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10 Things to Consider Before Starting a Restaurant

business.com editorial staff
business.com editorial staff

These factors are crucial in planning a restaurant.

  • Owning a restaurant requires knowledge of the location, menu, hours of operation and more.
  • Having a solid business plan is an essential part of opening a restaurant.
  • Research and understand your restaurant's competition.

The restaurant industry is huge, with plenty of profit to go around – if you have the right business model and concept.

According to Rasmussen Reports, a public opinion polling company, about 58% of Americans eat out at least once a week. While the customer base is there, but there's a lot to consider before you open a restaurant to ensure you're successful.


A business plan is vital to success. Your restaurant concept must be carefully planned and researched before you launch it. If you have a master's degree in business administration, you can craft the plan yourself, but if not, you may want to consider hiring a business consultant to streamline your idea. Ideally, your concept should include what you plan to serve, how much money you plan to invest, how much money you need to borrow and your expected profit. It's better to err on the side of conservatism and aim to break even your first year. Nestled among the financial details is your concept, which needs to be unique to draw interest. For example, Hash House a Go-Go is a chain known for its extremely large portions and Southern fusion cuisine, and Denny's is a diner that serves breakfast 24/7.

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


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.

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. Cost-saving menus include meals that use the same ingredients, so plan carefully.


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.


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.


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.

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.

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.


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. 

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
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