of the proposed space to see if it is a fit.

6) Register the Restaurant

Every business must register with the Internal Revenue Service (IRS). In turn, the business will receive its Employer Identification Number (EIN) and be able to file taxes when it is time.

Along with registering the restaurant with the IRS, the new owner should trademark the restaurant’s name. Otherwise, other restaurants will be able to steal the name without penalty.

7) Hire Employees

Before beginning the interview and hiring process, decide how much staff is needed for the restaurant to run effectively. Then, be sure to hire managers and additional employees who are passionate, hardworking, and enthusiastic. Managers should have service industry experience, and other staff members (waitstaff, bartenders) should be excited to start.

Now is the time to decide between using payroll software and processing payroll individually. Remember, restaurant payrolls involve local and federal regulations and laws about tips, so when in doubt, invest in quality software and make life a bit easier.

8) Order Equipment

A restaurant can’t run without quality equipment, and the specific machines needed can add up quickly. So be strategic when deciding between purchasing and leasing, and make a list of the essential equipment first, consulting with the chef as needed.

Used equipment is often used in professional kitchens, especially by restaurants just starting. Sticking to a strict budget and paying attention to the restaurant’s financial analysis is helpful.

9) Come up with a Menu

Excellent restaurants succeed based on menus that are appealing and smartly put together. The menu is the restaurant’s foundation and should be in harmony with the concept, the brand, and even the name.

An exciting menu can also convince new customers to visit the restaurant to try the cuisine. Succinct but intriguing descriptions can help a menu to succeed. Also, adding a new dish every once in a while can freshen things up and create a buzz.

10) Focus on Marketing

A detailed marketing plan should be in place before the restaurant opens. Traditional marketing strategies include placing ads in local newspapers, billboards, and fliers and using word of mouth. However, it is wise to mix a healthy dose of web-based action. Social media platforms offer a valuable and free way to post food photos, show service videos, and even interact with customers.

A soft opening is also a popular idea for boosting notoriety. Many restaurants offer special deals, such as half-off cocktails or appetizers, during the first night or first few weeks.

11) Open the Doors

Now that the most critical tasks are crossed off the list, it is time to open the doors. Launching a brand-new restaurant is an exciting venture that relies on passion, discipline, and hard work. However, entrepreneurs who trust in their concepts, stay true to their instincts, and continue to learn will succeed in a demanding industry—especially if their menus are full of delicious cuisine.