How to Start a Restaurant

Congratulations! You’re ready to turn your passion for food into a thriving business for your local community! Starting your own restaurant can be the most rewarding and most difficult thing you have ever done, but hopefully with this planning framework, you can be better prepared to handle any challenges that come your way. As you are learning how to start your own restaurant business, here are 10 steps you should take when starting your restaurant business!

Step 1: Choose Your Restaurant Type

This is the most important part when you are going to start a restaurant business. You’ll want to make sure you have the capability to create an authentic atmosphere and food for your customers for the type of restaurant you choose. And you also want to make sure that there is demand for the kind of restaurant you pick. More demand for your food and atmosphere means more flexibility to grow your business down the road.

Are you going to be overseeing the food and service based on your own experience? Or will you be entrusting these duties to someone else you trust that has a lot of experience doing it before?

Step 2: Find An Ideal Location

You will want to pick a type of restaurant that fits both a demand in your local market with the expertise of your team. You might have a lot of experience serving Italian recipes from your family cookbook, but if there is too much local competition, you may have to consider a location that allows you to serve a larger market.

A location closer to a major highway may offer you more business, but it will likely cost you much more on your lease. You will want to weigh the pros and cons of different locations and how big the local market is in those areas for the restaurant type you’ve chosen. Location is one of the most important factors when deciding how to set up a restaurant business.

Step 3: Decide What You’ll Serve

Once you find your restaurant type and ideal location, you will need to define what items to have on your initial menu. You may want to consider conducting a focus group around your initial recipes to get feedback from your target market. If you have 10 items you plan to serve, your staff may love them, but a majority of your focus group may have very different feedback.

On top of making sure your target market sees a demand for your chosen menu items, you will want to determine:

  • How much it costs you to make these items.
  • What you plan to sell them for.
  • How many of each item you plan to sell monthly.
  • And how much of different ingredients you need to keep in stock to make sure you don’t have any shortages.

Step 4: Understand Your Expenses

Some of your biggest expenses will include the space you lease and the staff you pay to keep your restaurant running. After doing your market research, make sure that your projected profit outpaces your expenses, otherwise you may be making a bet on whether or not demand will substantially increase for your restaurant months down the road.

Step 5: Create Your Plan

The next step when starting a restaurant business is to formalize your restaurant plan. Once you finish researching what restaurant type you want to run and where you will run it from, put all of  these items down on paper for your own business planning purposes as well as for presentations  you may have to create to apply for financing, put together your marketing, and coordinate your plan of attack for building community awareness to get people in the door for the first time.

Make sure to include:

  • Your Business Name
  • The Niche Type of Food Your Restaurant Will Serve
  • Who Your Restaurant Will Serve (Your Target Market)
  • Local Competitors & Relevant Details
  •  Plans for Daily Operations
  • Financial Planning (Estimated Revenue, Expenses, and Financing Needs)

Make sure to write this plan in a way that you will be able to reference daily as you’re starting the business and keep a copy on file for reference by key restaurant staff members (omitting confidential financial plans or details as necessary). You may edit this plan as you understand more about your business once you get started, but having this running document will keep you focused on what is most important for your business to succeed.

Step 6: Apply For Financing

There are two main methods for financing your restaurant business. The first option is to finance with private money, either from your own funds or from private investors. The second option is to apply for a business loan. There are pros and cons to each of these methods.

If you apply for a business loan, you may need to wait weeks or months to get access to funds but you will have more flexibility when it comes to make decisions for your business without any other partners involved. If you bring in funding from private investors in exchange for a portion of the profits, you may be able to start up faster and execute on upgrades to your business quickly, but these investors may also want to have significant say in the day to day operations of the restaurant if your management and profits aren’t up to their original expectations. Evaluate this decision carefully, as it will determine your options moving forward.

Step 7: Apply For Licenses and Permits

Make sure to apply for any licenses and permits required by your specific area in advance so you aren’t waiting on them to open your restaurant. You will likely need to have a Certificate of Occupancy, a Foodservice License, Food handler’s permit, and other licenses specific to your area.

In addition to these, you will absolutely need to form your LLC or Corporation and get your Employee Identification Number, and our team is standing by to help! Just go to to get started, and our customer service team will be happy to assist you with any one-on-one support you may need.

Step 8: Assemble Your Team

Now it’s time for the final step before you open your restaurant. It’s time to hire the team to put your plan into action! Depending on the type of restaurant you are building, you will likely need a General Manager, Hosts, Bartenders, Servers, Cooks, Dishwashers, and other team members to bring your vision to life. Even the roles which require less experience are still critical to the success of your business. Make sure to have in mind the kind of culture you want to create for your employees, and stick to it to continue attracting great talent. Happy employees mean happy customers! And remember, hard workers can be trained to fulfill different roles. But talented lazy employees can hold your restaurant back in the long run.

If you still have questions about how to set up a restaurant business or are ready to turn your restaurant business into an LLC or corporation contact us here today!