Opening a restaurant is an exciting idea that requires careful planning and execution. However, starting a restaurant requires much more than just a passion for food and cooking — you must consider many things, like what kind of food you will serve, how much money you need, and who you will hire.
You might wonder, “How do I start my own restaurant from scratch?”, “How to open a restaurant with no money”, “What are the steps to opening a restaurant?”.
To help your restaurant idea come to life, we’re created this complete step-by-step restaurant checklist and guide to help you learn how to start a restaurant.
Key Takeaways
- Ownership Commitment: Owning a restaurant requires long-term dedication, often involving several hours of work each day.
- Concept and Niche: If you’re wondering how to open a restaurant, remember that the concept and niche are your starting points.
- Business Plan: Create and continuously work with a detailed business plan to guide your restaurant’s development and operations.
- Financing: Use savings and support from family or friends to finance the location. Look for grants, loans, and investors as a secondary option.
- Location: Choose the right location carefully, as it is a key factor in your restaurant’s success.
- Online Presence: Build a website for your restaurant and consider selling directly from it, rather than relying solely on third-party food delivery apps.
- Marketing and Promotion: Actively promote and market your restaurant—good food alone isn’t enough to attract customers.
Step 1. Select your restaurant concept
The very first step is thinking about your restaurant concept.
You need to consider and decide:
- What type of restaurant do you want to open?
- What cuisine will you offer?
- What are the startup costs?
- What will be your signature dish?
- What ingredients do you plan on using?
- What the interior of your restaurant will look like, etc.
At this stage, you can take a piece of paper and create a solid business plan of all the ideas that come to your mind.
- Cuisine (e.g. Italian, Spanish, Thai, Korean, etc.)
- Regional cuisine (e.g. New York cuisine, Kashubian cuisine, etc.)
- Specialized cuisine (e.g. gluten-free, lactose-free, vegan)
- Restaurant concept (Examples of types of restaurants include bistro, fine dining, fast food restaurants, food truck, quick service restaurants, pop-up restaurants, wine bar, and café.)
- Type of food (pizza, sushi, dumplings, crepes, steaks, etc.)
- Delivery method (on-site, takeout, delivery on demand)
- Location (traditional physical location, virtual restaurant)
Remember to conduct market research. It doesn’t have to be something big.
The basics include visiting establishments with which you will compete in the area. List and analyze their weaknesses, strengths, offerings, prices, the number of orders they may receive daily, and their marketing strategies.
Also, estimate the number of potential customers where you want to operate.
- Be prepared for years of hard work.
- A business plan is your action plan. You write it for yourself. It’s a living document that you update regularly.
- A good chef is essential. People come to restaurants to eat well 🙂
- Don’t rely on random people. Build a team.
- Be prepared to work 16+ hours, especially in the first few years.
- Read blogs and restaurant management books about running a restaurant and marketing.
- Attend gastronomic conferences and meet other restaurant owners.
- Implement a restaurant opening checklist to better manage your business from day one.
Step 2. Write a business plan for your restaurant
A restaurant business plan is a comprehensive document that outlines the strategies and objectives of a restaurant business.
Preparing a business plan is a critical initial step before opening a restaurant.
Key elements of a restaurant business plan
- Restaurant executive summary: In this part, you briefly describe the project, give the restaurant’s name, etc.
- Business description: This part includes vision, mission, business legal structure and restaurant concept.
- Market analysis: Here you need to analyze the restaurant target market and your competition. It is recommended to do a restaurant SWOT analysis.
- Cost Analysis/Financial Analysis: In this section, you present the restaurant costs associated with the initial investment and the spending plan for the first year of operation.
- Financial projections: In this part it is recommended to include:
- Profit and loss statement
- Break-even analysis
- Sensitivity analysis
- Management information, which includes:
- Founders
- Employees
- Restaurant marketing plan
- Description of the restaurant’s vision for further development, i.e., setting short- and long-term restaurant goals and a description of how to achieve them.
Step 3. Secure restaurant financing
According to Sage, opening a restaurant costs roughly $275,000 if you lease a building and $425,000 if you own the property.
As one can see, opening a restaurant isn’t cheap, but there are some ways to secure your restaurant financing.
Option 1. Get a business loan
Some banks can provide you with a restaurant loan such as banks for real estate investors.
The important thing to remember is that you won’t receive funds in one day. It may take a few weeks or even months, so don’t hesitate to apply for it as soon as possible.
You can apply for a business loan through the U.S. Small Business Administration (SBA).
Option 2. Look for private investors
Another option worth considering is looking for potential restaurant investors.
For example, venture capital companies and angel investors typically work with small business owners and invest in restaurants by purchasing a percentage of ownership at an agreed-upon valuation.
- Turn your business plan into a pitch deck, a presentation for investors.
- Practice your presentation (dozens of times).
- Tell your story briefly and concisely.
- Prepare potential investor questions and answers to them (e.g., How will the restaurant stand out in the market? What will be your competitive advantage? What will be the return on investment for the investor? When will the first profits appear?)
Option 3. Business Line of Credit
You will receive a maximum credit limit once approved for a business line of credit. However, you will only be required to repay what you use.
According to the study by RestaurantOwner.com, the average cost to open a small restaurant is between $175,500 to $750,500, with an average of $375,500.
Learn more about how much does it cost to open a small restaurant.
Option 4. Consider crowdfunding
Another option to take into account for restaurant funding is crowdfunding. You can get financial support from others using one of the following websites:
Option 5. Ask your family and friends (recommended)
As an aspiring restaurant owner, the safest route for gaining a small business loan is by asking family and/or friends for help. However, remember that combining personal and business relationships can be risky.
Here is a brief description about loans, which can help you to decide which ones are right for you.
- The cheapest money comes from savings and family.
- Always start a business with a financial cushion.
- Plan for the worst-case scenario—spending 50% more and earning 50% less.
- If you’ve never run a restaurant before, avoid investing large sums. Start smaller, like running a food truck, to test if it’s the right fit for you.
Step 4. Choose your restaurant location
Choosing a restaurant’s location is one of the most important issues influencing a restaurant’s success.
Whether you open a physical location or want to create a virtual restaurant, your restaurant location startegy is a critical factor in attracting your customers.
- Demographics – Target customer profile must match the restaurant location. For example, if a restaurant’s target customers are students, it should be located near a university.
- Competition in the location – How many restaurants are in the neighborhood, what kind of cuisine they serve, etc.
- Visibility and convenience – Customers need to access your restaurant easily. If your restaurant is in the center, it will be easier to reach than a restaurant operating on the outskirts.
- The state of the real estate market – Is it a good time to buy a property, or would it be more advantageous to rent?
- The local community and neighborhood – Who lives or often stays in the immediate area? Is there no school in the area, for example? (If so, you’ll have to consider that you won’t be able to sell alcohol).
- Building history and previous tenants – If you decide to rent the building, check who the previous tenant was. If the people who ran your business before you had a bad reputation, it can hurt your business and make it harder for you to succeed.
An alternative option is to open a virtual restaurant. A virtual restaurant is a restaurant that exists only virtually and does not function in a traditional form – with a dining room where guests can eat.
A virtual restaurant can operate only online, offering online ordering and delivery, or as part of another restaurant.
Step 5. Obtain necessary permits and licenses
Opening a restaurant obliges you to obtain the necessary permits and licenses. The licenses and permits required to start your restaurant will vary depending on its concept and the location where it is established.
The costs associated with obtaining them will also differ. It is a good idea to seek legal advice when applying for restaurant permits and licenses to ensure you complete all the necessary steps correctly.
Types of permits necessary for opening a restaurant
Opening a restaurant typically requires obtaining several permits and licenses, depending on your location and the type of restaurant you plan to operate.
Here are some of the common permits you may need:
- Employer Identification Number (EIN)
- Sign permit
- Certificate of occupancy
- Food handler’s permit
- Building health permit
Types of licenses necessary for opening a restaurant
When you open a restaurant, you typically need to purchase multiple licenses and follow food safety regulations, depending on your location and the type of restaurant you want to operate.
Here are some of the common licenses required to open a restaurant:
- Business license issued by the locality
- Foodservice license
- Liquor license
- Sales tax license
Step 6. Create your restaurant menu
The next step is to create a restaurant menu. Depending on the restaurant type you are to open, think about the quality of the ingredients you will use, dishes, and/or add-ons that will differentiate your restaurant from the competition.
Optimize menu with menu engineering method
It will be helpful to use menu engineering to build a profitable menu. Once you decide on the dishes you are to offer, you need to decide on menu pricing.
- Cost of Goods Sold (COGS): Ensure menu items are priced to cover the cost of sales and remain profitable.
- Food Cost: The percentage of the menu price covering ingredient and material costs.
- Profit Margins: The percentage of restaurant revenue remaining after all expenses (e.g., food, labor, overhead).
- Sales Forecasting: Estimate potential revenue to evaluate and adjust the pricing of menu items.
Create an online menu
While creating your paper menu, remember its online version. A common mistake is uploading a PDF file on the website. Don’t do this! Such menus are hard to read for customers and don’t look good.
Instead, you can use ready-to-be-used menu templates. Remember that it is essential to design a visually appealing menu that features specific items with clear menu descriptions and, where possible, photos to entice customers.
Create a QR code menu
An additional attractive option is to allow guests to order using the QR code menu. The tableside ordering from UpMenu will help you generate a ready list of QR codes, which you can place on tables in your restaurant.
Using QR codes to order food allows customers to place orders directly from their phones, saving time and making your staff more efficient.
Step 7. Design your restaurant’s interior and exterior
While making decisions about your restaurant layout and design, you need to consider front-of-house and back-of-house space.
Check out the factors that directly affect your restaurant space’s design.
List of dining room design factors to consider
- The number of seats and restaurant seating arrangements (chairs, tables, etc.)
- Furniture for the dining area
- Atmosphere and decoration (candles, candle holders, vases, flowers, wall pictures, etc.). It is good to decide on one main theme and plan the decorations according to it.
- Ease of cleaning and maintenance.
List of kitchen design factors to consider
- Dishwashing and sanitation facilities: These facilities are essential for running your restaurant and should be easily accessible by kitchen staff.
- Storage areas for non-perishable and refrigerated goods: Make sure to have separate storage areas for both perishable and non-perishable goods. Additionally, you will be required to manage the expiration dates of both types of goods, so make sure you have easy access to them.
- Spaces dedicated to food preparation: Provide enough space for essential equipment like hot plates, knives, and cutting boards.
- Cooking stations and appliances: Cooking stations will require power outlets and lots of tablespace for meal prep, so make sure you have both available at each station.
- Service areas for guests and staff: Create comfortable dining spaces for guests and allow staff enough room to navigate easily.
When choosing kitchen equipment, you can opt for new, more expensive equipment or buy used one.
The disadvantage of the second option is that the equipment is more likely to spoil quickly. Therefore, it is worth calculating a more cost-effective option in the long run.
Step 8. Invest in your restaurant equipment
If you are not renting a commercial kitchen, purchase ovens, refrigerators, stand mixers, fryers, and commercial dishwashers. If you are to offer a special menu, you may need to buy special kitchen equipment.
You also need to consider if you want to buy new or used equipment. Leasing equipment can be a cost-effective solution for you. It is also necessary to purchase:
- Seating for guests (tables, chairs, etc.)
- Plates,
- Utensils (e.g. knives, forks, spoons)
- Glassware (e.g., drinking glasses, wine glasses)
- Linens (e.g., tablecloths, napkins)
- Towels (e.g., hand towels, dish towels)
- Etc
Due to the pandemic, full service restaurants and those that offer delivery services experienced growth from online ordering. That’s why it is also necessary to invest in restaurant technology that allows customers to enjoy your food outside of your restaurant.
Step 9. Start selling online
Today, over 50% of all food orders made in the food service industry are placed online.
Launch online sales from your own website using an online ordering system for restaurants.
If you plan to sell on platforms like UberEats or GrubHub, remember that these platforms charge 13-30% commission, so online sales on these apps should only be an addition, not the main sales channel.
Read more about Uber Eats commission and Grubhub fees.
Launching online sales takes just 5 minutes of work, which involves choosing a menu template, adding products, setting prices, delivery areas, and adding an active menu to your website.
To get started setting up your restaurant for online selling, grab our step-by-step guide on how to set up an online ordering system.
By adopting the UpMenu online ordering system, restaurants can gain an edge over competitors and expand their customer base. Streamlining the ordering process can lead to
- a 31% increase in order value,
- a 27% increase in monthly revenue from online sales,
- saving 18 minutes on each order to provide a faster customer experience.
If you are unsure which system to use, read this best online ordering systems comparison.
- No commission fees
- You pay a fixed subscription fee instead of a 13-30% commission
- Higher restaurant profit margin due to the lack of commission
- Control over deliveries
- Building your own customer database
- Automatic collection of customer reviews
- Marketing opportunities to increase restaurant revenue
Step 10. Create a restaurant website
According to WebFX, 90% of customers search for a restaurant online before visiting. That’s why you need to create a website for your restaurant.
You can use the UpMenu’s restaurant website builder. You don’t need the technical knowledge to do this, you can use ready restaurant website templates.
We’ve prepared a step-by-step guide to help you get started on creating a restaurant website here.
Step 11. Establish partnerships with top suppliers
Don’t save money on products. Dishes prepared with quality ingredients will attract guests. Check the range of suppliers, test their products, and decide to work with the best.
- Product prices
- Quality of products and the presence of relevant certifications (e.g., HACCP, ISO, organic certificates)
- Frequency of assortment delivery
- Additional services (e.g., product washing)
Step 12. Hire qualified staff members for your restaurant
According to 7Shifts, the average job tenure of a restaurant employee is 1 month and 26 days. It is important to recruit and hire reliable, skilled employees.
Proactively seeking out the right candidates can lay a solid foundation for training, retaining, and developing an exceptional team. Look for chef and cooks, waiters, bartenders, staff responsible for dishwashing and kitchen cleanliness, etc.
Read more about the most common restaurant positions.
Step 13. Promote your restaurant
A successful restaurant offers more than just great food—it has that “something else,” such as strong marketing, a charismatic owner, unique design, a great location, active social media, and sometimes an exceptional website.
When opening a restaurant, it’s crucial to have a clear marketing plan and budget to attract your target customers.
Restaurant advertising is key to sharing essential details like location and cuisine, so explore various restaurant marketing strategies.
Examples of marketing plan elements:
- Hang a restaurant signboard: Even if you are at the stage of renovating the premises, you will start to build recognition for your brand.
- Promotional events for guests: Consider giving out discounts to first-time customers in order to tie them to your restaurant for longer.
- Weekly specials: Discounts on a particular menu item with offers such as a, “Buy a burger and get the second one 50% off,” discount.
- Social media strategy: Create profiles on Facebook and Instagram, and then post pictures of all of your amazing dishes.
- Email marketing strategy: Collect customer emails in a restaurant CRM and use them to send automated discounts to customers.
- Building a restaurant website: If you haven’t done so yet, check this guide on how to create a restaurant website.
- Create accounts on Yelp, TripAdvisor, and Google My Business: These help to increase your restaurant brand awareness.
- Plan soft and grand openings
- Radio, TV, print: Create localized advertisements to attract more local clients in your area.
- Set up a stall outside your restaurant: By doing so, consider offering complimentary samples of some of your dishes to people passing by.
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Step 14. Host a soft opening
A soft opening is a trial period before a restaurant’s official grand opening when it is open to the public with a limited menu, shorter operating hours, and potentially lower prices.
Usually, it is a day when restaurant owners, employees and neighbors’ friends, and families come to the restaurant for the first time.
This event is not promoted to the potential customers, as this is the moment to test the restaurant’s operations, menu, and staff and identify any issues that need to be resolved before the grand opening.
Step 15. Host a grand opening
Grand opening is the day of officially opening a restaurant. Once you hosted a soft opening and received your friends and family’s reviews, you made some adjustments, and here comes an exciting day of opening the doors of your restaurant.
Consider hiring a popular band or musician for this day and offering restaurant discounts such as buy one get one free.
20+ Tips from restaurant owners (real ones)
To create this guide, we also analyzed the best advice for new restaurant owners provided by current restaurant owners. Then, we created a list of the most important aspects based on their answers.
Restaurant staff tips
- “Surround yourself with good people. Pay them fair, treat them properly, and give them the opportunity to grow their rewards,”
- “Go into it with love and passion, and understanding, be the best for your team, and create a team that is unstoppable, don’t settle for less, your team is what will make you, you lead your team and give the best they deserve,”
- “Be present. Listen to your employees carefully, as they’re on the front lines”
- “Respect your chefs and other workers”
- “Pay your cooks what there worth, they will be loyal and committed to you”
- “Value your people. Treat them they way you would like to be treated”
- “Go for the best chefs especially for the start bcos the quality of food speaks the most”
Budget and costs tips
- “Make a restaurant budget and stick to it. Food costs go up = menu prices go up, simple math. Labor issues? Sometimes it is cheaper to buy prepared things like sliced cheese,”
- “Know and understand your costs”
- “Stick to a budget. Increase prices if need be. Be prepared for no profit first year”
- “Study and apply good accounting practices,”
- “Actually take the time and real effort write your own business plan”
Guests
- “Satisfied customers will be your best “walking advertisement. They gossip a lot & post everything on social media. Make sure to provide quality service,”
- “If you desire to and love to create an amazing experience for people willing to trade their money to have an experience then you’ll be successful no matter what anyone else says,”
- “Treat every guest like they are a personal friend coming for the first time”
- “Study your demographic and learn what they want it’s not all about the food it’s the atmosphere you provide. Find the unique niche that works for your area that no one else is doing and push it until it becomes a conversation piece for your locals”
General tips
- “No one is going to care about your restaurants as much as you do, so monitor everything”
- “Be prepared to work around the clock and all holidays”
- “Work hard, don’t let others run your business. No one will care more than you”
- “Keep innovating and never get stagnant. Try new cuisines and treat your business like a child learning to walk”
- “Seek to understand before correcting actions”
- “Not all restaurants are the same. Being an entrepreneur is an honor. You must find your passion. It could be love of food, people or just being your own boss”
- “Remember you’re in the business of people. People come first”
Frequently Asked Questions (FAQ)
Is $10,000 enough to start a restaurant?
Opening a small restaurant on a $10,000 budget is possible but depends on location, size, and type. With a limited budget, consider a food truck, small takeout, or pop-up restaurant. Here are some helpful tips:
- Start small: Opt for a smaller space or limited menu to minimize costs.
- Buy used equipment: Save money by purchasing second-hand equipment.
- Use social media marketing: Promote your restaurant on platforms like Facebook and Instagram.
- Minimize staff: Keep a small team or use volunteers to reduce labor costs.
- Keep inventory low: Buy only essential ingredients to avoid waste.
How to start a food business with little money?
Starting a food business with little money is possible with careful planning. Here’s how:
- Start small: Consider a food truck, pop-up, or home-based catering.
- Choose a niche: Focus on a unique food concept.
- Use existing resources: Rent a commercial kitchen or use your own kitchen.
- Leverage social media: Promote your business on free platforms.
- Buy used equipment: Save money by purchasing second-hand kitchen items.
- Minimize staffing: Start with a small team or work yourself to reduce labor costs.
- Seek low-cost financing: Look into microloans, grants, or crowdfunding.
Read more about how to open a restaurant with no money.
How profitable is opening a restaurant?
Opening a restaurant can be profitable, but remember that the restaurant industry is highly competitive, and success depends on providing customers with unique and compelling experiences while controlling costs and maximizing profits. On average, profit margins range from 3% to 5%.
Full-service restaurants typically have profit margins of 3% to 5%. In contrast, fast food restaurants and food trucks tend to have higher profit margins, ranging from 6% to 9%, due to lower labor costs.
Learn more about restaurant profit margin here.
