Whether you’re a seasoned restaurant owner or just starting, the process can be daunting, from menu planning and site selection to hiring employees and obtaining financing. The good news is that the following blog will help demystify this process so that you can quickly start creating successful dishes!
Do market research
Market research is crucial for your restaurant business, even if you’re starting small. You need to know who your customers are and what they want so that you can create a product or service that they will buy.
This may seem obvious, but it’s essential: before opening a restaurant, do some market research! Look at the competition in your area—what other restaurants are there? How many people eat out each day? What kind of food do most people like (and why)? How much money does each person spend on eating out?
Define your menu
A good menu has a range of items that appeal to your target audience. You can do this by ensuring you have a well-balanced selection. Consider what your competitors are doing – if they’re offering great value, try to develop something similar.
Look for a site to lease or buy
When looking for a location, you’ll need to decide whether you want to lease or buy. Leasing a location might be the best option if you have little money saved but are willing to risk it on your restaurant venture. Buying is usually better if the location will be profitable and long-lasting because once it’s yours, there’s no going back.
Another thing you will want to consider when choosing a location is foot traffic: how many people pass through your chosen area daily? This will help determine how much business you’ll get, so try not to choose a size without enough foot traffic. The more people that pass through, the more potential customers there are!
In addition to foot traffic, look at parking availability and visibility from other roads/streets around you. You want to ensure there’s enough parking space so people can get out of their cars easily without having problems finding spots; also, make sure they can see the place easily from nearby roads or intersections so they know where it is when they’re driving by (or looking for directions).
Decide on a business structure
You can decide on the type of business structure best for you. There are many options, but for this guide, we will focus on four:
- Sole proprietorship: If you are a single person who wants to start a restaurant as your own business (but isn’t interested in taking on partners or shareholders), consider using a sole proprietorship.
- Partnership: If you want to open up shop as part owner with other people with ownership stakes in the venture, consider forming an LLC or partnership.
- Corporation: If all goes well and your restaurant becomes successful enough, consider incorporating it into one so that investors can buy shares from time to time without having direct control over operations; this makes them less risky than purchasing companies outright because their investment isn’t tied up indefinitely.
- S Corporation: This is similar to a corporation, but the company’s income, loss, deductions, and credits are paid by the owner instead of the company itself. This allows the company to take advantage of tax breaks and deductions by claiming the company’s finances on its tax record.
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Obtain financing and investors
You’ll need to start with a business plan to get financing for your restaurant. This outlines your business and what it will take for it to succeed. It should include things like:
- An explanation of the industry and target demographic
- The financials and projections for the first three years
- A detailed description of how you plan on running your restaurant (management style, staffing levels, etc.)
Once you have this information written up and approved by an accountant or lawyer specializing in small businesses, it’s time to pitch to investors! You can find potential investors through social media or by reaching out directly if they’re local or local-ish. You can always talk with your local bank lender about financing as well.
Select the right kitchen equipment and furniture
Once you’ve decided upon a location, it’s time to select your kitchen equipment and furniture.
- Consider the size of your kitchen. This will determine what type of equipment you will need.
- Choose restaurant equipment that suits your needs and style.
- Choose furniture that is comfortable for both customers and staff alike!
Hire employees and chefs
- You need to hire the right people
- You need to hire enough people
- You must ensure they’re good at what they do and like doing it!
- The people you hire should also be loyal, trustworthy, and dedicated to your business so that when things go wrong (and when are things ever not going wrong?), your staff will support one another in getting back on track as soon as possible.
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Keep your restaurant in compliance with state, local, and federal regulations
- All restaurants must have a health inspection and receive a passing score before opening.
- Ensure you pay the appropriate taxes by checking with local tax authorities
- Make sure you have all necessary licenses for your type of business (e.g., alcohol licenses, food handling permits)
Obtain insurance for your restaurant
You must protect your business with the right insurance as a restaurant owner. An insurance policy can protect against losses due to fire, theft, and other accidents. It also protects from lawsuits.
Insurance can be expensive and time-consuming to obtain, but it is worth it in the long run because an insurance policy will help keep costs down while allowing you to sleep at night knowing that if anything bad happens (and trust us: bad things do happen), you’ll have the resources available to repair or replace any damaged property quickly.
Plan for promotions and marketing strategies for your restaurant business
You must also consider how you plan to promote your restaurant business. You can use social media, print advertising, and other methods. Please note that it is essential to have an effective marketing strategy before opening your restaurant because you want customers to come in as soon as possible.
Starting a new restaurant is a big undertaking but can also be gratifying. Restaurants are one of the few recession-proof businesses that will always be in demand. Creating your own restaurant business will connect you with people from all walks of life and teach you excellent management skills. Have a question? Ask us here BUILD IT’s contact info.