How to Open a Restaurant – The Ultimate Guide

A chef with a deep passion for cooking quits the job in order to follow his dreams, reclaim creative promise and open his very own dream restaurant. He knows how to open a restaurant, he only needs to act on the idea.

He stumbles. He falls. He needs to sort tons of personal and professional issues along the way. But in the end, his dreams come true and he lives happily ever after.

The image that probably crossed your mind right now is Jon Favreau’s cult movie Chef from 2014, but, as cinematic as it may sound, the short fable we just told is no longer reserved only for the silver screen.

You see, people are becoming increasingly mindful of what they eat. They have learned to appreciate all the nuances culinary masters use to make their meals special. They have outgrown the faceless food chains and now look for establishments that offer a more customized and intimate experience.

In short, people are becoming educated gourmands on a wide scale. Recent research says that as much as 58% of Americans eat at a restaurant at least once a week.

The time for all the young culinary entrepreneurs to step on the stage and do what they always dreamt of doing couldn’t be better. But, how to avoid all the tribulations Favreau’s chef Casper had to endure to find his happy ending?

Here’s the guide that should help you to cover the business side of the story and focus on what you enjoy the most – cooking.

Discovering the restaurant’s brand and concept

In this day and age, restaurants’ identity serves nearly as much as a draw as the food they put on the table. Their identity, in turn, can be observed in two major ways:

  • Concept – Essentially, the restaurant’s concept describes its set of services. You can look at it as a sort of niche. Some of the most frequent restaurant concepts include the likes of 1950s-style diners, seafood restaurants, Italian restaurants, etc.

Unlike niche, though, the term concept also covers the more abstract ideas as ambiance, casualness and serving style.

Feel free to take a glance at how we like to describe our restaurant concept.

  • Brand – Brand is the idea behind the concept. The force that gives birth to the concept and puts it into motion. A promise to your customers of sorts.

Since modern restaurant culture is so experience and concept-driven, the way you handle these two can easily make or break your future business, so tread very carefully.

Discovering the restaurant’s concept

Out of the two, discovering the restaurant’s concept is way harder. It’s something that just plays along with your passion, or simply makes the most financial sense in the environment you are starting the business.

However, there are some golden rules you should apply during your pursuit:

  • Study the competition – Are there already too many Mexican restaurants around, what worked in the past, and what you should definitely avoid?
  • Be original – It’s much better to find your own niche than try to fit the existing one. Especially if it’s already cramped.
  • Avoid the fads – Do you remember truffle oil, avocado toasts, and acai bowls? No, we don’t remember them either.

Discovering the restaurant’s brand

Fortunately, the restaurant’s branding is a much more exact science and there are a lot of tried and true practices we can borrow from other industries:

  • Find your target audience – And try to go beyond the broad strokes like Millennials or families. The more specific you are the better.
  • Establish a mission statement – In the world of business, the mission statement is the very reason for existence. So try to describe your restaurant’s worldly mission in one simple sentence.
  • Outline the key qualities of your brand – Or in other words, describe the benefits your restaurant will offer over its competition.
  • Create the brand message – Try using what people like to call “the elevator pitch.”  A quick set of information that should give the answer to questions like: “Who you are”, “What do you offer”, and “Why would anyone care.”
  • Create logo – A successful logo should be simple, memorable and express the restaurant’s concept in a stylized manner.
  • Find your brand’s unique voice – Will your restaurant be classy, casual, hip or something yet to be seen?

Create the killer menu

Now that you’ve sorted through the restaurant’s identity crisis and have a general idea of why, how and what you are going to serve, it’s time to delve deeper into minutiae and create a concrete menu you are eventually put in front of the customers.

It is also a perfect moment to draw attention to the fact that you should not look at the menu as the list of wishful thinking, but more as an opportunity to develop the restaurant’s concept and test the viability of your small enterprise.

You see, if the concept and brand are the restaurant’s heart and soul, the menu has to be its backbone. Everything revolves around it. If the menu is not carefully thought-out, researched and grounded in the real-life economy, not even the best budgeting in the world will help your business get off the ground.

So, what can you do to find a way out of this maze?

  • Study the competition – Seriously, it’s much better to learn on others’ mistakes than to make your own. Therefore, pay a friendly visit to the restaurants that share the similar concept as your future enterprise, inspect the menus, and try to get a general idea of the price and the variety of the offered meals.

As for now, you can take a look at how we managed our lunch menu.

  • Research the local market – You need to know how much your future customers are earning, how much they are willing to spend, and how frequently they visit the local restaurants.
  • Research your audience – If you are going to lean too heavily on some particular population, you need to know by heart the eating habits of that population. For instance, you want to open a restaurant for vegans, you need to know are you allowed to color the food.
  • Make first contacts with suppliers – Although it’s still too early to try to make concrete deals, you can learn tons of interesting things by dialing the local suppliers. Pay special attention to eventual discounts for buying in bulk.

When you finally gather enough info, it is time to write the first draft and engineer the menu to produce a profit. First, take a look at the ingredient costs and see if the portion sizing you have originally intended passes the basic reality check. Note the entries that should be further developed.

Second, try to divide all the items into the three groups:

  • High margin
  • Low margin
  • Low sales

Your mission will be to guide the guests’ attention to high margin products. Whether you are going to use clever formatting in the final draft of the menu, rely on the specialty appeal of certain meals (vegan, low-fat, low-calorie, etc.) or carefully place a couple of intentional  “decoy” menu items near the high margin meals is up to you.

Now, cross-reference the meals that need further development with low margin and low sales items. You will get clear enough of a picture, which items should be lost altogether, which can be repurposed into decoys, and which one could benefit from more rational sizing.

Also, it is a good idea to use the restaurant’s brand and concept to humanize certain meals that show potential, but still have a problem standing on their own. Emotional marketing is a scientifically proven way to sway the customers. You should not shy away from using this powerful tool to your advantage.

Choose the restaurant location

Finding the right restaurant location is very tricky because, if you don’t possess the required funds to lease the intended property, your dream restaurant will stay a couple of exhausting rounds with investors away from coming to fruition.

Still, even as a way to narrow down the list of options or improve your pitch to investors, doing your homework regarding the local economy and the available objects, is well worth the effort.

Once again, thorough research will be your best allay, so let’s take a look at some of the ground you should cover:

  • Population base – The object you want to lease as a restaurant needs to be located in the area populated by enough targeted customers to support your business. Now, doing a full-blown site-study can cost you up to $25.000. If you need a more frugal solution, you can use pie charts and ask the local chamber of commerce for help.
  • Visibility and foot traffic – Essentially, you want your restaurant to be seen by as many people as possible.  Good exposure will allow you to capitalize on the walk-in business and cut the necessary marketing costs.
  • Accessibility – Unfortunately, good exposure doesn’t always translate to good accessibility. Something that is easy to find is not always easy to go to. Think of this concept in terms of pedestrian zones, public transport, parts of the town that are virtually cut off during rush hours, etc.
  • Parking space – Although it doesn’t look like the top priority, nearby parking space is something you should definitely take into account. Accessible parking space expands your restaurant’s guest list from locals to virtually anyone who feels intrigued by your menu.
  • Labor and supply costs – Not paying enough attention to the price of the minimum wage and monopoly some local suppliers hold over their products can make a deep cut into your business’s budget and cause a lot of problems the long term.
  • Competition – Surprisingly enough, in the catering business, a little bit of competition is something you shouldn’t run away from. On the contrary. A couple of popular restaurants in the vicinity of your object indicate that the local population has a developed gourmand culture and that you can count on a curiosity-driven walk-in revenue.

What you should pay attention to is that the local restaurants don’t tap too deeply into your concept, or you will wash out your business’s uniqueness you worked so hard to discover.

Write a rock-solid business plan

A business plan is the intended practice of your business as described in a couple of smart bullet points. Everything you want to and have to do to make the profit needs to be found here.

But, what makes business plans so important? Well, the reasons are multiple.

A business plan is a good roadmap to help you self-correct in the times of doubt. A great way to grasp the magnitude of your project and break it into manageable chunks. The only way to appear credible and successfully sell your idea to potential investors.

Now, let’s take a look at how to write that fabled rock-solid plan able to serve all these different purposes.

  • Branded cover – A nice way to show the investors that you pay attention to details and are willing to go above and beyond to make your business more appealing.
  • Concept – Concept should quickly summarize the ideas you’ve developed in the step one of this guide. Now is the time to play up the word game and put your ideas to the paper in a simple, appealing and concise manner. No one will hold against you if you play up the emotional side a bit. You will only show that you are a capable marketer.
  • Sample menu – All the hard work that you’ve put in step two is now coming to fruition. Be sure to corroborate the entries with prices and detailed analysis you’ve used to develop the entries.  These details make a business pitch fail-proof.
  • Service and design – This is the way your restaurant will look and operate. Aside from being a solid foundation for your future employees to build upon, this section of the business plan is also an excellent opportunity to underline what makes your restaurant so special and show how the ideas you’ve developed as abstract concepts work in practice.
  • Location – Use the information you’ve gathered during the location hunt to present the compelling case for the proposed object.
  • Business structure – This section should describe your diner’s proposed business structure managerial structure, and future employee positions. You should also describe the requirements you will use to fill the mentioned positions.
  • Market analysis – Market analyses can be roughly divided into three sub-sections:
  1. Industry analysis – Who is the audience your restaurants appeals to, backed up by the business stats.
  2. Competition analysis – A section where you will underline the edge your concept has over the competition. Once again, backed up by cold facts and numbers.
  3. Marketing analysis – The investors will want to know how will you use all the favorable circumstances you’ve presented in the previous two sections to market your restaurant to future guests. This, on itself, is a very complicated matter so we will delve deeper into it further below.
  • Consultants, associates, and suppliers – A list of credible individuals and companies that will show your restaurant is in good hands. Feel free to expand the list with attorneys, architects, and other less obvious associate positions.
  • Financial analysis – An educated projection of your restaurant’s expected revenue. This is the area where you should strongly consider hiring professional help.

If all this looks complicated it’s because it is. A business plan is a project that requires a lot of time and effort. Be sure to write it with as much care as possible.

Also, if you want to you can divide some of the larger sections into new, smaller sections. Just try not to omit any important information along the way.

Find the investors and partners

And now that you finally have the master plan in front of you, it is time to venture out, put the wheels into motion and start looking for the investors that will finance your dream project.

If you are able to muster enough funds, you can skip this step altogether but it’s still worth reading about some business nuances that will certainly come in handy sooner than later.

So, by having a business plan in place you have covered half of the pitch. Let’s see what we can do about the second half.

The art of the pitch

  • Tell a compelling story – A good pitch should be backed up by, but not completely focused on the cold facts and figures. Instead, you should do your best to engage the audience and explain them what makes your journey so compelling.
  • Be prepared – Of course, stats, graphs and pie charts are still a very important part of every solid presentation. Know them as your back pocket. Also, come prepared for a variety of market-related questions.
  • Identify the problem and offer a solution – Essentially, your restaurant needs to justify its existence by offering a solution to an existing market problem. Be creative with this one.
  • Demonstrate you are a great chef – This is the opportunity to impress the audience with lesser known culinary secrets like which side dishes can be served with Stroganoff, how the soup can be freezed in small plastic bag, etc. Anything that demonstrates you know your trade.
  • Tap into trends – While pursuing the short-lived contemporary trends is something you should definitely avoid while developing an enduring diner, showing off in front of the investors with a couple of carefully chosen buzzwords can do you no harm.

The perks of having a partner

Looking for a partner has its share of pros and cons. On the one hand, sharing the executive position with another individual certainly undercuts the autonomy all small entrepreneurs desperately crave for.

On the other hand, having someone to share the burden with definitely offers some perks.  Business-wise, finding a partner with established connections and, preferably, some experience in the restaurant business is something you should take into consideration.

As a matter of fact, you shouldn’t even rule out investing money into struggling restaurants with a solid business model and a desperate need of rebranding and input of fresh ideas.

It may prove to be much easier to pull off than building the entire infrastructure from the ground up.

Set up the premise

Ok, you’ve finally got the “golden ticket.” The next logical step is to start realizing all the fascinating ideas you’ve got in the planning stage by setting up the restaurant location. And by setting up location, we mean two things: designing the space and buying the necessary equipment.

So let’s tackle these two important issues in the same order.

Designing the restaurant

At this point, you should have a pretty good idea of how your restaurant should look, feel and flow. However, it is only when you finally lease the premise you see that you will need to make some adjustments.

The main problem you are probably going to face is the lack of space. Occupied chairs, waiters, traversing guests and excessive decoration can prove to be poisonous for overall ambiance. Cramped kitchen has a similar effect on productivity.

Here are a couple of tips that should help you solve this issue in an efficient and visually pleasing manner:

  • Keep the tables at least 24-30 inches apart – It is more important to keep your restaurant efficient than to try to maximize the profit with too many seats.
  • Create an efficient layout – Typically, a restaurant allots 45-65% of its space to dining space, 35% to the kitchen area, and the remaining area to storage space. Also, the restaurant should allow systematic flow from the main doors all the way back to the kitchen.
  • Keep in mind the guests’ habits – For instance, 45-50% of sit-down customers visit restaurants in pairs, 30% of them dine alone or in a group of three, and only 20% prefer to dine in groups of four people and more.
  • Maximize the space with booths – They do wonders for smaller dining areas.
  • Prioritize lighting over furniture – Customers don’t visit restaurants to admire the furniture. On the other hand, they do need good lighting in order to have a pleasant meal.
  • Organize the kitchen into stations – Every employee needs to have a space to do its job without obtrusion. Centerpiece kitchen isle is a great way to glue all these different areas together and create an efficient workflow.

Buying the equipment

As for the equipment, appliances, tools, and furniture your dream restaurant needs to operate, there is really not that much to be said. You should try to find the best quality for the most affordable price. Equipment with Energy Star logo may cost a bit more, but it allows huge savings further down the road.

However, it is a good idea to note these two things:

  • Try finding used equipment – As long as the owner can provide a proof that some piece of equipment abides by prescribed safety standards (more on that in the next section) and give you a satisfactory warranty, you shouldn’t shy away from buying used units.
  • Think out of the box – Your small restaurant can, at some point, be used for business conferences, birthdays, weddings and other purposes that are not considered a part of the regular modus operandi. Make sure you are equipped for all these unexpected occasions. Who knows, maybe your restaurant earns some unexpected branding points along the way.

Apply for permits and licenses

This has to be the most boring and tiresome chore you need to move off the table, but you do need to move it off the table sooner or later.

The main problem is that the legislation regarding the restaurant services can drastically vary from country to country, or even from state to state. That is why we will try to be as region agnostic as possible and give you some general guidelines you can use to further inquire with local authorities.

  • Business license – The most important piece of paper you can’t run your business without. Business licenses are usually issued by the city or local municipalities so these are the doors you need to knock on first.
  • Health permits – They will be issued only after your restaurant passes a health inspection. Before you apply for one, be sure to familiarize yourself with local health regulations. The health permits shouldn’t be acquired by your restaurant alone, but all of your future employees as well.
  • Safety permits – Pretty much the same thing as the health permits. Your restaurant needs to be laid out to allow easy evacuation and all the equipment you are going to use must abide by prescribed regulations to create the environment where your employees can work and your guests can dine without being exposed to danger.
  • Music copyright license – In some countries, copyright regulations tend to be pretty strict. It just may happen that if you want to play the recorded music, or even let the band cover some of the current hits, you may need to obtain the license from appropriate music licensing agency.

Make sure you get the top quality supplies

Finding reliable food distributors is the key to restaurants’ success. You will, after all, be judged primarily on the merits of the food you put on the table. So, here’s how to make sure you get only the best product available.

  • Contact reliable food service vendors – What works for other restaurants should work for you as well. Vendors who operate on a large scale and have a developed transport network are usually able to offer lower prices than small suppliers.
  • Establish cooperation with local suppliers – Although they are often more expensive than big vendors, local suppliers do offer the best quality products. And since customers are growing increasingly environmentally aware, they will be willing to pay a couple of dollars more to ensure they’ll get locally grown, organic food.

Also, there is always an option to buy the products in cheaper bulks, so you shouldn’t worry about this slight price gap.

The thing you should always keep in mind when working with local suppliers is that you and they are operating within the same local economy. By supporting them, you are, in fact, supporting your potential customers.

Also, the agreements with small local businesses don’t necessarily need to be conducted in financial terms. You can also offer compensation through services and an option of cross-promotional marketing.

  • Shop in supermarket chains – Of course, it’s hard to deny that sometimes huge, nationwide supermarket chains simply put the best offer on the market, so doing a bit of footwork to see which products are discounted should not be out of the question.

Pay special attention to long-lasting and non-perishable products like spices, canned food, pasta, and so on.

Hire the right staff

Well-Trained, professional labor is essential to the success of any business, and your restaurant is no exception.

Your future employees will represent the face of the company, they will gather valuable feedback from the guests and it will be their performance that will drive your business to success. One day, when you expand the business, these workers will also take care of the training of the new employees.

Suffice to say, you need to nail this one down. Hard. So, let‘s first take a look at the positions you will need to fill:

  • Manager – Your very own right-hand man, a good manager should have an abundance of experience (preferably in the same business niche), excellent leadership skills, and share the same level of enthusiasm and brand commitment as you.
  • Chefs and cooks – Since their sole duty is to deliver the promise your brand made to the customers, chefs and cooks are probably the most important positions in the restaurant. And regardless of the size of your establishment, you will need at least three top-notch talents to fill these positions.
  • Servers – The servers are conducting the most interaction with the customers, so they need to possess excellent communication skills, be polite and work well under pressure. Hiring experienced staff to fill these positions is highly advised.
  • Additional positions – Depending on the concept of your restaurant, you may also need to hire bartenders, hosts, food runners, and dishwashers.

And now, let’s breeze through the tips that should help you select the best talents to fill these important positions:

  • Create a detailed job description – You need to make sure that all of the applicants have a great understanding of their future responsibilities.
  • Develop a clear profile of the ideal candidate – It will keep you on course during long screening sessions.
  • Prepare the screening plan – The job interviews should have a free flow and go to unexpected places, but it is highly advised to have a written plan to keep the screening on point. The interview questions should highlight key skills, brand values and achievements you, as a person with experience within the branch, can relate to.
  • Scout internet and local schools for hot talents – Although the backbone of your restaurant should be consistent of people with a lot of experience, you can allow yourself pursuing a couple of hot young talents you will later groom within the company.
  • Look for the oddities in the employment history – Workers who frequently change the employers, endure unusually long unemployment gaps, or show affinities to other industries should not be at the top of your list.

Know how to market the restaurant

The question of marketing in the context of catering business is incredibly complicated and it could be easily dealt with in a separate post this size.

However, we will do our best to give you an abridged version of the answer. As a newcomer to the business, you should approach the problem with the “all-guns-blazing” mentality and check out as many of the entries off the list as possible.

Also, take note that some of the methods we will address here are more efficient prior and some after you finally open the restaurant.

  • Create a restaurant website – A good-looking, easy to navigate and mobile-optimized website is an absolute prerequisite for all future online marketing efforts and a place where customers can get a fist “bite” of your restaurant’s brand and concept.
  • Engage in content marketing – Content marketing is a marketing approach focused at offering valuable and consistent content in the effort to attract the audience and convert them to customers.

Fortunately for you, the opportunities for content marketing in this particular niche are virtually endless and range from blogs, recipes, and eBooks to podcasts, and YouTube videos. Feel free to use this opportunity to unleash your creative spirit and remind yourself why you are in the restaurant business in the first place.

  • Create a strong social media presence – Various social networks are a place where you can share your content, interact with your audience in a very personal manner, gather valuable feedback and finally organize various giveaways and calls to action that can create a lot of chatter.
  • Ignite the fire with guerrilla marketing – Essentially, guerilla marketing is an umbrella term for any kind of frugal marketing stunts performed on the street whose goal is to surprise, shock and awe the audience. Think Rock Radio’s “Free Air Guitar” racks we’ve seen a couple of years ago.

What makes guerilla actions so efficient is that they are inherently sympathetic and if they are pulled off right, they generate an infectious word of mouth virtually out of nothing. Who can resist a chef preparing food and serving free meals in a city park?

  • Distribute promotional material and products – No one can deny the sheer power of promotional material. If designed well, it can quickly translate the idea behind your restaurant’s concept in a visual manner, offer all the relevant info future guests need to know and highlight some of the best meals you have on the menu.

Another way to quickly grab the audience’s attention is to give away free branded products like USB sticks and discount coupons. Although they are not the cheapest marketing option you can find, traditionally, they feature a pretty good ROI

  • Create a referral program – An absolute must for all developing businesses that really so heavily on recommendations and word of mouth as restaurants do. The secret of successful referral programs lies in clear message, simple rules, precise goal, good analytics and a healthy dose of gamification.
  • Don’t ignore the paid ads – The reason why paid ads, whether they are presented in your favorite browser or published in local newspapers, have such an enduring presence in the marketing landscape is because they are simple and incredibly efficient.
  • Make your restaurant visible online – People need to be able to quickly locate your diner on Google Places, TripAdvisor, Yelp and other popular online resources.

Prepare for the opening party

Ah, we’re so close to the end. All that remains is to make the preparation for the day you will finally let the customers get the taste of your beautiful new joint. Just to keep you intrigued till the very end we will present you with two ways you can pull this finals stretch of the race off.

Grande Ouverture

Or in other words – a traditional “big fat” opening party.

In order to make it work, you need to make sure the event is well advertised and even better publicized once the curtains fall. That is why you should spend the last couple of weeks before the opening making a strong presence in the local media and ensuring the presence of influential reviewers and local celebrities.

As for the very event, the entertainment must be in tune with your restaurant’s intended brand image and subdued enough to let the guests engage in pleasant conversations and exchange impressions with each other.

The party should be well-documented and you shouldn’t wait for too long to make a press release and publish the recorded material on the social media. You need to keep the hype train going.

Finally, don’t let the guests leave the party without some engaging promo material that will reinforce the impression you’ve made with the party and make them think of you in weeks to come.

A soft opening

When Hollywood executives are not sure will their movie make a huge box office splash, they usually release the flick in a limited number of theaters and wait to see how the audience will respond. If the feedback is positive and the audience engages in online chatter the movie is released nationwide.

The same thing can be pulled off with your new diner and it’s called “a soft opening”. So, instead of putting all eggs in one basket, you will create a series of smaller and more intimate events for the targeted audience (local celebrities, bloggers, influencers, etc.), and let them create the hype instead.

This opening method has its share of pros and cons. On the more positive side, you will get the chance to collect the essential feedback before going all public, your staff will get an excellent opportunity to iron out all the routines and logistics of the premise, and the anticipation you will build will be incredible.

On the other hand, once the ball starts rolling you will need to organize some big event, or the hype will quickly die off. The period in between can be easily used by the completion to counter marketing and undermine your efforts before you even get the fighting chance.

Instead of the conclusion

We are finally at the end, and what a journey it was. Exhausting? Yes. Rewarding? Absolutely!

But you already know that. The passion for cooking and the untamed urge to explore different cuisines lead you here in the first place. So, instead of preaching you how your dreams have finally become real we will give you a few tips that should help them remain real in decades to come.

Happy employees are productive employees. Be honest with them, treat them as equals and throw them a party or two to from time to time.

The opportunities for establishing additional sources of income are endless. If you ever dreamt of hosting a monetized YouTube show or pushing the line of branded aprons, just do it.

Locals will go out of the way to protect one of their own. Show them some good will with charity work or by sponsoring the local sports team.

Keep up with the changing times. The strategy that built your small empire may drive you out of business just a couple of months down the road.

Remain tireless and always invest the same level of effort as if you are just starting the restaurant.

And never forget the sheer joy of being a chief.

Source: martinihouse

Joseph P Demars
Joseph P Demars
Joseph P. Demars is a food lover and an entrepreneur who has experienced in running successful restaurants. Joseph lives in Chicago with his adorable family. His wide knowledge, plus his practical skill has helped him earn extraordinary profit from running restaurants.

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