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Updated Dec 19, 2023

7 Things to Consider Before Starting a Restaurant

Launching a restaurant requires careful planning and consideration. Here's what you need to know.

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Written By: Max FreedmanSenior Analyst & Expert on Business Operations
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The restaurant industry is vast, with plenty of profit to go around. However, if you own a restaurant, you must consider many factors, including its location, menu and hours of operation. You also have to create a solid business plan that outlines how you plan to be successful and includes research on your potential competitors.

Here’s what to keep in mind before you launch your new restaurant business, along with the software and services that can help you achieve your goals.

What to consider before starting a restaurant

Before you launch your new restaurant, consider the following elements:

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 in someone’s mind.

The name you choose should stand out not just in conversation but also on listing websites. When someone is faced with a big list of options on Yelp or Google Maps, they’ll be drawn to the most interesting names. Make sure your restaurant is one of those.

2. 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 all of these expenses, so it’s essential to consider how you’ll fund your operations.

FYIDid you know
The first step in developing your restaurant’s concept is to create a business plan that outlines the entire journey you’ll take to open and operate the restaurant. Use your business plan to guide you through getting funding from potential investors to executing the projected financial plan.

3. Location

Wherever you decide to set up shop, be sure your restaurant is visible. It should be easy to spot from the street. Your parking lot is almost as important as your restaurant’s space; if a customer can’t find a place to park, you’ve lost business. Restaurants located off of a highway are often busy.

4. Marketing

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

Did You Know?Did you know
A clean, simple website attracts more customers to your restaurant than a busy, complicated one. Avoid too many moving parts; many intricate features aren’t available on mobile platforms.

5. Licensing and permits

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

6. Target customers

The type of customers you want to attract will affect the kind of restaurant you operate. It’s important to consider the income level, age and lifestyle of your ideal customer persona. 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 in the 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 of the type of restaurant you want to own, as well as the menu, price range and decor.

7. Competition

Before you sign the lease on a restaurant, it is essential to know your competition. Be sure to visit as many of the restaurants in the area as possible. Visiting your competitors gives you a chance to identify their strengths and weaknesses, which can help you differentiate your offerings and atmosphere. Look for their customers’ preferences so you can incorporate them into your restaurant, and recognize their failures and successes to learn what and what not to do.

TipBottom line
Conduct a competitive analysis annually. Competition changes and trends evolve, so you must adjust your business plans and marketing accordingly.

The best restaurant software and services

The perfect software for your business can minimize the chance that human error will hinder the growth of your business. Everyday tasks, such as completing transactions and managing your staff, can be streamlined to let you focus on the big picture.

  • Point-of-sale (POS) system: If there’s one piece of software you pick up for your restaurant, it should be a POS system. The best restaurant POS systems easily connect the front and back of the house, helping everyone stay on the same page and get orders out in a timely manner. 
  • Business phone system: Customers call restaurants constantly to make reservations, verify allergen safety, inquire about specials and provide crucial feedback. Missing a call can mean losing a customer, but the top business phone systems can help manage it all. 
  • Accounting software: Regardless of why you chose to open a restaurant, it was most likely not to become an accountant. The best accounting software takes away the guesswork and simplifies the process, giving you a healthy sense of your business’s finances.
  • Credit card processor: Customers expect fast service, easy refunds and convenient payment options. Having one of the highly rated credit card processors can expand the card options you accept while cutting your fees. 
  • HR software: Your staff, from front-of-house personnel to line cooks, are the backbone of your company. Managing your team and their schedules can be especially complicated and messy, but the top HR software can structure schedules and payroll, as well as find and maintain the best employees. 
  • Restaurant management system: The best restaurant management systems are similar to expanded POS systems that include staff management and inventory. An RMS also performs typical POS services, like order management and payment processing. 


Max Freedman contributed to this article. 

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Written By: Max FreedmanSenior Analyst & Expert on Business Operations
For almost a decade, Max Freedman has been a trusted advisor for entrepreneurs and business owners, providing practical insights to kickstart and elevate their ventures. With hands-on experience in small business management, he offers authentic perspectives on crucial business areas that run the gamut from marketing strategies to employee health insurance. Freedman's guidance is grounded in the real world and based on his years working in and leading operations for small business workplaces. Whether advising on financial statements, retirement plans or e-commerce tactics, his expertise and genuine passion for empowering business owners make him an invaluable resource in the entrepreneurial landscape.
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