The beginners guide to starting a restaurant

By 6.7 min readPublished On: August 16, 2019

Almost everyone dreams of owning their own restaurant, bar or coffee shop at some stage. How difficult can it be to run? How difficult can it be to make money? The reality is that the restaurant business is one of the toughest. Starting a restaurant is an ambitious undertaking. Many restaurants fail within a few years because of poor planning and a lack of understanding. A restaurant is a business that needs to be run with precision to ensure that profit margins are in line.


We don’t want to scare you, but lets be honest right from the start. You need cash money to get this business started. Whether you decide to buy a franchise, partnering or go solo opening up a restaurant means you need some serious cash.

So if you don’t have someone personally investing in your idea you can look into the following:

Working capital loans. A working capital loan is a loan that is taken to finance your everyday operations. These loans are not used to buy long-term assets or investments and are, instead, used to provide the working capital that covers short-term operational needs

Lines of credit. If you’re approved for a business line of credit, you’ll get a maximum credit amount but will only have to pay what you use. Like a credit card, the line of credit constantly revolves. As you pay your balance, you’ll have more credit to draw on for future expenses.

Equipment and technology loans.  Did you even know you can get loans on this? Equipment and technology are necessities in starting a restaurant in this day and age. Make sure you negotiate with your bank or service provider so you can obtain loans for kitchen equipment and restaurant technology. These costs alone are the most expensive in getting your business started. Many point of sale providers, offer 0% financing to offset the initial cost of the technology.


Having a thorough business plan is essential when reaching out to investors and applying for restaurant loans to start your restaurant. It will also help you develop your strategy and flesh out the feasibility of your restaurant’s details. Below are the main components of a restaurant business plan.

  • Executive Summary
  • Company Overview and Description
  • Market Analysis (target market, location analysis, competitive analysis)
  • Business Offerings
  • Management
  • Marketing and Public Relations Strategies
  • Financial Projection (investment plan, projected profit and loss statement, break-even analysis, expected cash flow)


When choosing a location for your new restaurant, the following features are among the most important:

  • Visibility and accessibility. Select a spot that can be seen by those driving or walking by. You should also look for an area that gets plenty of passersby on foot or in cars. In addition, consider if there is parking and ease of access by foot or car.
  • The demographics. Ensure the target market of your restaurant matches the demographics of the area.
  • Labor costs and minimum wage. It’s important to ensure that the labor costs of an area don’t cut into your profits. You will also want to have an idea of what employees might expect to make based on the location.
  • The competition of the area. Some nearby competition can help with marketing. But it’s wise to have enough of a distance that you can still guarantee a solid pool of customers who won’t be easily drawn to another similar place.


To open a new restaurant, you’ll need to obtain several federal, state, and local permits and licenses. It can be worthwhile to have legal counsel when filing for restaurant permits and licenses to make sure you complete every necessary step.

Depending on your concept and the city or state where you open your restaurant, the necessary licenses and permits you’ll need — and the costs to acquire them — will be different. Some licenses are required for every restaurant (i.e. business licenses), while others depend on your restaurant concept (i.e. liquor licenses).

Here are some other licenses and permits you’ll most likely need:

  • Employee identification number
  • Certificate of occupancy
  • Sign permit
  • Food service license


When starting a restaurant, it’s important to have a clear concept and brand. Your restaurant concept includes the service style of your restaurant, the food you serve, and the ambiance of your restaurant. This goes hand-in-hand with your brand, which forms your restaurant’s identity, personality, and mission. Your brand is the intangible force behind your restaurant concept, and your restaurant concept is kind of like your brand in action.

Think about what you want your establishment to be known for? Is it fresh local meat and produce or is it authentic Italian cuisine? Find your niche and own it.


The days of hand writing customer orders is old, inefficient and leaves lots of room for error.

Most restaurant guests are expecting technology when they come to your establishment. They want, quick , easy and painless service.

To be successful, you’ll need a modern and reliable POS system that can offer pay-at-the-table devices, online ordering, inventory management, guest feedback options, and much more. It will only help you run your business much more efficiently.


Before you open your restaurant, you’ll want to establish some basic food items that your menu will feature. Deciding what will be on your menu is important when figuring out the equipment you need, the staff you will hire, and the crowd you hope to draw.

Try testing your menu ideas and approach building your menu like an experiment. Consider having a dinner party featuring your proposed menu where you ask people for their honest feedback.

Then comes the not so exciting part, you’ll need to price your menu. This is where cost of goods sold, food cost, sales forecasting, inventory, profit margins, and other restaurant metrics come into play.


One major step of opening a restaurant is hiring staff to carry out the operation of your restaurant every day. Consider all roles that need to be filled at your particular restaurant before hiring staff. This may include human resources management and supervisors, food and beverage purchasing, receiving and storing products, food preparation, foodservice, food cleaning and dishwashing, marketing and sales, public relations, accounting and auditing, and bar services.

For both front- and back-of-house staff, look for candidates with prior experience and a supreme ability to multitask and to work quickly and efficiently. All employees should work well with others and be able to stay calm under pressure. Front-of-house staff in particular should exude exceptional social skills.

Though the list will vary based on the unique needs of your restaurant business, there are a few fundamental positions you will likely need to fill when opening your restaurant:

  • Executive chef
  • General manager
  • Sous chef
  • Prep cooks
  • Servers
  • Bartenders
  • Hosts
  • Food runners and bussers
  • Dishwasher


Starting a restaurant is serious business in the competitive market. You need a strong marketing plan to help you bring in and engage with your customers.  Everything from your opening day initiative to your weekly specials should be included. Don’t forget how important your restaurant’s digital presence is with a carefully designed website, and a social media and email marketing plan you will for sure catch the eye of future guests.

When writing out your marketing plan you should always remember it’s definitely not a one-size-fits-all when it comes to marketing your business. It should be personalized to your restaurant and your concept.

There’s nothing better than running a restaurant. You get to create an atmosphere and cuisine that people will love, but it comes with a lot of hard work. Start planning today with our helpful tips!

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See you next week!

Your devoted hostess,


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