Opening a restaurant is not an easy task. You have to come up with a business plan, find the perfect site for your restaurant, and then you need to open on time while managing all of the challenges that come with running this type of business. That's why we created this checklist for opening your restaurant: a survival guide which will help you get from clueless to confident by your opening date!
Why start a restaurant business?
Having a restaurant is not about the money, it's all about living your dream! Opening your own business will give you the chance to make your ideas happen, on your terms and timing. The restaurant industry is still recovering and there are great opportunities to open a successful business. There are many reasons to start, but most importantly is that you do it our of passion for good food and seeing smiles across your future employees' and your customers' faces.
It's possible for restaurants with limited budgets or experience to find success in this industry. It doesn't have to be too difficult or expensive for you to open up that little spot in town with amazing food and great service. However, even money can't solve everything, because proper restaurant planning is what leads you to your goal.
The checklist of successful restaurants will help you prepare for the day that has come, but it's never too early (or late) to start planning! Take time before hand to explore ways in which this type of project may be connected with what you're currently doing.
What about your target demographic?
Who is your target customer? Is it a family with young children, couples on the go, working professionals, students? The type of food and beverages you serve at your restaurant depends largely on what demographic you are targeting.
If you might be serving children and families:
- Look on the restaurant plan to see what kind of food and drink you will have
- Try to make the food more healthy so they can eat it
- Make sure that they have a place to play outside or be seated away from the bar (if you have one)
- Find room to store high chairs and maybe even strollers for customers to dine with ease
If you might be serving couples on the go or working professionals:
- Look for a restaurant that is close by to a metro/bus station and has parking spots available near it
- Make sure there are businesses or shopping centers nearby so they will have something else to do after eating your food
- Make sure you have some take-out and delivery options
- Try to have some quieter spots for working professionals to arrange meetings or work while dining
If you might be serving students:
- Try to have affordable prices for their student budget
- Choose a location that is near university or college buildings and has public transportation nearby
- Offer discounts with ID, such as 50% off the second pizza ordered or 10% off everything.
If you might be serving the elderly:
- Look for a restaurant that is handicap accessible
- Have chairs and tables with high edges to avoid someone from accidentally falling off of it
- Make sure the parking lot has extra space allocated for wheelchairs or scooters
- Keep in mind, they might not be able to eat as quickly as you would want them too. Give them time!
The cost of starting a restaurant
The cost of opening a restaurant will depend on the type or size of your business. Start by looking at your budget and knowing the type of restaurant you want to open, which will lead you to starting a business plan.
If you are opening a franchise, the initial investment will range from $25,000 to $250,000+
If you plan on being independent and not franchised or license free of charge (including all permit fees), it could be between $300-$500K. These numbers depend largely on if this is your first restaurant business or not.
Based on estimates:
- If you want to have a small restaurant/bakery, then your budget will be around $30,000.
- A larger restaurant with a bar might cost about $200,000 - 300,000.
- An upscale restaurant could cost as much as $500K or more!
Not every restaurant needs millions to start and you don't have to start with an expensive location, but be prepared for unforeseen costs such as food, security systems, equipment financing, furniture replacements and more. Equipment financing alone typically works at a fixed interest rate usually between 8% and 30% with a fixed term length so your payments will be the same from month to month.
Do not forget about taxes (Income Tax, GST/HST, PST, CPP and EI). Everyone has to pay these amounts, including the employer! The costs will depend on how many people you have working in your restaurant. Remember that if you hire people to work for tips, then you are only responsible for paying the minimum wage.
However, investing your time and money in restaurant management will only bring you more profit in the long term. If you need more information about cutting down on costs, properly managing orders and inventory, food and beverage costing, and other useful money saving tips, we have other blog posts you may be interested in!
As for now, we will give you the checklist you've been waiting for...
Checklist: Opening a restaurant
Implement a business strategy
A restaurant's success starts with a thriving business plan, so be sure to include an executive summary, company description, industry analysis, geographic analysis, target market analysis and marketing strategies.
Choose the right location
The most important thing to consider when looking for a restaurant is where it will be located. If there are any preconceived notions about where to locate your restaurant because of busy roads or public events nearby, it might not be best for you.
You want your restaurant to be in an area that has high traffic, plenty of parking, or even access to public transportation to find more potential customers. Of course, your restaurant should be in an area where your food attracts the customers you want and offers food that will tempt them to revisit.
Consider the restaurant's size
Size matters when it comes to choosing a restaurant space. If you want high-volume, then choose the bigger size option because this will allow for more seating and will make your customers feel more comfortable and welcomed.
Be sure the property you select can accommodate all needs such as kitchen layout, storage space, office space (if necessary), food preparation space, seating space, restrooms, decoration space and more. When stocking new commercial kitchens, it is important to purchase commercial grade appliances and dishes because kitchen equipment quality is crucial for the cooking process, and your executive chef and other restaurant workers will have an easier time getting the job done. Not only are these items more durable than their home counterparts, but some also have warranties.
Building/Buying or Renting?
Decide if you are going for a fast-food, quick service, casual dining, or fine dining. These options will help determine your restaurant's appearance and menu offerings. This may also affect the design and equipment needed as well as how much time customers need in order to move through the restaurant.
If you're going for a fast-food restaurant, then it's more likely that customers will want to eat and leave quickly. Whereas casual dining restaurants are designed to be more welcoming with slower service and comfortable seating arrangements.
Before deciding on whether or not to buy your building, figure out if renting is cheaper and less risky than buying.
If you do not have enough money to purchase your building, consider if you want an amortized mortgage with a fixed interest rate. In this case, the monthly loan payment is usually lower than buying and then paying off in full.
As for tips on how long to stay at one location before relocating: rent first because it is cheaper and you can always purchase the space when you're ready.
What about floor plans?
Once you have found a location, the next step will be to get all of your floor plan requirements together and ask these questions:
- How many square feet are available for lease?
- How much is the monthly rent? Does it include utilities?
- How about parking spaces or storage space?
- Do you have to rent any furniture or equipment?
- How much will renovations cost and when will they be done?
- When can you start the lease?
- Do you need time to get things in order before opening?
Estimate your costs based on these factors, and make sure to leave a little room in your budget for the unexpected.
Plan for equipment
You will need a lot of kitchen appliances from ovens to refrigerators, dishwashers, fryers and more. These expenses are usually financed at an interest rate between 0% - 30%, with fixed terms that depend on how much money is needed.
In order to save money, purchase appliances and equipment used or refurbished. There are also leasing options available that can be paid in monthly installments for as long as you need the equipment.
To acquire a better idea of how much it will cost to open your restaurant (this is important!), use this equation:
Equipment Cost + Lease Payments = Total Equipment Cost in Year One.
Tip: Think about hiring a restaurant consultant before finalizing your equipment purchase so you know what will work best for your needs and budget. They can advise on layout, design tips, costs of appliances and more!
Analyze the competition:
There are many tips to opening a restaurant, but this one is probably the most important. It's best to learn from your competition and figure out what they're doing right so you can do better than them!
To start with,
- See if there are any restaurants in the area that have closed recently and why they may not have been successful.
- Investigate the restaurant market to see if there is a demand for your product or service. Do research on other restaurants in the area that already offer similar food and find out how successful they are.
- Find out when people want to eat (if you have an idea of opening breakfast, lunch or dinner).
- Find out what people like about competing restaurants. What do they think the restaurant is missing?
- Get tips from other restaurant owners, food bloggers by researching online or directly speaking to people around the area.
- Make sure not to duplicate any restaurants in the market, but rather offer something different and unique that will attract a new customer base!
Know your competition's strengths and weaknesses
Keeping up to date on the latest restaurant openings will help you know your competition. Once you have a clear idea about what kind of restaurant, look for restaurants in that same category or with similarities. Talk to them! Ask which customers they are targeting (age range, occupation) where their most popular dishes come from and what their service hours are like.
You can also research what kind of food they're serving and if it's a local restaurant, ask about the neighborhood to get tips on where you should be located in order for your customers to find you easily!
Find inspiration from other restaurants too! You want to know how they manage customer expectations, menu items, service hours, and more.
Find your customers
In order to open a successful restaurant you need to find out who will come in hungry for what you're offering! You want to know what your customer base wants, needs and their preferences.
Seek local support: It's important to work with the community in order to establish a restaurant, so you want to reach out and ask for tips on where your customers will come from. Talk to them about what they like or don't like about these other restaurants and why it is that way. You can consider asking them about a restaurant menu and their comments about the variety being offered as well.
For example, if people are complaining about the food at another restaurant, ask them what they would like to see on a menu.
It's also important to understand your customer base so you can cater and create dishes that will be popular with this group! Research current restaurants in the area for tips: It is important to do research when opening a new restaurant because it gives you a practical idea of what to offer in terms of food, design and customer service.
Choose a name for your restaurant
Naming a restaurant can be one of the most difficult parts to getting the restaurant established. You want a name that has some meaning, is easy to pronounce and spell, and differentiates from other restaurants in its category or area.
Be sure not to use an existing trademark as it will make it difficult to market the restaurant. Choose branding that you think will withstand the test of time, and one that you can easily design your restaurant around in terms of ambiance, style, and cultural preferences.
You can also create a clever play on words with your name or use a slogan that embodies what customers will experience when they come in for dinner!
Meet With Investors
If you need to get a loan for your restaurant, make sure you are meeting with investors that want the same thing as what you do. Talk to investors and ask them what they are looking for in a restaurant. This will make it easier for restaurant businesses to find the right people to work with.
The best way to find investors it to go to various networking events, like Chamber of Commerce meetings for your local area. You can also put an advertisement in the newspaper or on social media stating that you are looking for investors. Make sure to offer enough information about your restaurant without giving away any trade secrets that might make people hesitate from investing.
No matter if you are meeting with a bank, small business bureau, or private investors, bring all your paperwork neatly organized, in folders and portfolios for investors to keep.
If you are going to be investing your own money, find out how much it will cost up-front for all the necessary permits and renovations.
To put down a payment on restaurant business, you'll want to look into the following:
- Figure out what your budget should be. You can get tips from family and friends about how much they might be willing to invest in your idea.
- Once you have that number, make sure it's within reach of numbers for loans.
- Think about where your money is going to come from and what kind of restaurant you want to open up- there are many factors that go into price!
- If all looks good with your finances then decide when you will put down the deposit or withdraw funds for opening day.
A very common way for restauranteurs to find funding is through tips from family and friends. It is always a good idea to avoid asking for too many tips from one person because you want to make sure that the fund you are given can be repaid in timely fashion.
If tips aren't a viable option, it's important to have an idea of what your budget looks like before looking into loans. You don't want to overspend by investing too much money in a restaurant and then not have enough funds left over for operating costs.
The next step in the process of finding funding is figuring out where you will get your money from. Whether it be tips or loans, these decisions are important because they will affect the profitability of your restaurant and your restaurant concept as a whole.
Establish Your Social Media Presence
In order to open successfully it is important to think about how customers will find out about your restaurant! You want people who live in the area or those passing by to know where you are located so they can come in for a taste.
Before opening a restaurant there should already be an established social media presence that people can check in on before they come into eat! Build followers with posts of the food you have, fun times at the restaurant and tips on what people can expect when they come in.
Get your restaurant listed on Google Maps and make sure the business phone number matches up with your website, Yelp listing or any other social media accounts (Facebook, Twitter, Instagram) that you have set up!
You want to reach out to local newspapers and magazines about what you're doing in order to get the word out.
Get permits, licenses, and insurance
In order to open your restaurant it is important that you get all the necessary permits and licenses. These are usually acquired through researching who regulates a certain type of business in your area (usually, but not always, this will be local government).
To get the necessary permits and licenses, you'll need to research who regulates a specific type of business in your region. Most regions have some form of government that handles these types of things. For example, if you're opening a restaurant in Washington D.C., you would want to contact the Alcoholic Beverage Regulation Administration (ABRA).
Obtaining an operating license is more than just filling out paperwork- there needs to be inspections done on the restaurant to make sure it is up to code, and inspections done on the food by a health department. You'll want to make sure that the kitchen has all the necessary restaurant equipment and facilities for cooking, storing and serving food. The building should also be safe for customers, with fire suppression measures in place and established health codes.
The last thing you want when opening a restaurant is a shut down because of insufficient procedures or improperly maintained equipment. Restaurant costs only increase as a result, since violations can cost you long-term reputation damages and future success.
In addition to getting an operating license, you will need a food handler's card. This is important because your employees are the ones handling raw meat and produce, so it makes sense that they know how to handle food safely.
Insurance is also required for the restaurant business. You will need to research what insurance you'll need based on it's coverage, which is usually a combination of general liability and property damage for different types of businesses in your region.
You will also need to obtain liability insurance in order to operate your restaurant. It's necessary to find out which type of insurance you're going to need before you open up. And then there's the issue of finding it in the first place! A possible solution is starting a conversation with an insurance agent who is aware of the restaurant industry.
An important thing to keep in mind once you are insured is that you'll have cede control over everything that goes into your restaurant- meaning, if there's a health code violation and some food has to be thrown away due to contamination, your insurance will cover it.
Some licenses to consider: To open a restaurant, you need to acquire certificates of occupancy, obtain an employee identification number (EIN), apply for food service licenses and liquor licenses with the state inspections board, get a sign permit from your local government building inspector’s office, and always purchase music to use in-store / or use paid apps like Spotify.
Note: It can take several weeks for a liquor license to be approved, depending on your restaurant's location.
There are a lot of things that need to get done before opening day- and it is important to have an idea of how you want your restaurant to look.
Doing all of the work yourself can be exhausting, so hiring staff can sometimes seem like a good option for new business owners. Hire experienced people in the restaurant industry as soon as possible: head chef, general manager etc.
Make sure when interviewing candidates for managers or other positions that you are asking questions about their experience in the restaurant industry and if they have any tips or tricks for opening day.
It's also important to think about how you want your restaurant space laid out: seating, kitchen, bar and dining area. It is good to have a general idea of the layout before hiring staff or finalizing any contracts with contractors for construction work. A pre-opening checklist should ask questions like "what will be the main purpose of this space?" to help you determine the needs of your restaurant.
Once you have hired staff, it's important that they are properly trained and know their way around a kitchen or bar so that customers get what they order quickly and correctly. We recommend taking care of this before opening day because there will be less time available for training once everything is in place.
It's also important to think that when hiring staff, how much you want the restaurant space to be run by one person. You may need a manager for each shift or have two people share hours of work since it can get exhausting running an entire business on your own.
You'll also want to decide if you're going to hire staff in-house or outsource to a third party. Outsourcing can be a cost effective option for startups, but may take longer and require more time from the restaurant owner.
The final thing you want when hiring staff is someone who will fit well with your business's culture: do they come up with great ideas? Do they have similar beliefs, values, and ethics as you? Do they work well with other people?
Start by creating a restaurant timeline (or at least a project management plan that you can update as necessary). This will help your business stay on track and be able to avoid some of the common pitfalls.
Curating a menu
Create a menu that will be tailored to your specific needs in terms of taste, budget, and technique. Either stick to what you know best and change it up once and a while to offer customers with dishes that stand out from nearby competitors.
Decide the best time of day that makes sense for customers in terms of what they typically get up to on a weekday or weekend morning: some people might like breakfast while others may prefer lunch or dinner.
Think about how you'll be able to cook a certain dish multiple ways so that you can have flexibility when it comes to customer tips and requests. For example, if a dish is popular at lunch but not dinner time, then make more of the ingredients used in that dish during those hours instead of using up all your resources on one meal period!
If you have a liquor license, take care of your alcohol and make sure that it is stocked before opening day to avoid running out during peak hours! You'll also want to get tips from the staff on what drinks sell well so be sure to ask for their input as soon as they've been hired.
Don't forget! Try to offer the menu electronically on your website or by scanning a code for ease of ordering, and to cater to those who might not have a menu in hand at your restaurant.
If you want to avoid running out of menus and any potential spills ruining your menus, print extra and have them waterproofed with a matte plastic film or have it slipped into custom menu folder (which is easier if you change your menu often). Also, ensure that your menus are not too reflective in their material, as this will hinder legibility with any direct source of light; artificial or natural.
Lastly, don't use hard-to-read fonts on your restaurant menus as it will cause more frustration than anything. We recommend using elegant sans-serif fonts such as, Avenir or Gill Sans, as they are generally more readable than serif fonts. Keep in mind, if you opt for a serif font, such as Bodoni or Garamond, you would need to increase the font size in order to account for legibility. A good rule of thumb, design the menu with a font size no smaller than 9pt.
Make sure to consider the type of payment methods you want to offer since it will affect your wait time and tips. Will customers be paying by cash, credit card, by phone or even all methods?
We recommend using a POS system when it comes to payments and tipping because this will allow you to track how much money is coming in and for which dishes, and will allow you to track tips and distribute them effectively to your staff.
If you're worried about the tips being too low, don't forget that they are still taxable income for your employees and could end up costing more than what's coming in!
Immediate customer feedback
It's a common thing for restaurants to ask for feedback, especially if they want to know what dishes are doing well, why customers are unhappy with certain dishes or how they could improve. You'll want to have a feedback form so that customers can write in tips, opinions and any suggestions for dishes. This will help you know what needs to be changed or improved before the next shift starts. There are many ways that restaurants can do that:
- Include a tips box right on the front of the menu so customers can write in tips, opinions and any suggestions for dishes. This helps you know what needs to be changed or improved before the next shift starts.
- Place customer feedback cards at the tables or ask wait staff to give them out as a way of getting more detailed reviews. It may also help if you include a comment card that has a specific space for an email address where people can send their feedback and tips - this will give you a way to communicate back.
- Believe it or not, the time of day that your restaurant opens is an important factor! It's worth considering when deciding on opening hours and what type of business plan will work best for your restaurant as this can affect tips, wait times and customer satisfaction.
For example: some people might want to go out for lunch during the day and others may want dinner in the evening. It's worth considering when deciding on opening hours as this can affect tips, wait times, customer satisfaction - it all depends on what your customers are looking for!
Delivery services can be a lifesaver for restaurants that are too far away from where customers want to dine. It can also help those who don't have the energy or time to put into cooking when they come home from work in the evening. It's a great way to appeal to those looking for fast food or home-style dishes with just a few clicks on their phone.
Some of the most popular food delivery services for restaurants are:
- Grub Hub: For specific culinary requests, Grubhub offers a personal chef to make it happen. They also offer catering packages that will give you all the tips and tricks on how to get your restaurant up and running with tips from industry experts.
- Door Dash: Door dash tries to use as many local vendors as possible. This gives you the opportunity to promote your business while supporting other local businesses. You can order by dish or by restaurant in order to find what you're looking for quickly and easily.
- Eat24: This is an online ordering service that provides restaurant menus and a wide variety of dishes. It's quick, reliable and easy to use for both the restaurant owners and customers.
- Instacart: Instacart provides delivery services that are based on your location and what's available in stores near you. This is perfect if you need soup or just some milk! They also offer tips, tricks and deals for restaurants which can help drive new business your way.
- UberEATS: Uber Eats offers an easy way to order food for delivery. They work with restaurants in your area and deliver the food right to you! This is great if you're feeling lazy, out of time or just want a change from cooking at home. The tips are automatically included which means less hassle when it comes to tips.
- Foodler: Foodler offers an online ordering service for food delivery that is designed to help restaurants get more business by providing a platform where you can offer deals, discounts and coupons as well as find new customers near your location. It's quick, easy, reliable and allows restaurant owners the opportunity to provide better customer service while reaching new customers.
- California Tortilla: California tortilla offers delivery services for your favorite Mexican food - no matter where you are in the US! They also offer tips and tricks to help restaurant owners reach out and find more customers with their online ordering service that allows users to order by dish, location or cuisine type.
Opening Day Planning
The best way to prepare for opening day is with tips from people who are experienced in this area. Be sure to prepare tips for the staff on what they should expect and how you want things done so that opening day is a success!
It also helps to have an idea of who all will be working in your restaurant before people start coming through the door- otherwise it can get chaotic very quickly if everyone has different ideas about what needs to be done.
Tips for Staff on Opening Day
- Check their uniform before opening day so that they are not rushing around trying to find a missing piece of clothing or accessory
- Make sure you have someone cleaning the premises and quickly seating customers to their tables
- Leave some extra tables for walk-ins, if you have none left, make sure you're ready to state wait times and reserve tables either using a hostess, or in combination with a restaurant reservation app.
- Be sure staff members are aware that tips are expected for all customers, not just those who eat at tables.
- Establish a clear system so that everyone knows what they're responsible for on opening day and doesn't feel like they're being left out.
- Have someone be a point of contact for tips and complaints from customers
- Bring any necessary equipment to the restaurant (chairs, general supplies) so that opening day goes smoothly.
- Set up your space with tables and chairs before people arrive or when it's slow in the morning. This will save you time later on as there will be more room to work.
- Decide the best time of day that makes sense for customers in terms of what they typically get up to on a weekday or weekend morning: some people might like breakfast while others may prefer lunch or dinner.
- Make sure your liquor is stored where it supposed to be and is accessible for bartenders/waiters.
- Consider how much time you can dedicate towards opening a restaurant in order to make it work. Will your restaurant be open all day, every day? Will it be open from 11-12pm on a weekday? Keep these factors in mind when considering your hours.
Restaurant trends to watch out for
- Millennials want the ability to customize their food and drinks
- Offering healthier/cleaner menu options for those who have dietary restrictions or allergies
- More vegetarian, vegan & gluten free offerings.
- Use local produce and spices
- Offer food specials catering to food and beverage holidays, such as National Lasagna Day!
- Farm to table restaurant philosophy
- Fusion food
- Alcohol-free drinks
- Offering cooking classes
- Nostalgia food
- Sanitation stations
- Outdoor dining
- A pop-up restaurant (ex: cater at a party, an event, or rent and cook in a food truck)
At the end of the day, there is no one-size-fits all plan that you can follow to open your future restaurant. The key to success is doing your research and finding out what your customers want, or who they are so that the business will be successful from day one and still be an attractive food establishment.
Opening day is usually followed by days of uncertainty and self-doubt, but that doesn't mean you should give up! You may not have everything planned out perfectly before opening day, but you'll be able to use these tips and those from others who are experienced in this area as well.
Remember that the most important thing is to be yourself and keeping learning from your business and your customers. Just with a business plan in hand and this checklist, you have the power to decide what tips you want to implement today.