How to Open a Restaurant: 5 Steps to Get You Started

Opening a restaurant is exciting, but it’s also an incredibly challenging endeavor, and 60% fail within their first year. To increase your odds of success, let’s look at five steps you can take to open a restaurant.

[Read more: Restaurant Business Guide 2021]

Decide on the restaurant concept

The first step is to pick the concept for your restaurant, and this step is probably also the most fun. Your restaurant concept includes the type of food you’ll serve and the service you’ll provide to customers.

For instance, do you plan to open a food truck or breakfast location? How will you price your meals and who are your target customers?

During this step, you want to be as specific as possible because your restaurant concept will influence your menu and the type of customers you attract. If you’re not sure what type of restaurant you want to open, you can check out some of the biggest restaurant trends for 2021.

Obtain the necessary funding

Opening a restaurant is not cheap — the average restaurant startup costs are $275,000. Here are just a few of the one-time and ongoing expenses you can expect to incur:

• A security deposit for a building location.
• Legal fees for the business formation.
• Kitchen and cooking equipment.
• Furniture and tableware.
• POS systems.
• Employee salaries.
• Marketing costs.
• Insurance and business permits.

Most new restaurant owners obtain the funding through a small business loan or investors. Before you apply for funding, you’ll need to make sure you have a detailed business plan and a financial forecasting spreadsheet. This information will show lenders and potential investors exactly how you plan to make a profit.

Choose a location

Finding a location is usually the most expensive part of opening a restaurant. It’s also one of the biggest factors that will determine your restaurant’s success or failure.

When you’re looking for a location, there are many details to keep in mind. The first is the access to potential customers and parking lot facilities. If your restaurant is difficult to get to or has inadequate parking, your business will suffer as a result.

You also want to look at your proximity to other businesses. For instance, if you’re located in a busy retail area, you may get a certain amount of business just based on the presence of neighboring businesses.

[Read more: How Smartphone Location Analytics Is Helping Retail and Restaurants]

Apply for the necessary permits

Before you can open a restaurant, you need to apply for specific federal, state and local permits. It’s best to hire a lawyer to assist you throughout this process so you don’t miss anything. But here is an overview of a few of the permits you’ll need:

• Business license: Before you can operate a restaurant in the U.S., you must apply for a business license. The exact process and fees will vary depending on the state you live in.
• Foodservice license: A foodservice license is typically issued by the city health department, and you’ll have to pass a food safety inspection first.
• Liquor license: If you plan to serve alcohol in your restaurant, you’ll have to apply for a liquor license. This process can be quite lengthy, so you’ll want to start it as soon as possible.

Hire your staff

Hiring the right staff is a crucial part of opening a successful restaurant. You want to start thinking about company culture right from the start and what kind of incentives and employee benefits you’ll provide.

Start by making a list of all the staff positions that need to be filled. This will depend on the size of your restaurant but may include the following positions:

• A general manager.
• Front-of-house manager.
• A kitchen manager.
• Kitchen staff.
• Servers, hosts and other front-of-house staff.
• Marketing or PR specialists.

[Read more: How to Attract Employees to Your Business]

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