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How to Open a Restaurant

Dave Thomas

Anyone that knows how to open a restaurant will tell you -- starting a business in food service is hard work. In fact, just Google "open a restaurant," and you'll notice that nearly every story that pops up begins with a warning that the time and energy put into this kind of endeavor doesn't always pays off.

The reality is that most restaurants fail during their first year, frequently due to a lack of planning. But that doesn't mean your restaurant needs to be a complex set of operational procedures that prohibit you from ever making progress.

Opening and running a restaurant can be incredibly rewarding and profitable when you combine dedication with good food, supreme service, and business smarts. Here are the basics of how to open a restaurant:

Set the Stage

As with any business idea, particularly a restaurant, it's important that you communicate your vision in a business plan. This business plan should spell out your entire restaurant concept, as well as an analysis of the market and understanding of your competition, a description of your target customer, a marketing plan and/or sales strategy, a description of your management, organization, and operations, and financial projections.

Don't forget that if you try to please everyone, you end up pleasing no one. No restaurant has universal appeal. You'll set yourself up for success when you streamline your efforts and try to make the experience perfect for the smaller, targeted market that you can capture.

During the initial phase of researching and planning you'll also need to look into the regulatory requirements, both locally in the city you plan to open your restaurant in, and at the state level. You'll need to be familiar with building codes, liquor licenses, health codes, and other regulations that regulate the way your restaurant will operate.

Figuring Out Your Concept

Deciding what type of restaurant you plan to open depends on a number of things. It's likely that you want to serve the type of food you enjoy cooking and want the feel of your restaurant to reflect a dining experience you'd enjoy personally. If you're more interested and skilled in the front of the house operations, you may want to open a restaurant that fills a need in a particular location or that might grab hold of a new emerging food trend.

Your concept should be easy to communicate; this is what gives patrons an idea of the food they can expect and the experience they'll have before they even walk in your door. Your concept will also dictate the structure of your restaurant, and when mapping out your operations and costs, you'll know where to start.

Find a Location

The success of many new restaurants hinges on the establishment's location. When looking for the perfect neighborhood and real estate, be sure to consider the area's population, both in numbers and in style. Consider accessibility of your location and do your research to see if your concept is something that will have success and low competition in the area you're targeting.

Once you've settled on a location within a certain city or town, you'll need to consider your real estate options. Work with an experienced commercial real estate broker to negotiate the best possible lease for your restaurant. Or, you might feel that buying the property is more suitable for your goals. Don't forget that in addition to dining and kitchen space, you'll need areas for food storage, administrative tasks, restrooms and dishwashing.

When looking for the right location, consider the design of your dining room. Lighting, décor, furniture, and layout all play an important role in how you want a diner to feel as they're eating at your restaurant.

Designing the Menu

It's likely you've already started planning your menu at this point, but now is the time to detail out your full list of food choices. Seasonality and restaurant theme will certainly influence your options, and you'll need to stay current with food trends and popular choices in order to keep customers coming back.

Knowing how to price the menu is another important factor around choosing your menu items while increasing your profit margins. Food cost and portion control are two of the major considerations in making sure you price your menu correctly. You'll also want to have a predictable balance of both expensive and inexpensive food items available to those dining in your restaurant.

Getting the Right Equipment

Your menu items will also dictate your purchases of equipment, supplies, and perishable food items. Outfitting your restaurant's kitchen and dining room can eat up a large part of your budget. You should be able to find deals on both used equipment and leased equipment -- available either online, or through equipment wholesalers. You may look into buying equipment from other restaurants that are going out of business or who may be looking to upgrade their wares.

Connect with Food Vendors

As with any business partnership, it's best to work with a food vendor with whom you work well and feel comfortable. Your food vendor will be responsible for delivering food and supplies at a set price within your budget. As we've warned before, the quality of the food will be reflected in the price, so you don't want to make a decision that's based solely on numbers. To make a decision about the best food vendor for your needs, talk to them about product specifications, delivery dates, and terms of payment. You'll also want to work with someone who is flexible and consistent.

Hiring for Success

Finding the right combination of staff is critical for your new restaurant. You'll want to have a good handle on what your own strengths and weaknesses are, and figure out how to hire to fill in the gaps. If you're a chef, it's essential that your incredible food be complemented by incredible service. Hire a full-time general manager to organize the front-of-the-house needs, from both a supplies perspective and an operations and staffing perspective. Hiring experienced workers in the areas of cooking, bartending, and dining room staff is essential to getting your restaurant off on the right foot.

Photo source: e-restaurantbroker.com

Image Credit: Monkeybusinessimages / Getty Images
Dave Thomas
business.com Member