Starting a new restaurant can be a very exciting business venture. According to the Bureau of Labor Statistics, U.S. households will spend an average of $3,365 per year eating out at restaurants, almost as much as eating at home. The industry continues to grow year over year, and there has never been a better time to open your very own restaurant business, but it can be quite an intimidating prospect.
You need to handle a variety of complicated tasks and make serious decisions, some of which you may not have even thought about up to this point before you are ready to open your doors to customers.
However, you can make the entire task of planning seem more relaxed and more manageable by breaking it down into separate steps with our handy checklist.
Checklist of 10 Steps to Opening a New Restaurant Successfully
If you have the necessary skills and feel like you have something to offer today’s dining enthusiasts but have no idea about how to start a new restaurant, you have come to the right place. To make this vast undertaking easier to manage, I’ve provided steps you can follow as an essential guide.
In this guide, you’ll learn everything from how to pick your concept to your soft opening. You’ll also learn everything in between like how to do recipe costing, so you’re going to have a lot on your plate (no pun intended). Here’s a checklist of steps to help with everything you need to get started and open your restaurant like a pro.
1. Pick Your Concept
Before you begin, you need to sit down and think about what kind of restaurant it is going to be. The type of food you intend to offer, style of service and type of environment you envision are all aspects of the concept. These will help determine whether you want to create a fast casual, bar and restaurant, family style, fast food, cafe, buffet or fine dining establishment as a few examples. Here are some of the top trending concepts to get the creative juices flowing.
The concept plays a considerable role in determining your restaurant’s mission, personality, and identity, and therefore ties in with the brand. A unique and well thought out concept can help you create a brand that resonates clearly with the type of crowd you want to attract to your new restaurant.
If you’re still not sure what kind of food and beverage operation you want to open, there are many types of options to choose from that are popular. Fast-casual restaurants are the next big thing in limited service, here’s a list of the top 40 fast-casual concepts by QSR magazine.
After you have decided on your type of restaurant, it’s time to have some fun with naming your business. Pick a handful of names and get feedback from friends, family, and colleagues.
Another option to consider is to go with a franchise, so you don’t have to reinvent the wheel, and a lot of the work on this checklist is done for you. But it depends on your risk tolerance and if you want to own your own business or be part of a larger organization. Let’s not sugar coat it, starting and running a restaurant can be a risky endeavor, so working with a franchised business can reduce but not eliminate some of the risks. Either way, you’re going to need financing and to prepare a business plan, which brings us to our next step in the process.
2. Create Your Business Plan
To gauge the viability of your new business venture, and to seek funding from most lenders, you will need to have a comprehensive business plan. A business plan helps you get into the details of how you intend to make the venture work.
Your plan could be anywhere from 10 to 50 pages depending on the size and type of your concept. The restaurant business plan will have several sections where you’ll need to provide specific details for your research and your potential investors. Here’s what an outline would look like:
Business Plan Summary
By completing each component in detail, you’ll have your estimated costs of startup and how much you’ll need to keep your restaurant operating for the next few years. You’ll also have a snapshot of how much funds you have available to invest and how much you may need to borrow with a business loan.
Margins can be thin, but with a well-prepared business plan, you can be able to show investors and lenders that you have assessed the viability of your venture, and have an idea of how you intend to make it profitable, daily and in the long run.
3. Design Your Menu
You need to have a basic idea of some of the main food items you intend to offer customers way before you open your new dining establishment. These should help you put together a bare-bones menu which will initially guide your choices involving the sort of employees and equipment you need. A menu also gives you an indication of the kind of customers you hope to attract.
A good tip when it comes to designing your menu is to work with your food vendors to put together your menu items and prices. Consult with your food vendors, because they have a lot of experience working with various food and beverage establishments and can help you put together your menu and assist with recipe costing.
You can revise the menu later on as you get a clearer idea of what that your customers like, but you’ll require a physical menu before going live. Also having a spreadsheet or hard copy of your menu to present to your POS provider will help to program your POS (point of sale) system. Most POS companies can use your menu data to program the menu on your POS, so providing this information will help to expedite the setup process.
4. Pick Your Location
Simply put, the location you choose for your new restaurant can make or break it. As such, you need to put some thought into the location before signing that lease agreement.
Signage and Parking. When researching for space, you’ll want your signage and preferable your building to be visible by people walking or driving nearby. You’ll also want to consider the parking requirements based on your seating. If you’re busy on a Friday night, do you have enough parking to accommodate all your guests?
Local Competition. It’s a good idea to find a balance in the distance between your competitors – that way your customers aren’t tempted to visit another establishment that is similar.
Customer Demographics. If you watch Bar Rescue with Jon Taffer, you’ll know he always researches local demographics before performing a rescue. So picking the proper location in advance based on your desired demographics is critical.
Wages and Labor Costs. Determine the labor costs for the area you’re considering and incorporate that into your business plan – this will also give you an idea of what to pay your employees.
A suitable location should be easily accessible, by foot or car, in a high traffic area to guarantee visibility and a good flow of customers. It is also important to choose a location that is not too competitive; starting a restaurant a safe distance from your fiercest competitors might be a good way to attract a consistent flow of customers.
If you’re starting as a restauranteur, we recommend that you lease your space to keep your costs down – this will also give you more flexibility should something happen with the business or if you plan on expanding.
5. Acquire Permits and Licenses
Depending on the state you live in, you will need several permits and licenses to operate your new eatery. For instance, you will need a business license, EIN, foodservice license, liquor license (if you’re serving alcohol), signage permit, and food handler’s permit regardless of where you intend to open a restaurant. If you are planning on having an outdoor space, you will need separate licenses.
Since it might take several weeks or months to issue licenses, it is crucial that you start the application process as soon as you have funding. Consider having a legal professional assist you with the license applications to ensure that everything is done correctly.
6. Find Suppliers And Employees
As previously stated above, you can start buying the necessary equipment and supplies once you have a menu. You should opt for Energy Star-branded appliances as they are more energy efficient and will offer significant cost savings throughout their useful life. You also need to find reputable suppliers and food vendors who provide fresh and high-quality products and any other consumables at the best possible prices before you open a restaurant business.
Each business will be unique, but here’s an idea of some of the positions you’ll need to hire for when starting your restaurant:
Head Cook or Executive Chef
As your opening date draws nearer, you can start hiring employees for the kitchen and the floor. Remember to take time to identify the right professionals for each position. Don’t be shy about asking any questions or even asking to test-taste food prepared by the chefs under consideration, especially if you are not familiar with them and their food preparation skills.
7. Choose a Layout
It is essential for you to come up with the right layout before opening your eatery for business. The arrangement should essentially facilitate a perfect flow from the front entrance of the space to the kitchen at the back.
You can design the layout yourself with software intended for floor planning like RoomSketcher, CAD Pro, or SmartDraw, or may want to consider working with a design consultant who can maximize the floor plan. If you’re not sure what designer to work with, your equipment suppliers or food vendors should have some local recommendations. With an optimized layout and seating arrangement, the smoother your operations will be and the better the opportunity for more profits.
After the layout is complete, you can then look to decorating the space to create the ambiance and mood you envisioned at the beginning.
8. Purchase a POS System
Protect your profits by utilizing a point of sale system for your restaurant. If you’re starting a small restaurant and want to use a cash register, that’s fine. However, if you plan on having employees, inventory, and want to accept multiple payment types, then you need to consider purchasing a modern restaurant management system.
We find that most owners make this the last step on the list, but it’s vital to research your options before making a final decision. Honestly, with all the options on the market and with the low cost of cloud-based POS systems, you’ll want the advantages of utilizing a POS to improve customer service and grow your business. You and your staff need to be adequately trained, and the POS should go through test transactions before going live to work out any programming bugs or operational issues.
With most POS companies and providers, it will take a minimum of 30 days to get a full functioning POS system programmed and installed. There are exceptions to this rule, but the point is to not wait until the last minute because you don’t want to delay opening or open before your point-of-sale is in place.
Advertising your new restaurant will help capture the attention of potential diners, and with it, attract customers. Make sure that you choose the most appropriate advertising channels keeping in mind the type of patrons you are looking to reach. The main focus of your advertising should be to get people interested in your new dining establishment, using excellent images of some of the dishes on offer, as well as sharing relevant information about your restaurant.
Here a few tips to help generate some buzz as you get started:
Website with Menu and Images. You should start out with a website that is branded with your business name. Your website should have your menu, high-resolution images, about us section, address, phone number, and hours of operations. When someone types in your brand name in the search engines, your website should come up. Here’s a roundup of 50 examples of restaurant website design we compiled for you to get the creative juices flowing.
Google My Business (GMB). Setup a free Google My Business account and completely fill out the profile with all your business information. Link your website address on your GMB account. Get a minimum of 5 positive reviews from your customers to get the gold stars.
Use Social Media Accounts. Create a Facebook, Twitter, Pinterest, and Instagram account and share images, coupons, promotions, and information about your establishment. Pick at least one to post to frequently and it’s important to stay consistent when sharing on social media. Link your website address on all your social accounts to help establish your brand.
Get a Yelp Account. Another great way to increase your brand authority and to be found online is to establish and claim your business on Yelp. Yelp is one of the main sources for opinions and reviews and you want to make sure you have accurate information on your page and that you stay on top of the reviews.
Use a Loyalty Program. Reward your customers with a loyalty program to keep them coming back again and again. You can use a mobile loyalty platform or some POS systems include loyalty software as part of the service. Text and send out messages with promotions.
Local Radio or Newspaper. You might think that radio and paper is old school, but don’t discount these marketing avenues. Radio ads are still very relevant for getting the word out about local eatery’s. Reach out to the editor of the local paper to get a write up about your grand opening.
Create a Newsletter. Capture emails from your website and your POS system to start building your email list. You can send out a newsletter to your customers about promotions, events, coupons, pre-fixed menus, and bands that are playing, as a few examples. Also share the newsletter on your social media accounts.
Offer Promotions. Everyone loves a good deal, especially if it’s for free. Offer your first-timers a free appetizer or dessert to welcome them to your business. Offer your existing customers discounts or free products as part of a loyalty program.
These are just a few tips, but the most popular advertising channels to use include social media advertising, your restaurant website, local newspapers and radio stations.
Before you go live, you might want to consider having a soft opening – this is very common in the industry. By having a soft opening, you give your staff the opportunity to go through the paces without the stress of serving the general public with a massive grand opening. It’s a good idea to give everyone a “trial run” to use the point of sale system, fine tune your meal times, and practice serving guests, as a few examples.
Here are a few tips to help pull off a soft launch:
Host Family and Friends. One of the more popular methods is to hosts your family and friends with a complimentary meal to help train staff.
Offer Reduced Menu. Start with a smaller menu for a limited time, then invite your customers back to enjoy the full menu.
Reduced Hours. Open for half days for the first few days or a week, then ramp up and open for full days when everyone is ready.
So there you have it, our checklist of the steps needed to open a new restaurant. The process is anything but easy; however, with proper planning and perfect implementation, your dream of starting a new dining establishment can be realized. Thanks for reading, we hope this list was useful to you. If you have any questions or comments, please let us know below.
Cathy Smiley is a POS specialist, former restaurant professional, and content contributor for www.posusa.com. Cathy currently works as an ISO for one of the largest POS companies. Since 2011, she has personally been involved with hundreds of point-of-sale installations. Her articles have been featured or mentioned in many of the top industry websites. She likes writing on the subject of POS systems and enjoys helping merchants find the best solutions to help grow their business.
For more information about the point of sale industry, Cathy invites you to Like Point of Sale USA on Facebook and to Follow POS USA on LinkedIn.