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13 Things to Consider Before Starting a Restaurant

Max Freedman
Max Freedman

There are several crucial factors that must be planned for and taken into account when you're considering opening a restaurant.

The restaurant industry is huge, with plenty of profit to go around. However, owning a restaurant requires knowledge of the location, menu, hours of operation and more. It also entails creating a solid business plan that not only outlines how you plan to be successful, but also includes a lot of research and understanding of your potential competitors. While dining out took a huge hit during the COVID-19 pandemic, restaurants are now starting to see a big increase in customers are consumers get back to a normal way of life. So, while restauranteurs can feel comfortable knowing a solid customer base is there, there is still a lot to consider when opening a restaurant to ensure success.

1. Restaurant name

Have you ever been chatting with a friend who said they went to a place with an intriguing name and then immediately asked them, "What’s that?" That’s the power of an attention-grabbing, memorable restaurant name. You want to come up with a word (or two or three) that both reflects your restaurant concept and lingers on the mind.

The name you choose should stand out not just in conversation, but on listing websites. Think about it: When you're faced with a big list of options on Yelp or Google Maps, don't you find yourself drawn to the most interesting names? Make sure your restaurant is one of those.

2. Staff

A restaurant is a huge operation. You'll need to hire hosts, servers, cooks, dishwashers and all kinds of other people. Read up on common restaurant roles and the number of employees typical for restaurants of sizes similar to yours. Then, hire accordingly.

3. Funding

A fully functional restaurant requires a location, a sizable staff, tons of kitchen equipment and plenty of other resources, all of which quickly become costly. Chances are you don't just have the money lying around to cover this all, so among the key things to consider when opening a restaurant is how you'll fund your operations. [Read our guide to restaurant financing to learn more.]

FYIFYI: The first step in developing your restaurant's concept is to create a business plan

4. Location

Wherever you decide to set up shop, be sure your restaurant is visible. It should be easily spotted from the street on which it resides. Your parking lot is almost as important as your restaurant's space, especially if it's unique compared to its competition. If a customer can't find a place to park, you've lost business. Restaurants located off a highway are often busy.

5. Menu

This is a big consideration when you're planning to open a restaurant. Study the food trends, and if they line up with your restaurant's concept, you should consider them for your menu. There are a few menu must-haves that you should include, such as meatless options for vegans and vegetarians, kids' options so families can dine at your place, and a few desserts. You also want to consider the price for each menu item. Cost-saving menus include meals that use the same ingredients, so plan carefully.

6. Hours

It's important to understand that as a restaurant owner, you won't have the luxury of taking days or holidays off. This isn't a 40-hours-per-week job. Expect to spend most of your time at the restaurant working with your staff, paying vendors, talking with customers, planning menus, and reviewing profit and loss reports. It's a rewarding career choice, but it's also a time-consuming one.

7. Marketing

Have a plan to get the word out about your new restaurant. You can take advantage of the many social media platforms to market it. You should also look into joining restaurant coalitions so you can work with other restaurateurs to cross-promote. Many cities promote local businesses, so join a chamber of commerce and participate in food festivals to get the word out.

8. Delegation

It can be difficult to trust others with your restaurant, but prioritizing and delegating is a must in this industry. You cannot do everything yourself, so be sure to hire and train staff to your specifications and then let go.

9. Licensing and permits

Before you can open the doors to your restaurant, you need to make sure you apply for the proper licenses and permits. There may be several inspections you must pass before you can begin operation. Reach out to your city government to find out what you need for your restaurant. You also need to consider state and federal requirements, so do your homework long before you set a date for your grand opening.

10. Equipment and services

In addition to having all of the needed kitchen equipment and tools that you will need, there are a number of other services and tools that you will need when running a business. This includes things like:

11. Target customers

The type of customers you want to attract will affect the type of restaurant you want to operate. It's important to consider the income level, the age and the lifestyle of the customers you want to attract. For instance, do you want to attract customers that typically take their time while eating? Will your target audience be willing to travel to the restaurant? How much money will they be willing to pay for their meal? Is your target customer available early morning, late evening and/or at any time during the month? Once you know the answers to these questions, you will have a clearer vision about the type of restaurant you want to own, the menu, the price range and even the decor.

12. Competition

Before signing the lease on a restaurant, it is essential that you know what your competition is. Be sure to visit as many of the restaurants in the area as possible. Visiting your competition gives you a chance to identify their strengths as well as their weaknesses, which gives you a competing edge. Look for their customer's preferences so you can implement them into your restaurant, and recognize their failures and successes in order to learn what to do and what not to do.

TipTip: A competitive analysis should be conducted annually as competition changes and trends evolve. 

13. Business plan

Without a detailed, well-organized business plan, you will not be able to bring the dream of owning a restaurant to life. The business plan is used to outline the entire journey you'll take to open and operate a restaurant; it explains in detail how the restaurant will take shape and how it will operate once you open the doors. You will use your business plan to guide you through getting funding from potential investors to the projected financial plan.

Image Credit: Jacob Lund / Shutterstock
Max Freedman
Max Freedman
business.com Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.