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If you’re passionate about the culinary arts, opening a restaurant can be an exciting venture. You get to plan the menu, lay out the interiors and start a business you enjoy doing.
To successfully manage a restaurant business, you need to plan ahead and create a well-defined strategy. In this guide, we’ll discuss how to start a restaurant business using a step-by-step strategy. We’ll also share some time-tested tips and a couple of examples to inspire you.
What is a restaurant business?
A restaurant business is a service-oriented business that offers a variety of dining experiences and cuisine to guests. People visit restaurants to taste various dishes and experience good hospitality.
A restaurant business typically has these elements:
A dining room for customers to eat
A reception counter for taking reservations or accommodating walk-ins
A kitchen space where meals are prepared
Wait staff who take customers’ orders, serve food and provide other required services
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Why start a restaurant business?
The food service industry has been showing promising growth in recent years. In the U.S. alone, sales in the food service and drinking places reached a staggering $975.92 billion in 2022.
The global food service industry is also forecasted to grow to $4.43 trillion by 2028. This makes starting a restaurant business a sound financial decision.
However, opening a restaurant isn’t just about the money. If you have a passion for cooking, like to serve people or have always wanted to start a business, you should start a restaurant business.
How to start a restaurant business in 12 steps
01. Create a business plan
Before starting a new restaurant, you need to create a business plan that outlines all the basics of your business. This includes the restaurant name, the restaurant location, the type of cuisine served, the average startup costs and your target market.
Creating a comprehensive restaurant business plan saves time and resources and also sets a foundation to successfully manage your new business.
02. Pick your restaurant type
When eating out, you’ve probably come across different types of restaurants. Some might be fine dining restaurants, some might specialize in a particular cuisine and others might be pop-up restaurants.
Each type of restaurant has its own requirements in terms of costs, staffing and resources. Decide which restaurant type is most feasible to open, considering these parameters.
Here are some common restaurant concepts you can consider:
Casual dining restaurants
Food trucks (see these food truck websites for inspiration)
Cafes and bistros
Cloud kitchens
Catering businesses
Gourmet or niche restaurants
For example, if you live in an area where people are cost-conscious, starting a fine dining restaurant might not be the best option. Instead, a quick-service restaurant or a food cart might get you better sales.
03. Create a restaurant menu
Once you’ve decided on the restaurant type, create a menu. If your restaurant serves a particular international cuisine, include popular dishes from that location. Or, if you’re running a local eatery, make sure to include dishes that people in that area prefer to eat.
Keep the menu diversified to include multiple courses such as starters, main dishes and even desserts. For more profitability, consider catering to different customer types. For instance, you can create a menu for kids and have dairy-free or vegan-friendly options for people with dietary restrictions.
When pricing your menu, consider the expenses of running the business, the desired profit and your target audience. If possible, provide multiple portion options with different prices so you can accommodate different customer requirements.
04. Create a business website
Even though a restaurant is an offline business, creating a restaurant website helps you promote it online and reach a wider audience. When building your website, include the name and description of your restaurant, a booking system for online reservations and any important contact details.
Create a quick and budget-friendly restaurant website using the Wix Editor.
05. Select a business structure and obtain relevant licenses
Like any other business, you’ll need to choose a business model when opening your own restaurant. Consider options such as a sole proprietorship, a limited liability company (LLC) or a corporation, depending on the number of partners, the legal requirements and partnership shares.
However, the legalities don’t end there for a restaurant. You also need permits from various departments to open and run a food service business at any location. These include occupational licenses and permits from the fire and health department. You’ll also need a liquor license if you’re serving alcohol.
Learn more:
06. Obtain business financing or capital
When deciding how to start a restaurant business, you also need to choose a financing or capital source.
Opening a restaurant involves substantial costs, such as:
Cost of kitchen equipment
Interior decor costs
Salaries of kitchen, reception and wait staff
Food costs
Licensing, registration and other legal fees
Marketing and advertising expenditure
Insurance cost
Website creation and maintenance costs
Financing options include taking a small business loan from banks and money lenders, securing grants or reaching out to potential investors.
Learn more:
07. Set up accounting and bookkeeping systems
Tracking your restaurant’s expenditure, revenue and profits is crucial for maintaining the financial health of the business. Set up proper record-keeping systems right from the planning stage to keep restaurant costs in check. You can use accounting software or hire bookkeepers to ensure proper maintenance of records.
08. Source specific restaurant equipment
The equipment you require for a restaurant varies widely based on the type of restaurant you choose. For instance, a fine dining restaurant requires expensive kitchen equipment, while basic appliances may suffice for a casual eatery.
Here are some of the most popular equipment restaurateurs use:
Ovens, grills, stoves and other cooking equipment
Pots, pans, spoons and other utensils
Plates, cups and crockery
Refrigerators and freezers
Chairs, tables, countertops and other furnishings
Dishwashers and sanitizing equipment
Point-of-sale (POS) systems for order processing and payments
Music systems and speakers for entertainment
09. Register your restaurant
After selecting your business name and choosing a business structure, you’ll need to register your restaurant by filing paperwork with your state government. Business registration makes you eligible for tax benefits and protects your personal assets from bankruptcy and debt.
You’ll also need to obtain the required licenses and secure appropriate insurance coverage. Visit your city’s information center if you’re unsure of the procedure for registering a food service business.
Learn more:
10. Find and create your restaurant space
A good location is crucial for running a successful restaurant. A space that is close to the city center or has a bustling crowd will gain high visibility, bringing in more customers. But, such locations may also be more expensive to rent or lease.
If you’re planning to start a small business or you have limited funds, you can choose a location further away from busy areas and within your budget. You’ll still be able to attract customers and increase sales using a well-planned marketing strategy.
If your restaurant concept is mobile, such as a food cart, you can try placing it at different locations for a couple of days or a week. This gives you a good idea about which areas generate more sales.
Once you’ve chosen the location and set up your restaurant, make sure to create a good ambiance. Use high-quality furnishings, vibrant colors and suitable decor to make the space attractive for customers.
11. Hire staff for your restaurant
You need adequate and well-trained staff to create a good dining experience for your customers. These include receptionists, chefs and wait staff. If you’re serving alcohol, you also need skilled bartenders.
Publish job ads in local newspapers and interview applicants to make sure they fit your restaurant’s requirements. You can also hire college students and interns to cover part-time shifts if hiring full-time employees becomes a challenge.
Be sure to create a good work culture and provide adequate pay to your staff. This makes it easier to find dedicated employees and retain them for the long term.
12. Promote your restaurant
Promoting your restaurant both online and offline helps bring in more customers and keep your business growing. You can distribute fliers or offer limited-time discounts to promote it offline.
For online promotions, you can also create a solid social media marketing strategy and run exclusive offers for your followers. This way, the restaurant will increase its reach.
Tips for managing your restaurant business for profitability
You’re off to a great start with the above step-by-step guide on how to start a restaurant business. However, managing the business is a much more nuanced process. The tips below will help you keep your restaurant business profitable in the long run.
Marketing strategies
Marketing helps you create awareness about your food business. But this doesn’t always have to be expensive ads in newspapers and social media. You can also implement inexpensive yet effective marketing strategies to popularize your restaurant.
Try generating word of mouth by inviting influencers. To increase foot traffic, host a grand opening ceremony and offer discounts to first-time customers who visit your restaurant.
You can also create a social media profile for your restaurant and use the right content marketing plan to build an online audience.
If you want to run ads, use the Instagram and Facebook ads tool by Wix to quickly create campaigns and track your performance.
Network with local merchants and food suppliers
Networking with local food suppliers, merchants and other restaurant owners not only gives you contacts for your own business, but it also helps you research the market and understand industry trends.
While data and numbers are readily available everywhere, exclusive insights about the local restaurant industry can only be gathered by talking to people in the field.
Tweak the menu for seasonal twists and variety
Many restaurant business owners create seasonal menus to bring a sense of newness to the business. For example, Starbucks serves spooky, Halloween-themed beverages every October.
You can also offer seasonal fruits and vegetables, use holidays and events or experiment with new dishes to bring variety to the menu.
Restaurant businesses to inspire (all built on Wix)
Here are a few examples of restaurant business websites built using Wix that serve as an inspiration to budding restaurateurs:
Market on Front is a Missoula-based food service business that includes a restaurant, a deli, a coffee shop and a grocery store. Its website has an extensive menu, two delivery options and contact information so people can reach out if they require catering services.
Chiles Mexican Grill brings Mexican cuisine to the city of Tokyo with its elaborate selection of burritos, tacos and salad bowls. The restaurant displays all its menu items and prices on its business website, along with its opening hours and a map to help customers reach the location.
Haiku Melbourne is a futuristic Japanese restaurant that serves delectable sushi, sashimi and bento boxes. Its website provides options to preorder, use its catering services, reserve a table or order online.
How profitable is a restaurant business?
If you plan properly and use the right strategy, starting a restaurant business can be a profitable venture. A restaurant owner in the U.S. earns around $97,173 per year on average.
However, the profitability of a restaurant business depends on several factors, such as the location, competition, market demand, pricing strategies and quality of food and service.
For example, a full-service restaurant in an area with high footfall may get hundreds of orders a day. But its profitability might be low as the business might also have high operational costs.
In contrast, a small restaurant with limited items located in the same place might have higher profits as it may operate at lower costs.
How to start a restaurant business in a specific state
The basics of opening a restaurant are the same in every location. However, the legal requirements, licenses and permits may vary from state to state. To understand better, let’s see how to start a business in Texas and Ohio.
Texas
Texas requires every retail food establishment to have a valid permit issued by the Texas Department of State Health Services (DSHS), depending on the restaurant type. You also need a food manager’s certificate and a food handler’s certification.
Texas also has certain equipment and facility requirements to ensure food safety, such as:
Multiple sinks to sanitize equipment and wash hands and utensils
The availability of both hot and cold water for all sinks
A well-constructed sewage disposal system
Water from approved sources
Visit the DSHS website to get a detailed overview of these requirements.
Ohio
The requirements for opening a restaurant in Ohio are similar to that of Texas. You need a food service operation license from the local health department and an additional permit if you’re serving alcoholic beverages.
You also need to responsibly dispose of solid and hazardous waste and levy proper sales taxes on the items you sell. The Ohio government has created a handy checklist of all the requirements to simplify the process of opening a restaurant in the state.
How to start a restaurant business FAQ
How much money do I need to open a restaurant?
The amount of money you need to start a restaurant business can range anywhere from hundreds to tens of thousands of dollars. It depends on the type of restaurant, your city and all associated expenses.
Consider these factors when calculating the cost of starting a restaurant business:
Cost of acquiring, renting or leasing a property for the business
Cost of furnishings and interior decor
Restaurant staff payrolls
Cost of necessary equipment, cutlery and ingredients
Fees to apply for and obtain multiple licenses and permits
Marketing and advertising costs