How to Open a Restaurant in 7 Simple Steps

Operating a restaurant is challenging, but with careful planning and patience, you can be successful.

Many restaurants close because they fail to make crucial decisions before opening their doors. Keep reading to learn how to open a restaurant by developing a winning strategy to keep it functional and your guests happy.

Restaurant Opening Checklist

Before opening your restaurant you’ll need to decide on a niche, create a business plan, obtain a business loan or line of credit, find a location, create a menu, recruit and train employees, and market your new venue.

Step 1: Figure Out Your Niche and Type of Restaurant You Want to Open

One of the most common reasons a restaurant closes its doors is because the owner failed to establish a niche. You may want to appeal to as many customers as possible, but you can’t please everyone.

Segmenting and targeting are critical to your long-term survival.

Begin by identifying your target audience and consider the following:

• Will you be a family restaurant or a restaurant for dates
• Do you want to appeal to the younger crowd or baby boomers
• What style of service do you want to provide (upscale, quick-service)
• What about your food concept? Will it be ethnic cuisines, such as Italian or French?

Step 2: Create Your Business Plan

Writing a business plan helps you focus on your vision, mission, and goals. If you need a loan or investors, you’ll need a business plan.

The core elements of a business plan are:

• Executive summary. Mission statement, review of legal structure and ownership, brief history, and overview of financials
• Business overview. Describe your concept and why you believe it’ll be successful
• Industry analysis. Target audience, competition, benefits of your location
• Strengths, Weaknesses, Opportunities, and Threats. Consider potential disruptions to the industry and how you’ll overcome them
• Operations. Staff and management
• Financials. Cash flow statement, income, and expense report
• Marketing plan. Branding and advertising

Step 3: Obtain a Restaurant Loan

If you haven’t saved money to open your restaurant, you’ll need to raise capital. You can borrow from friends, pitch to investors, or apply for a restaurant loan.

A traditional bank loan is difficult to obtain. You’ll need excellent credit, and banks tend to be nervous about lending to restaurants.

Online lenders are a much better option. Here’s a look at three possible lenders for your restaurant.

1. Kabbage: Kabbage is an online lending marketplace. It’s not a lender, but it’s the best source for finding startup loans. You fill out a single application, and you receive loan offers from different online lenders
2. PayPal: You can apply for a small business loan from PayPal. You’ll need to have been in business for at least nine months with annual revenue of $42,000 or more
3. Funding Circle: If you have at least two years of business history, you can apply for a small business loan from Funding Circle. Loans are available from $25,000 to $500,000

Step 4: Find a Location

When searching out a location for your restaurant, keep in mind your niche and target customers.

Getting diners in the door is going to be a challenge when you first open your restaurant. Being located in an urban area where there’s plenty of foot traffic will make you more visible.

Another consideration when choosing a location is competition. Are there currently restaurants in the neighborhood offering the same food concept as yours?

Step 5: Create Your Menu

Your menu is based on the food concept you’ve chosen. Keep it simple and on target with your concept. The longer the menu, the more confusing it is for your guests.

Once you have your menu concept, you can create your list of core ingredients. Remember, it’s a work in progress. Getting the right flavors to please your target market requires some trial and error.

Try to use local products as much as possible. It’ll be fresh and more affordable. You might also plan your menu according to seasonal availability. Items that are out of season are more costly.

Step 6: Hire and Train Employees

Your target customers determine the staff you’ll need. You’ll have different needs depending on whether the restaurant is family-friendly or upscale. Even if you intend to be the head chef yourself, you’ll still need help. At a minimum, you’ll need to hire:

• Line cooks
• Servers
• Host/Hostess
• Dishwasher

It’s essential to take your time and carefully interview all candidates. You’ll also need to train your new staff. How they perform reflects on you. Poor service is one of the most common reasons that guests don’t return to a restaurant.

Step 7: Marketing and Promotions

Even if you’ve chosen a location with plenty of foot traffic, you’ll still need to invest in marketing and promoting your business.

Make sure your restaurant is on Google My Business; be sure your location and phone number are accurate; set the location on the map and include a photo of your restaurant; add a link to your website and social media channels; consider an online reservation platform, such as your Google profile.

There are plenty of ways to effectively promote yourself. You’ll also need to create engaging and delicious images of your dishes and post them on Instagram. You can also encourage customers to post photos of themselves from inside your restaurant.

Conclusion

Opening a restaurant can be the culmination of years of perfecting recipes in your kitchen. Now you’re ready to take your love for cooking to the masses. With careful planning and attention to detail, your new restaurant can succeed.