Sometimes there is nothing better than hitting the town and enjoying a delicious meal out, especially when you don’t have to be the one to cook the food yourself! Millions of Canadians appreciate eating out at restaurants as they bring people together to enjoy new culinary experiences.
If you’re the type of person who strives to bring these experiences to the broader public, then you may be interested in opening a restaurant of your very own. Therefore, if you’re wondering how to start a restaurant, consider following these 13 steps below to get your envisioned food establishment up and running!
These topics will help you understand more about running your own restaurant:
- Tax Obligations for New Restaurants
- Setting Up Accounting Processes
- How to Price a Restaurant Menu
- Guide to Restaurant Payroll
- How to Start a Food Delivery Service for Your Restaurant
- Restaurant Inventory Tips and Tricks
- Tip Pooling
Opening a restaurant checklist
If you have decided to open and operate a restaurant, then you will need to consider the following details and steps required to implement this plan into action successfully.
Listed below are the necessary steps you will need to take to start a restaurant, including what you need to open a restaurant, the required paperwork and processes, and all details surrounding menu items, location design, and the overall dining experience you want to provide to customers.
Use this restaurant checklist to help you cover all your bases when opening your restaurant and entering into the restaurant industry.
1. Decide on a restaurant service style
The first step to opening a restaurant is settling on a specific service style. This service style dictates how you will operate the primary services of your restaurant. In what way will your patrons and customers obtain their food and beverages?
There are five main restaurant service styles you can choose from, these include:
- Waiter Service: Your customers sit at a table and order from a waiter who delivers all food and beverages
- Chinese Banquet Service: Another form of water service that covers large tables and dishes are typically served for communal and shared consumption
- Buffet Service: Customers have the option to order off the menu from a waiter or serve themselves using the buffet line
- Self-Service: Patrons order, pay, and pick up their food and beverages from a counter, creating a fast and casual dining experience
- Semi Self-Service: Patrons order and pay at the counter, but their food is brought to their table by waitstaff
Depending on the mood and ambiance you are going for and the food you will be serving, certain restaurant service styles will fit your envisioned business concept more readily.
2. Choose a type of restaurant
The service style you settled on in step one will help dictate the type of restaurant you aim to create, as they go hand in hand. If you chose a waiter service style, you are most likely going for a fine dining or casual dining experience, while opting for a self-service style will see your establishment feeling more like fast food restaurants.
There are 11 main types of restaurants and restaurant concepts you can choose to create:
- Fine dining
- Casual dining
- Contemporary casual
- Family style
- Fast-casual
- Fast food
- Cafe
- Buffet
- Concession stands
- Pop-up
- Delivery-only
To help you decide which types of restaurants might fit your business vision, start thinking of the price point, food items, and overall formality you are aiming for. Are you driven to create a high-end, five-course dining event, a casual and relaxed family-style vibe, or a quick service experience? Answering questions like these can help you settle on the right restaurant type for your business.
3. Determine menu items and prices
As your restaurant starts to take shape, you must already have an idea about the food dishes you wish to offer. Now is the time to consider these thoughts and fully conceptualize the food and beverages you will serve to customers.
When determining menu items, mull over the type of food, quality of ingredients, and item price range you had in mind. Are you developing a menu based on regional cuisines, or are you offering a hybrid of dishes? Your hours of operation might also affect your menu or menus. Will you have a separate lunch and dinner menu, or just one menu that covers all meal types?
Consider how pricing menu items will affect the restaurant’s bottom line in the long run. Are you creating an inexpensive night out or an extravagantly priced affair? The food dishes and the quality of ingredients you choose will directly affect these price points.
Food is not the only thing on the menu. What drinks will you offer? Will you serve alcoholic beverages? If you do, will your menu cover a full bar or just a wine cellar list? For those restaurants that do serve alcohol, bar items typically have a pricing markup of 200%.
With that in mind, you will also have to factor in the sales tax on food and beverages when settling on menu item prices.
4. Create a restaurant business plan
Hashing out these finer details in the previous steps will hold you in good stead for creating a restaurant business plan. Like any other industry, as the business owner you will need to think through all aspects of your developing food establishment when creating a business plan.
Therefore, when developing your restaurant business plan, be sure to include these details:
- Your restaurant concept
- A market analysis
- Sample menu design and details
- Financial support and restaurant funding
- Required restaurant equipment
- A marketing plan
- Your restaurant design
- The location setting
- Your employee hiring processes
- An executive summary bringing it all together
Creating business plans can be a long process, but it is worth it. Thinking through these details and conducting research will help you solidify your restaurant’s overall vision and prepare you for the next steps. This plan will also come in handy throughout all stages of starting a restaurant, especially when securing the finances needed to open and run your restaurant.
5. Secure funding
Whether you have the capital and liquid assets to open this restaurant yourself, or you need to borrow the money through financing options with a bank or from investors and stakeholders, now is the time to get your finances in order. So far, all of the necessary steps can come to naught if you do not have the financial resources to back up your vision. Therefore, securing the correct amount of capital for your business is a necessity.
When starting a restaurant, most owners will need to have access to half a million dollars. The average restaurant startup cost in the USA falls between $375,000 and $425,000 , depending on whether you rent or buy real estate for the business. When budgeting for your business, you’ll need to consider all restaurant startup costs as well as ongoing operational expenses.
One of the biggest barriers to opening a restaurant is insufficient funds to cover its startup costs. So you must budget accordingly for all expenses associated with the establishing and running of the company. A well-written and thought-out business plan should have covered all the necessary information about the financial sums you would need to open and run your restaurant for its first few years of existence.
Your restaurant business plan can also help secure funding from banks or investors for a restaurant business loan, as they are more likely to support a well-researched business strategy. Learn more about qualifying for a small business loan to help you with your financing options and line of credit.
6. Research permits, bylaws, and regulations
In order to legally operate your restaurant in any given U.S. State , you must possess the proper licenses and permits at the provincial and federal levels. You will need to register your business with the provincial government and obtain a business number at the federal level.
Depending on your business’s structure, whether it is a sole proprietorship, partnership, or corporation- you will need to file the corresponding application with the federal government.
You must also be aware of the many other permits and regulations to apply for before you can successfully open a restaurant. For example, if you’re planning on selling alcohol on-premises, you will need to obtain the required liquor license to do so. You will also need to acquire the correct parking lot permits if your restaurant will have a parking area.
With all of this in mind, now is the time to research and apply for the correct paperwork concerning the restaurant industry:
- Restaurant insurance
- Federal and state business licenses and permits
- Taxation on restaurant services
- Food safety regulations
- Public Health Inspection
- Accessibility compliance
To help you determine what your restaurant must apply for, the Government of the United States has created this guide to federal licenses and permits, indicating the issuing agency for different busines sectors .
7. Find an appropriate location
Depending on the type of restaurant you want to create and the vibe or ambiance you want to give off, you’ll need to find an appropriate location to match these specifics. Now is the time to go on the hunt for that perfect location.
When browsing for your most ideal real estate, will you be looking at rental properties or wanting to purchase an empty lot or building? Do you want to be close to the highway or main street to be accessible to high levels of traffic, or do you want a location that is off the beaten path for a more intimate venue?
8. Consider the layout of your restaurant
Once you’ve found the perfect location for your restaurant, now is the time to measure up the building and decide the place’s interior design and layout. Walk around the building and imagine the best use of the space, accounting for foot traffic of customers and wait staff.
Where will you put the main seating area? What area of the restaurant does it make the most sense to place the bar and the kitchen? Will you have a waiting area? These are all questions you should write down the answers to when designing your restaurant’s layout and flow.
This step can also help you determine the restaurant’s hydro, gas, and water needs for equipment and appliances. Are the correct fittings in place for such things, or will you need to hire a contractor to modify the space accordingly?
9. Pick a secure payment system
When conducting any transaction for your business, you will need to ensure the proper protection of your restaurant’s and your customer’s sensitive financial data. For this reason, companies must have a secure payment system or point of sale system that safeguards all transactions and information passing through it.
Choosing the best POS system for your small business is of utmost importance, as your revenue streams are directly tied to this service. Your restaurant POS system should also be able to accept and process all forms of payments and should offer a feature for online checkouts and payments too, in case you want to expand your business with a delivery service.
10. Settle on a food supplier
With your food items determined and the quality of ingredients set, you will need to find a food supplier that fits these parameters. To ensure your food dishes and menu items are up to your standards, you’ll need to work with a supplier who can provide you with all the fresh and high-quality ingredients you need.
Securing yourself a trustworthy and fair supplier is also a must for your restaurant. As you rely on this seller for your food services and products, they need to be transparent with their food standards and pricing to ensure both parties are happy with this business deal and working relationship. Therefore, spend some time researching accessible food suppliers near you before signing a contract with one.
11. Hire employees and set up payroll
One thing you will need to open a restaurant is a workforce. As the restaurant owner, you are responsible for the hiring and training of wait staff, cooks, bartenders, hostesses, bussers, and other required employees. As a result, a big part of starting a restaurant is conducting the hiring process to find reliable and hardworking staff members.
It is best to go into the hiring process with a plan of action and the qualities and attributes you wish to see in your future employees. This is especially true when covering your customer service needs. Listing job openings online can help you reach a wider pool of potential candidates while conducting face-to-face interviews can help narrow down your choices for the perfect fits.
Once you have your human resources covered, you will need to choose a payroll provider and set up payroll processing to pay your new employees properly. Now that you are managing a workforce, you will need to keep on top of payroll processing every month to ensure your employees receive their remuneration for their hard work.
12. Begin marketing
Before opening your doors to the public, you should focus on the marketing of your restaurant. Getting the word out about your new dining establishment is essential to cultivating customers. Social media marketing can help you at this time. Conduct some market research to find out what social media platforms your target customers use the most and begin there.
Start by making business pages and accounts on these social media platforms. Creating these social accounts and announcing your grand opening while regularly posting content and promotional campaigns can greatly boost the traffic that will come through your doors.
13. Launch your opening
Now that you have checked off every item on this list, your restaurant is ready to open its doors in earnest. Having covered all aspects of setting up and opening your new restaurant, the time has come to roll up those sleeves and continue your hard work.
Many restaurants establish themselves to the public by hosting a grand opening or a soft opening, or both. A soft opening allows you and your staff to have a trial run of its operations, as it serves a small number of people. A soft opening can build buzz around your restaurant and provide you with feedback on your food and service before the grand opening.
A grand opening can be a lavish affair, as your restaurant throws open its doors to the wider public. This event can help your restaurant make a splash in the community and spread the word about your delicious dishes and exciting new ambiance. Word of mouth can be a powerful thing.
All your hard work has finally come to fruition, as the opening is now under your belt, and you can continue to focus on the management and operations of your newly developed restaurant!
Consider the right software
If you’ve decided to start a restaurant, you will need the right software to help you manage and run your new business. Why not try using QuickBooks Online to help with your restaurant’s accounting needs and financial responsibilities.
Quality accounting software like QuickBooks can easily sync to your restaurant’s POS system to track revenue that much easier. Millions of small businesses and new restaurant owners across the country turn to QuickBooks Online to help them accurately and completely track cash flow, process payroll, and run financial reports to improve the management processes and boost revenue all at the same time.
Try it today when you get your new restaurant underway!
