How to Open a Restaurant

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how to open a restaurantIf you’re looking to have your own business, starting a restaurant can be one of them. Running a restaurant is full time work and is dependent upon you, how you’ll run it or how successful it will become. Perhaps your creative in culinary arts, have a love of cooking food, or just want to have your own restaurant business and make money. Ask yourself, what kinds of foods you would like to serve? Do you have any creativity? How is your restaurant better? Maybe you have ideas no one else has or you love bringing your cooking to the world. The goal is good food, great services, and pleasant comfortable atmosphere. As the entrepreneur you’ll find yourself asking a lot of different types of questions. Most importantly, study these different types of questions that will help sketch out your plan of business:

1.) What type of food you want to serve to the customers?
2.) How much room do you need for your restaurant?
3.) What will be a good location?
4.) Will you be serving any alcohol?
5.) How much staff will you need?
6.) Who are your customers?

Starting A Restaurant
In the beginning you may find that it’s not easy and of course you’ll need enough money to cover the expenses and pay employee salaries and maybe having to go to the banks for constant loans. For example, if you were to rent a restaurant you could likely face difficulty with the landlord when your lease has expired or if they decided to go higher on the rent. You basically must have financial security or have a lot of money saved up. You could seek help from an investor but also have portion ownership of the business. If you’re fortunate you can seek capital help from your friends or family to raise it and there’s no interest to be paid back. There are always other alternatives to get the capital that you need:

1.) A Loan from banks
2.) A Loan from the Small Business Administration
3.) A Loan from a financing company
4.) Savings
5.) Using your credit cards
6.) Selling equity, stocks, and bonds
7.) Grants from the federal government for small business

Now that you have the money for the startup, you’re looking to start your business right away. First you need a place to run in, here’s how you can do it:

1.) Buy out a restaurant
2.) Purchase an existing restaurant
3.) Rent an affordable space
4.) Build up a restaurant

Buying out a restaurant is the least expensive way but can come with several disadvantages. For one, the restaurant could have been financially unsuccessful, bad management, or bad location. It could have not had good reputation in the area, or whatever the many reasons are. Always do an investigation on the disadvantages or circumstances of the restaurant’s history. Many restaurant owners want to sell their business for a number of reasons. The owner can decide to take retirement, tiered of working long hours, or not making enough money to pay the rent, or the bills, and staff salaries. The advantage to the new buyer will already have an established customer base. Lease an empty space and turn it into a new restaurant that would give the potential restaurant owner full scope in designing and developing a restaurant in their own concept. You would have to make a substantial financial investment that would include hiring an architect, contractor, and plumber, purchasing equipment and making renovations. The most costly use to start a business is buying property that can be built from the ground up.

Establish a cash budget and maintain cash flow projections on a continual basis. Determine the actual cost of how much food and the actual cost of the food sold. Menu prices are a combination of food costs and what is needed to meet expenses and a profit. The proximity of the price is about three times the food costs because of the type of restaurant, operating expenses, and competitor’s prices. Setting the right price influences costumers on what they’ll buy and if service is good the customers will pay for it.

When you have a business you should make sure to always have insurance to cover any liabilities or incidents such as fire, theft, or any accidents. You can choose to have an insurance agent or broker who is recognizable with your business and the way that it’s operated. To find an insurance agent, check them out on web sites or check with the restaurant association that has information on insurance packages.

Keep a record of finances, daily income, and expenses. A good record keeping system should be simple to use, recognizable, reliable, and accurate.

Licensing & Regulations
All businesses must meet the terms with licenses, regulations and permits. The business owner must make contact with the city, local, territorial, and federal governments. Each metropolitan government has the authority to issue its own business licenses within its control. Check with the proper officials to conclude whether your business will be affected by local regulations and licensing requirements. All businesses must meet the zoning laws that control property uses in their cities. In regarding licenses, permits, and regulation information, contact province/territory, local city hall, town, village, or municipal office, federal governments and government listings.

Sole Proprietorship & Partnership
The business owner decides how the business will be operated b y either a partnership or ownership. A sole proprietor has ownership of the business and holds all the responsibility. The thing is you have to deal with is creditors who can have authority over your assets and bank account and can cause you serious damage. A partnership takes two people to run the business and a written partnership agreement. Each partner is liable for any legal, creditor, and civil actions, and bank accounts. They also must report their share of profits or losses on an individual tax return and pay the tax on those profits.

Buying Equipment & Furnishings
Buying equipment can be your biggest expense; you practically need everything such as equipment for the kitchen, lighting fixtures, entertainment equipment for guest, and so on.
Buying used equipment is a cost saver that you can buy from restaurant closeouts or from dealers that deal in second-hand equipment. You’ll find that no guarantees come with used equipment, or else you can rent. You’ll need all the necessary furnishings such as tables, chairs, seating, and silverware. Having to buy all the furnishings needed for the kitchen, bathroom, bar, or in any place in the restaurant. You can find these from discounted supply stores.

Seating Arrangements
This can also be based on the type of atmosphere you want in your business. Do you want a little or a lot of people? What kind of setting do you want to setup? To make that determination go by the number of seating capacity, also this goes for food costs, the number of people that sit down during meal periods. Also include seating in every part of the restaurant, such as waiting rooms, serving room, restrooms, and bar.

Purchasing Inventory
Purchasing can be done in a variety of ways, such over the telephone, by fax, or online. Keep in mind there’s often no contract signed between the purchaser and the supplier. Make sure to choose the supplier carefully; this also goes for when purchasing fruits and vegetables that you want to get from a good fresh producer supplier. There are several suppliers that you’ll find suitable to supply your business. If you’re also going to purchase alcohol beverages you can get them through wholesalers or distributors. Improper food and beverage inventories results in spoilage and can affect your profit margin and business.

Menu Preparation
Here’s what you can do to get a list of ideas for items, visit any café, bakery, or restaurant chain for research as to what you would have on your menu or turn it into your own creative idea. Come up with your very own dish and add your own signature items. List popular food items that your customers will love, for lunch, people are always looking for pita dishes or sandwich wraps, also a demand is bagels and espresso. Any spicy, marinated foods, or appetizers would be fine. Provide a number of ethnic dishes such as Italian, Thai, Spanish, Chinese, or French, also keep in mind of your nutrition-conscious customers and provide healthy low-fat dishes on the menu. Child menu selections contain four or five items in smaller portions and healthier snacks are added such as yogurt, fruit cups, and applesauce cups. Let your young customers choose nutritious selections as an option.

Menu content and design is important also. They’re factors that can influence and increase your business. Keep the number of items short and the descriptions simple and straightforward by providing the customers choice in concise format.

The percentage of sales volume each item in your restaurant in a given week. This number is calculated by determining the number of each menu item sold in a typical week and then multiplying that number by the menu price and then dividing that number by the total sales.

Marketing Plan
A business owner should be knowledgeable about their customers and competitors and specific information about them is how you develop your marketing plan. You’ll need to be able to understand the wants and needs of your customers, and make them aware of what you deliver by using promotions.

Advertising is an effective way to get your customers in your place of business seated down and taking orders. By doing this are good public relations, using flyers, advertising in newspapers, radio, television, and the yellow pages phone book or by Internet. These types of ways get the word out and the public interested in what you have to offer. You can also be a good role model by donating food to communities and organizations.

Location is very important as to where your place of business will be located. You’ll have to be able to get a drive of customers and make successful sales. Conducting a market research determines if your restaurant will succeed in a certain area.

Internet Marketing
Internet can be a great way to market your business by using a web site, listing details of your restaurant, the location and address, hours of the operation, picture menu display, and anything creative or an marketing idea to your targeted customers. Once you’ve done your completed web site, make sure to update it on a regular basis.

Getting Customers
When your customers walk in, they either want to dine in or eat out. Here are your dine in customers, that have different taste and expectations. Some customers like to come into upscale restaurants where they know they’ll get better service than the average restaurants. These customers will spend money freely and are less concerned with the prices. Your restaurant would have a classy atmosphere and offer more advantages such as music, experienced cooks or chefs, and unique foods. You would have them make reservations, this kind of service is more to a customer’s liking and is well preferred.

Here you have your elderly customers that want a relaxing quite atmosphere, and are looking for specials with lower prices or discounts. If you’re going to have a family-oriented atmosphere, keep in mind of the children. Parents and grandparents bring along their children or grandchildren. If you want to establish a child-friendly environment, provide the necessary achievements. Booster seats, value meals with toys that come along with it, and an indoor\outdoor playground. You can also have games or provide entertainment with children’s performers.

Your take out customers either don’t or have the time to prepare a meal, bake, or hassle with appliances, or cleaning dishes. Your take out customers want fast convience and not to have to clean up after themselves. This is where the rise in popularity of fast food comes in. You have a variety of demographics that are in demand for greater service when it comes to buying their meals.

When you open a restaurant, you’ll be in competition with a variety of different businesses. That’s why businesses find a niche on what will help better their market by having a critique concept and what makes them different from their competitors. How you can make one best product that distinguish you from others in the marketplace.

Making it in the restaurant business can be rough and a slow start at first and all the time hard work and you must keep in mind of good management, merchandising, and service. Entrepreneurs can become acquainted with their regular customers and build relationships with them. All you need to know is good food and great service to keep the customers coming back. Sure you’ll loose some and gain a whole lot more, but it will also be incredible to be in a place where the people know you and your business and it can make you feel very good inside. There are many ways to seek information, check with your local library, business development, organizations, or seminars and workshops. You can also benefit from joining a restaurant association:

Promote and exchange marketing ideas amongst other members.
Establish and encourage a quality of professionalism.
Represent and advocate on behalf of members.

Types of Food Services

Salad Bars
Sandwich Shop

Popular Menu Dishes

Regional Cuisine

Providing Atmosphere

Formal Dining
Sophistication Ambiance

Things to Consider

Food Quantity
Weight Differences
Brand Names
Damaged Goods
Business License
Department of Health
Licensed Contractor

Licenses & Permits



Fire Safety
Retail Sales Tax
Zoning Laws

Professional Services

Lawyer (legal issue)
Insurance Broker
Banker (dealing with your bank)

Definitions Explanations

CO-Branding – when two or more well-known restaurants combine their menus in one location to off customers a wider selection of items.

Popular Menu Items – are groups of foods that interest and appears satisfying to the customers.

Nutrition Minded or Conscious Customers – are customers looking for healthy nutritious foods to be displayed on the menu.

Pay Administration – manage and control such necessities like personal cost, and employee morale.

Control Cost – control inventory and costs.

Professional Services – is beneficial to your business to seek knowledge and expertise from professionals.

Business License – to comply with all the local government rules and regulations.

Department of Health – an requirement for a restaurant business for an thorough inspection to be made to meet health regulations and guidelines and where a customer can report incidents in any food service.

Architect – can work with you and design the layout for your business and has an idea on how you want your place of business to make an appeal.

Licensed Contractor – hire a professional contractor to do the remodeling work.

Lease – where the tenant pays for operating, maintenance, taxes, and insurance.

Triple-Net Lease – the leasee pays property tax, insurance, and maintenance expenses.

Shareholder – liable to their investment and not to the corporation’s debts; elects the corporation’s directors; have control over the management of the corporation.

Break Even Point – the restaurant must accomplish the minimum amount of sales in order to cover all the expenses before a profit can be made.

Competitive Analysis – who your competition is, what they’re about, what they offer, and how you will compete against them.

Company Management – managing workplace environment; making decisions on your business; dealing with problems; dealing with staff.

ABCD Award – restaurants give the award to employees for their excellence in work.

Casual Dining – a restaurant provides table service, enjoyable environment, spending top prices.

Cash-In Sheet – Used to account for all money during an employee’s shift.

Cost Goods – are inventoried purchased items.

Sole Proprietorship – an entrepreneur runs and owns the business.

Partnership – a business relationship between two or more people who agree to share their resources, profits, and loses in specific portions.

Employee Facilitate – when an employee helps a customer or another employee in need.

Franchising – starting a brand name company.

Franchisee – someone who owns a franchise.

Dual Branding – when there are more than one brand name operations located in the same retail price.

Limited Time Offer – when a new special or product that is on the menu item, it’s intention is to draw customers to come in.

Customer Feedback – comments on the employee’s performance and can it can help employees improve their skills.

Sanitizing – it’s important to keep your business cleaned and maintained, if you’re employees handle food they should sanitize bacteria that will cause infection or disease.

Customer Impression – your customers use their impression on your restaurant, the service, atmosphere, and quality.

Demographic Surveys – determines and analyzes age, gender, income, lifestyle, and consumer habits. It’s useful for your business.

HACCP – is hazard analysis control point system to help ensure food is free of any errors to be handled and is safe to serve to your customers.

Open Door Policy – employees have questions, concerns, or problems and they would like to refer it with their boss.

Full Service – waiting on the customer at all times and providing quality and ambiance.

Excellent Service – is good hospitality, good service, good quality, and cleanliness. These are all the aspects of what a restaurant should have.

Productivity – is what you like to see in your employees to get the job done and efficiently.

Goodwill – any amount paid for by a business that exceeds the fair market value. The law allows goodwill to be assigned to such items as trademarks, patents, copyrights, customers lists, name recognition, concept attributes, the community image, and public perception.

Press Release – your business can be submitted through the media for publication.

Traffic – is a numerous amount of people who are drawn to your restaurant.

Mystery Shopping – a mystery shopper will come to your place of business and evaluate its performance by using a report card.

Target Market Analysis – profiling your demographics and also affects the aspect of your business.

Meal Presentation – is presented by the cook or the chef on what they cooked.

Point Purchase – where the customer makes an purchase, they’re swayed to buy the items that the business is offering and at the moment they intend to purchase.

Theoretical Food Cost – food cost based on your menu, does not take in account of wasted food and is an ideal number that gives you an overall food cost in dollars and percentages points that you achieve.

Margin Markup – what the distributor paid for the item from the manufacturer.

Market Penetration – when a new business opens up in an area where it has very little success or recognition.

Market Saturation – when a business is gaining customer recognition.

Perceived Value – is determined by the customer. Whether they’re satisfied what they paid for based on the products, services, and the overall atmosphere.

Net Sales – the amount of all the items sold that excludes all sales tax.

Outsourcing – when a employer pays an outsider who is not employed in their business to do task for them.

Reprimanding – a disciplinary discussion that deals with task performance and issues.

Limited Liability Company (LLC) – a company that invests in a business but has no management responsibility and no liability for the business beyond the money they have invested.

Interest Rate – a rate charged to customers who have good credit and is a reference point for other loan rates given by the bank.

VIP – mean inviting important people who are leaders, business associates, or friends. It also helps create a popularity sense for your business.

Quick Service – a restaurant serves reasonable priced meals through the counter that is quick and convient service.

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