Opening a restaurant is a dream for foodies everywhere. As an owner, you enjoy full creative control over the menu, food quality and customer experience. Before you start a restaurant, however, it’s important to understand exactly what goes into the process.
So sit back, untie your apron and dig into the steps for opening a restaurant.
Steps to open a restaurant
Opening a restaurant is both exciting and complicated. From getting licenses to planning a menu and buying kitchen equipment, each phase requires patience and attention to detail. Use these steps to organize your plan of attack.
1. Decide on a restaurant concept
Your restaurant concept is the central idea or theme of the business. Typically, it involves two core elements: the cuisine you offer and the environment in which you serve it.
Popular cuisines include:
Once you know what kind of food you want to serve, it’s time to design the environment. Some common style and size options are:
- Fast food
- fast casual
- ghost kitchen
- Fine dining
- Coffee shop
To crystallize your concept, summarize the idea into a sentence. For example, “a small fast-casual café serving espresso drinks and elevated comfort foods in a cozy setting.”
2. Build a restaurant business plan
Write a restaurant business plan that describes your operations, analyzes the market and identifies the target audience. It should also lay out the structure of the organization and make financial projections.
A well-researched plan is a roadmap for opening a restaurant — you can use it to guide every important decision, from choosing a location to setting the menu. Potential investors will use the plan to determine your potential for success.
When you’re opening a small restaurant, the business plan can be less complex. You might include fewer details about the organizational structure and focus primarily on the target audience and competitor analysis.
3. Secure restaurant funds
There’s no getting around it: It’s expensive to open a restaurant. Many owners need to seek funding to help cover the costs of rent, furniture, decor, equipment, insurance, licensing and labor.
Some common funding sources for restaurants are:
- Business loans
- Business lines of credit
- Financial support from family and friends
- External investors
Restaurant startup costs can vary considerably based on size, type, and location. One survey of restaurant owners reported that average totals range from $175,000 to $750,500. Another report estimated startup costs ranging from $95,000 to $2 million.
Owning a restaurant can be profitable. However, since profit margins are tight — usually ranging from 3% to 5% — you must control factors such as inventory tracking, ingredient selection and food waste.
4. Find a restaurant location
Location is one of the most important factors in a restaurant’s success. It determines everything from public perception to the customers you’re most likely to attract. A restaurant that’s highly visible and set in a convenient location may have an easier time than one that’s hidden away on a back street with no parking.
As you evaluate locations, consider these factors:
- Available parking
- driving distance
- Proximity to public transportation
- Visibility from the sidewalk or road
- Ease of access
- Existing kitchen facilities
Think about your target audience, too. Where do they live? Will they walk or drive to the restaurant? What kind of environment do they prefer?
Use audience insights to guide your property search. If your goal is to be the local date-night hotspot, for example, you might prioritize a property with a beautiful view or an intimate vibe.
5. Obtain restaurant licenses and permits
Every restaurant needs a license; it demonstrates to customers and officials that you know how to operate legally and safely. Restaurant licensing requirements vary based on your location and business and may be required by city, county, state, or federal regulations. Common licenses and permits include:
- Business license
- Food service license
- Food handler’s license
- Building health permit
- Certificate of occupancy
- Sign permit
6. Create your restaurant menu
Work with your chef to craft a menu. Most menus fall into five categories: static, cyclical, fixed-price, du jour and à la carte. As you choose dishes, consider these factors:
- Alignment with restaurant concept
- Popularity and competitive advantage
- Most important ingredients
- Ingredient availability and seasonality
- Prep time and complexity
- Costs and profit margins for each dish
- Food allergies and dietary preferences
When you come up with a short list of dishes, consider menu pricing; set prices that are acceptable to your target market but still enable you to make a profit. If certain items are too expensive for the restaurant concept, eliminate them from the menu.
At this point, you should have a final list of dishes. To design the menu, follow these tips:
- Separate dishes into categories.
- Allow plenty of white space.
- Highlight priority meals with bold fonts or graphic elements.
- Indicate items that are safe for allergies and dietary restrictions.
- Write applying descriptions.
- Take beautiful photos for your website and delivery menu.
7. Find restaurant equipment and food suppliers
With your menu in mind, find suppliers that can deliver the necessary ingredients on your required schedule. Build community and gain a competitive advantage by working with local suppliers to source high-quality foods with short delivery times. Other options include national wholesalers, catering suppliers, and commercial butchers, farmers, and fishmongers.
Then, purchase the necessary equipment for the restaurant. At a minimum, you’ll need appliances and furniture for:
- Food preparation
- Guest comfort
- trash collection
Equipment is a big investment, but you can buy used items to save money without sacrificing functionality.
Technology is another important consideration; it helps you market the company, process orders efficiently, and capture more delivery business. Most restaurants need a point of sale (POS) system, printer, cash drawer, payment processing technology, kitchen displays, and a mobile ordering system. Grubhub can streamline your tech stack — it integrates with many POS systems, so delivery orders flow right through to the kitchen.
8. Hire restaurant staff
Place job postings in local newspapers, on online job boards, and in social media groups. You can also reach out to professional contacts for referrals, especially when it comes to manager and chef candidates.
The number of employees you need depends on the size of the business. At a minimum, you should hire:
- general manager
- Chefs and/or cooks
In small restaurants, the same people may fill several of these roles. Large or specialized restaurants may need additional staff members, such as a food and beverage manager, executive chef, pastry chef, sommelier and kitchen manager.
Onboarding is paramount for a new restaurant. With thorough orientation and training, workers can do their jobs with confidence and create a positive experience for customers. This is a great time to establish company values and traditions that minimize employee turnover: respect, fair and flexible scheduling, continuing education, staff safety and an inclusive environment.
9. Create a restaurant marketing plan
Marketing is critical for a restaurant startup. Done successfully, it builds a buzz and gets local customers excited to try your food. A marketing plan helps you stay on task and build brand awareness, even amidst the chaos of a grand opening. This document maps out your marketing strategy — what you want to achieve with your promotions, how you’ll do it, and how you’ll know it’s successful.
As you build a restaurant marketing plan, include these items:
- Description of the target audience
- Competitor marketing analysis
- Marketing objectives, such as building brand awareness or increasing foot traffic
- Marketing activities that achieve your objectives, such as social media campaigns or marketing emails
- Metrics to track the performance of marketing activities
For modern restaurants, a website is the most important marketing tool. It’s the core of your web presence; customers will visit to see the menu, look at photos and find opening hours. To drive additional business, consider adding a branded online ordering website with Grubhub Direct.
10. Host a grand opening
There are two phases to a restaurant opening: the soft opening and the grand opening.
During a soft opening, you invite a select group of people to try your restaurant. It’s a great time to get your staff up to speed, refine your operations and experiment with a trial menu to see how customers respond to different dishes. Before your soft launch, you should have a menu with prices, all necessary equipment and trained kitchen and front-of-house staff.
After you implement the lessons from the soft launch, you can plan the grand opening — the first day the restaurant is open to the public. Make sure to build excitement with advertisements, social media posts and influencer marketing. Create a sense of occasion by offering special treats to the first customers, setting up a photo background or planning live entertainment.
Invest in tools to grow your business
Getting to your restaurant’s grand opening takes time and effort, but the results are rewarding. With careful planning and an organized approach, you can set the business up for long-term success. Grubhub is here to support restaurant growth. Our solutions like professional delivery, direct online ordering, POS integration and virtual restaurant support can help get your new restaurant in front of eager customers. Want to learn more about how partnering with Grubhub can benefit your business? Try Grubhub free for 30 days.