How to Start a Restaurant
Everything you need to know about starting a restaurant
Research & Refine your Business Idea
Is it a dream come true to open your own restaurant? If so, you have to take extra time to select the right concept and make sure all of the details are handled with the attention they deserve.
Starting a restaurant is more challenging than establishing other startups. A larger investment will be required. You need the right venue, the right equipment, some staff, as well as all of the permits and licenses needed to serve food safely to your customers.
Because of these facts, you have to make sure the concept is a successful one right from the start.
In order to do so, you will have to narrow it down.
What kind of restaurant are you going to open? You can answer this question by focusing on your strengths and doing a bit of competition research. You need an industry that enables opportunities for the entry and the growth of new players.
Try to come up with something unique and distinctive. Will you be offering farm to table hearty meals? Are you experienced in Lebanese cuisine? Will you offer fusion with a modern twist?
There’s no right answer when it comes to the specific type of restaurant, bistro or fast food joint you’re going to open. Just make sure that a market niche exists, giving you the opportunity to quickly find customers and establish your reputation.
Creating your Business Website
Do restaurants need a website? The answer is yes! People are increasingly turning to online sources for information and recommendations. A well-made, modern and attractive website will help you present your restaurant concept in the best possible way.
A website isn’t just about brand establishment.
Through a corporate website, you can accomplish a range of additional promotional and practical goals:
- Do local advertising by pinpointing the venues where your food is available
- Create the content that will be used to set up your social media marketing and other promotional campaigns
- Present your menu
- Show behind the curtains footage or information that will give customers a glimpse into the human face and the personality of your business
- Enable takeaway orders online for added convenience
- Use specialised pages (landing pages) to introduce new products, menus or services you’ll be making available to your clients
While you can accomplish all of these goals, setting up a business website doesn’t have to be time-consuming or expensive.
Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.
Get Ideas for your restaurant business name!
Marketing Your Business
You need an aggressive, multi-channel marketing approach because the competition in the food industry is quite intense.
Once you get your website set up, you can try several digital promotional methods:
- Content-based marketing to establish your reputation and to do effective search engine optimisation
- Social media marketing
- Local promotion on niche directories and websites like Yelp, Facebook Places, Google Maps, etc.
- Pay per click (PPC) promotion
- Partnering up with food bloggers and influencers who can review your restaurant
- Joining coupon and discount websites to give new clients a chance to save some money when trying your food
Apart from the excellent, highly targeted online marketing opportunities, you should also be using offline promotion.
There are many things you can do to increase the popularity of your business.
A free tasting or cooking class is an excellent choice. Such campaigns have interactive nature, which means that people will get close to your business and they will have an experience to link the brand to.
You may also want to opt for participation in food-related festivals, offering loyalty programmes, encouraging restaurant visitors to create user-generated content, partnering up with local media and building relationships with local delivery services.
Setting Goals and KPI’s
Key performance indicators (KPIs) provide invaluable information about how your business is doing. To make good use of them, however, you’ll have to determine which KPIs are worth tracking.
Food industry representatives can rely on a number of unique measures to take a business in the right direction:
- Menu item popularity: you may think that your menu will receive a certain reception but is this really the case? Which menu items are most popular? Which ones get ordered the least? By tracking this KPI, you can learn a lot about the preferences of your clients.
- Production time per dish: how long does it take from receiving an order to having the dish delivered to the table? Tracking employee efficiency is vital. The production time per dish will also have a massive impact on the quality of customer service.
- Food waste: how much food is wasted per item from the menu purchased? Food waste is a serious issue because it contributes to restaurant expenses. By monitoring food waste, you can improve demand forecasting, reconsider your production processes and your suppliers.
- Total sales per head: divide the total income for a night by the number of customers. You’ll get an average expenditure for every client. If it’s way too low, you’ll have to consider strategies for encouraging larger purchases.
- Bounce rate: how many customers came to the restaurant during a given day and how many of them ordered something to eat? A high bounce rate will be indicative of a menu or a customer service problem.
Plan your Finances
You can anticipate several kinds of expenditure when setting up your restaurant. The most important ones to plan and budget in advance include:
- The cost of renting the right venue
- Equipment (kitchen supplies, bar, furniture, signs, etc.)
- Licensing and permit fees
- Equipment repairs and maintenance
- Staff salaries
- Additional front of house and back of house expenses (renovation, upgrades, HVAC installations, etc.)
- Daily food and beverage supplies
- Accounting, bookkeeping, marketing and other outsourced services
- Insurance coverage
- The purchase of POS technology
Obviously, some startup restaurants can avoid a few of these costs but the list contains the general and most common types of expenses.
Because the list is relatively long, you’ll probably have to discover a reliable and affordable source of funding.
Finding a committed business partner with resources and financial experience is a great choice. Your partner will be responsible for the management and the budgetary side of things, while you work on developing the restaurant concept.
Angel investors, venture capital, grants and subsidies and bank loans can also prove to be beneficial when you need financial resources.
Adopt an Entrepreneurial Mindset
Maintaining an entrepreneurial mindset throughout the process will help you spot opportunities and nip problems in the bud.
Entrepreneurs come up with extensive strategies for the future. You need to have a clear concept. Where will your restaurant be in a year? In five? How will you accomplish your goal and what’s the size of investment needed to make it happen?
There are numerous resources you can rely on to adopt the entrepreneurial mindset to starting your own restaurant. Restaurant Owners Uncorked: Twenty Owners Share Their Recipes for Success is a great starting point. You can also read books that address other aspects of running a restaurant like Front of the House: Restaurant Manners, Misbehaviors & Secrets by Jeff Benjamin, Kitchen Confidential by Anthony Bourdain and Leonard Gentieu’s Chasing the Heat: 50 Years and a Million Meals.
Other things to consider when starting your
Restaurants work with food and raw ingredients can be dangerous when they’re not sourced or prepared properly. This is the main reason why most countries have strict regulations and licensing requirements for the issuing of a restaurant permit.
Acquaint yourself with the legal framework in your country of residence. The venue you choose, your equipment and food sources will have to meet certain criteria in order to be deemed acceptable.
In the US, for example, you will need a business license, a liquor license if you plan to serve alcoholic beverages, a foodservice license, a food handler’s permit and a sign permit among many others.
A good corporate attorney will give you a good idea about the legislative requirements and help you prepare the paperwork.
Accounting & Bookkeeping:
Restaurants can have rather complicated accounting and bookkeeping.
You’ll need to keep track of expenditure, income and payroll information. Inventory management is also going to be of vital importance for the provision of quality, cost-efficient services.
You should either hire a full-time accountant or outsource the process to a local bookkeeping firm/freelance accountant. These professional will keep track of the monthly bookkeeping tasks, allowing you to focus on more strategic aspects of running the business.
Look for a good accounting and inventory management software because you’ll have to rely on such a solution in your everyday work processes. There are special options out there tailored to the needs of restaurant owners.
Take enough time to find and hire the right professionals. A restaurant isn’t a business you can run on your own.
You will need an experienced chef to handle the back of house processes. A kitchen manager could also help for the faster and more efficient processes.
The front of house team should feature bartenders, waiters, a general manager, a host and a catering coordinator (if you’re offering such services). Some restaurants will have a few additional custom positions. Determine whether you need to hire all of these professionals and if so, what competences and experience they should possess.