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How To Start a Restaurant

How To Start a Restaurant

Nate Lozier

Nate Lozier

Opening a restaurant requires not just a love for great food and deep industry knowledge, but a keen understanding of many areas of operations, marketing, and finance. This article walks through the many plans, checklists, and strategies to consider when opening a restaurant.

The restaurant industry is an incredibly competitive landscape and opening a new restaurant is certainly no easy task. Still, tens of thousands of new restaurants open every year in the United States alone. One thing many of them have in common is not just a passion for great food and deep industry knowledge, but a solid understanding of the many additional components that contribute to restaurant success – store operations, labor, marketing, and finance to name a few.

This article is an overview of those areas as well as some best practices to consider.

How to Create a Restaurant Business Plan

A restaurant business plan serves as a comprehensive roadmap, essential for organizing the necessary steps to opening your business. It ensures no details are overlooked during the process, including everything from funding to a breakdown of operating costs and projected sales. This plan is particularly crucial for restaurant operators amid the complexities of licensing, staffing, and other operational challenges unique to the industry.

Understanding Restaurant Accounting Basics

Accurate accounting is a crucial part of running a successful restaurant that maintains profitability. Whether you’re running accounting in-house through restaurant accounting software or using an outside accounting firm, there’s a lot to get acquainted with as a manager/owner.

Some of these areas include setting up a fiscal calendar, setting up General Ledger (GL) codes, entering Accounts Payable (AP) for cash flow management, and evaluating a budgets based on sales fluctuations. Restaurant accounting can feel overwhelming – many operators outsource this process to accounting firms – but familiarizing yourself with these key components of restaurant accounting is a good place to start.


What is the Average Profit Margin for a Restaurant?

New Restaurant Concept and Design

It’s important to aligning the design and ambiance of your new restaurant with its concept and customer expectations. Inconsistencies in elements like pricing, attire expectations, and menu choices can deter customers from coming back.

Start by brainstorming some ideas for your restaurant. Identify not only what type of food you’re serving, but also your target demographic and service style. If you’re stuck, try eliminating the things you wont be doing as well.

Once you’ve created a solid concept and restaurant design, share it with some of your fellow industry people. Ask for honest feedback and take it to heart. This is another crucial part of the process to make your concept better!

Naming Your Restaurant

Naming your restaurant is typically one of the least stressful parts of opening shop. It can be a fun process that makes your restaurant feel “real”, but it should also involve a process. As with your concept and design, choosing a name should involve brainstorming, a few iterations, and some testing. 

Your restaurant’s name should reflect not just your food but you overall brand. What experience are you trying to give customers? What should people envision when they hear your name?

It’s also important to consider existing businesses in your area (not just restaurants). At some point, a large portion of customers will find your restaurant online through search engines and social media. If your name is close to that of another business in the area, it can cause confusion for your customers, particularly early on before you’ve developed a loyal customer base.

Pricing Out Your Menu

Strategic menu planning is a key part of restaurant success, particularly in the context of rising food and labor costs. After you’ve decided on your core menu items, you can start setting price points. Here are a few key considerations when setting those prices.

Your restaurant’s menu is more than a list of your dishes and their ingredients. It is a marketing vehicle that can be used to increase item popularity. Through menu engineering, operators can drive a real, measurable impact on the sales and profitability of their restaurant.

Selecting Your POS

With hundreds of options available, choosing the point of sale (POS) system for your restaurant requires a little research. Remember that your POS isn’t just a transaction system but also your central point of engagement with guests, influencing their experience positively or negatively.

Before you research your options, start by assessing the specific needs of your restaurant. These include your service model, data reporting, accessibility, and integration with other tools. Integrating your POS with other areas of your business (back office, accounting) has become increasingly common as restaurants look to create one system that communicates seamlessly.

When deciding on your POS, consider those that were made specifically for restaurants, which tend to have specific features that will be useful to you and your team. You’re probably already familiar with at least a few of these if you’ve worked in the restaurant industry, but explore at least a few options you haven’t used. Read reviews and get a full demo of the system before you make any decisions. They’ll be happy to give you one!

Selecting Your Restaurant Management Software

Each year, restaurants adopt more and more software and allocate more of their budget to tech tools. Since 2020, restaurants spend twice as much of their gross revenue on restaurant technology.

There are an increasing number of restaurant technologies available every year, touching every part of the industry from raw ingredients being delivered to customer feedback after the meal. While these tools are useful, investigate offerings before you commit to a contract. Understand how they integrate with your existing tools and make your operation more streamlined, not more stressful.

Wrapping It Up

It’s easy to feel overwhelmed when taking on something as big as opening a restaurant. With many moving parts, and an incredibly competitive landscape, the industry is certainly not for the faint of heart. It requires not just hard work and a passion for serving great food, but also the willingness to learn about many other disciplines of restaurant management.

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