The restaurant industry is an ever-growing landscape. The demand for dine-in and takeout options is constantly increasing. If you have an entrepreneur mindset, learning how to open a new restaurant can lead to great success.
Something every business owner will tell you is that it takes a significant amount of time and effort to open a new restaurant. Getting all of your ducks in a row is a vital step. In fact, that's exactly why we’re about to break down a complete guide for you to follow.
From the first rough draft of your business plan to the time you cut the ribbon on launch day, this step-by-step guide has all the information you need. We believe that following this guide will allow you to hit the ground running and achieve restaurant success. So, let’s dive right in!
Open a New Restaurant In 10 Steps
Are you planning to open a new restaurant? Doing so is such a rewarding and exciting experience. However, it certainly involves a lot of hard work and an organized gameplan. Below, you’ll find ten simple steps on how to open a restaurant. Now, let’s begin!
1. Create the Brand and Menu
Creating the brand and developing the menu types will set the tone for the entire restaurant. If you often dream of the day that you open a new restaurant, this is probably one of the aspects that you consider the most. This is great, as the restaurant branding will help influence everything else.
Consider the kinds of visuals that you want your restaurant to display. From color schemes to restaurant lighting, there are many areas you will need to design. Then, come up with a comprehensive menu of dishes and beverages that suit the branding.
One of the best reasons as to why you should do this step first is that you can plan all the nitty-gritty afterwards accordingly. If you go for a more casual dining experience this will dictate how much you invest in food more than anything else. However, if you decide to launch an upscale restaurant, there will be more than just the food that you need to invest in, like furniture and experienced employees.
2. Write a Restaurant Business Plan
Writing the business plan will be one of the most technical steps in opening a restaurant. However, it’s also one of the most important details. When you and your business partners sort everything on paper, it becomes easier to plan and coordinate.
Did you know that a business plan is also a necessary component of acquiring funding? Whether you’re applying for a bank loan or are partnering with an angel investor, the business plan must be complete. This will ensure that they’re getting involved with a business with long-term potential.
To display that you’re starting a bar or restaurant with the potential to scale, complete the following sections of a business plan:
- Mission statement
- Restaurant description
- Market analysis
- Competitive or SWOT analysis
- Menus and dish descriptions
- Restaurant design and layout
- Plan for hiring staff
- Location details
- Marketing and advertising
- Financial projections
3. Acquire Proper Funding
Anyone who wants to open a new restaurant knows that it’s a very expensive project. On average, it can cost anywhere from $150,000 to over $1 million. You might be wondering how it’s feasible for people to acquire such high funds. But fortunately, you have options.
Some of the most feasible options include:
- Small business loans
- Traditional commercial loans
- A business line of credit
- Local crowdfunding
- Working with investors
4. Select the Perfect Location
The success of any brick and mortar restaurant depends on its location. Lease commercial real estate in areas that get a lot of foot traffic and are visible from main roads. Keep in mind that if your business isn’t noticeable to the public, it might have to rely on online ordering–at least in the beginning.
5. Obtain the Necessary Permits and Licenses
Legalities aren’t exactly a fun topic to discuss. However, it’s necessary to learn about such details to open a new business according to the law. To open your doors to the public, you’ll need to obtain the following documents:
- Certificate of occupancy
- Business license
- Building health permit
- Sign permit
- Food service license
- Food handler’s license
Always double-check license and permit requirements in your township. Laws can vary depending on your location, so it’s also important to take the time and confirm the details from local officials.
6. Design the Layout and Furnish the Space
Here’s where you’ll really see your visions come to life. Within a month or so of opening a new restaurant, head to the location and furnish the space. From wall decor to tables and chairs, this step is extremely important for the launch.
Decor and use of color will help brand your restaurant. Then, the setup of tables will determine other important details. For example, the restaurant seating capacity is a vital metric for a reservation system. It will also help the owner decide how much they need to prioritize delivery. You can also take this time to install all the appliances.
7. Onboard Restaurant Technology Solutions
Restaurant and food tech solutions contribute to some of the most profitable business models in the space. They allow the restaurant manager and owner to put tasks on autopilot, never having to worry about work overload. They’re also capable of improving the guest experience.
By using the proper tech solutions, restaurants can improve accuracy, speed up table turnover, and cut the labor cost. It’s an investment that’ll pay for itself time and time again. The tech features that we think you should start with include:
- Integrated POS system
- Restaurant inventory software
- Kitchen display system (KDS)
- Online ordering apps
- Google food ordering
- Customer rewards program
8. Hire a Productive Team
You can’t run the show without a team of passionate employees. During the months leading up to your launch date, conduct interviews with candidates for each role. Starting out, you’ll need to hire the following positions:
If you want to make things much simpler, use HR software for restaurants. Not only will this organize onboarding details, but it will automate payroll. Plus, it'll make things more straightforward for your accountant or bookkeeper.
9. Promote the Restaurant
Effective restaurant marketing techniques will serve as the best ways to attract customers to your restaurant. Sure, word-of-mouth marketing is one of the most influential types. But, you need to begin somewhere else to get that flow of traffic rolling in.
10. Launch Your New Business
Congratulations! Once you make it to this step, it's time to open the restaurant's doors. After promoting the launch date, host a grand opening for your business. Make it extra special by playing upbeat music, giving discounts, and offers for your restaurant loyalty program. As the owner, ensure that the customer experience is as memorable as possible.
Frequently Asked Questions About How to Open a New Restaurant
Once you choose to open a new restaurant, many questions and concerns will come your way. If you're still unsure about the whole process, no need to worry - we've got you covered! In the section below, you'll find a handful of questions that people normally ask when opening a new restaurant. Read on for more details about the topic!
Is It a Profitable Venture to Open a New Restaurant?
Yes, it's a very profitable business venture to open a new restaurant. On average, expect the restaurant profit margin to be anywhere from 2 to six percent.
How Hard Is It to Open a Restaurant?
Restaurant businesses are very challenging ventures to run. In fact, 60 percent of restaurants don't survive the first year, and a whopping 80 percent don't make it past four. If you would like to achieve longevity, you must ensure that you can identify common signs of failure in the restaurant business.
How Do You Make Money After Opening a Restaurant?
One can make money in a restaurant by pricing items accordingly. Adding an appropriate markup to the menu items will ensure that the business gains profits.
How Do Restaurant Owners Pay Themselves?
Restaurant owners can pay themselves a salary every year, as they would for their employees. Or, they can keep a fixed amount of the restaurant's total profits each year. In some cases, they can earn a mix of a salary and dividends from the company.
Which Type of Restaurant Is Most Profitable?
Bars are the most profitable type of restaurant business. Sure, most people enjoy grabbing a bite to eat and some drinks. However, the fact of the matter is that liquor sales drive profits. Liquor actually has the highest markup of all the types of inventory. So, it's no wonder bars are so profitable.
Let Revolution Ordering Help You Open a New Restaurant
The journey to open a new restaurant can be just as scary as it is exciting. A person in this position must pay close attention to various factors. Luckily, the use of innovative restaurant technology can streamline operations. If you're looking to open a new restaurant and need some help, book a demo with us today!