Opening a restaurant: 14 steps for beginners

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Opening a restaurant goes hand-in-hand with the entrepreneurial dream. Small businesses are the backbone of any society, with local restaurants playing a vital role in the neighborhoods they serve. Restaurant owners embody the diversity and creativity that give each restaurant its vibrant character.

At the same time, the restaurant industry is challenging, especially for newcomers. First-time restaurateurs often deal with high startup costs and low profitability. Restaurant management requires long hours and serious dedication, from training new employees to programming your point of sale system to posting on social media.

Entrepreneurs who step up to the challenge can find themselves having built something they’re proud of. There’s no greater satisfaction than seeing the smile on your diners’ faces as they bite into your food.

Here’s an in-depth checklist for opening a restaurant, from the restaurant business plan to the soft launch. Careful planning will help you streamline your concept from development to the grand opening, as well as maintain positive cash flow through that critical first year and beyond.

1. Create a business plan

There’s a good reason this is first in our guide to opening a restaurant: Without a plan, you’re not going anywhere. Before hiring any staff, signing a lease, or writing any checks, you must sit down and create a business plan that details your vision behind your restaurant. And while the term “business plan” can make this sound like a daunting task, in reality, it’s a lot more approachable than meets the eye.

A business plan is a document that outlines your goals, as well as your methods, budget, and time frame for achieving those goals. Opening a restaurant involves many moving parts, so your business plan is meant to change over time. The most important thing in the beginning is having a concrete vision for your new restaurant that will dictate your action steps as you get started.

Steps to creating your business plan:

1. Craft your executive summary (company description, mission statement, expected costs and returns, execution plan, and a message to investors).
2. Conduct a thorough market analysis (target audience, competitive advantage, market conditions, location).
3. Dig into financial projections (startup costs, break-even analysis, profit and loss statements, overall budget).
4. Draft a solid operations plan (management and staff description, sample menu, software and table management strategy).
5. Create a marketing plan that can sell (social media, loyalty program, public relations, restaurant branding).

2. Identify your restaurant concept

Restaurant startups come in many shapes and sizes. Opening and operating a steakhouse looks very different from starting a burger joint, which looks different from starting a food truck. Determining the type of restaurant at the beginning is critical for shaping the foundation of your business.

Chances are you already have a firm idea of what you want your new restaurant to look like. Be sure your vision answers the following questions:

• What type of service will you have? Are you focused on full service, limited service, or fast food (also known as quick-service restaurants or QSR)? Perhaps you’re looking to open a pop-up or ghost kitchen for a delivery-only business. Each kind of service has its own benefits and costs.
• What type of dining experience do you want to create? Whether you’re interested in fine dining, dive bars, or anything in between, describe the ambiance from the guest perspective. Restaurant names hint at the type of experience a customer should expect, so spend some time deliberating on what you’ll name your pride and joy. Different concepts cater to varying demographics and require different locations, kitchen equipment, and (of course) menu items. Each concept also has its own restaurant operation considerations, startup costs, and service standards.
• Do you want your own restaurant concept or a franchise? Independent restaurants provide both the thrill and risk of going out on your own, while franchising a popular chain comes with streamlined training programs and predetermined restaurateur best practices.
• What are your business needs? If you’re an aspiring chef-owner who wants to run the back-of-house, your goal is far different than that of someone opening a restaurant as a passive income stream who is looking to spend minimal time on-site. While profitability is critical in new businesses, determining from the start whether your restaurant is a financially driven business or a lifestyle-driven business will shape its development.
• Where do you fit in your local market? Market research is key here, since you’ll need to know your area in order to stand out. Rather than rehashing common trends, see how you can make your restaurant unique in your town.

Each restaurant concept has a different target market, so write down the demographics (characteristics like age and income level) and psychographics (behavior) of your target customers.

3. Design your menu

Designing your menu before getting to the other steps will help everything fall into place. For example, it’ll determine what kitchen equipment you’ll need, how much food cost will impact your overall operating costs and at what point you can break even, and what kind of chefs you’ll need to hire.

A restaurant with a small menu will require less storage space for inventory than one with a large menu, and will allow you to focus on essentials. On the other hand, a large menu will mean you’ll need more room for inventory storage, more tools in the kitchen, and potentially more kitchen staff.

Designing your menu early can also help you attract potential investors. A menu that slots nicely into a niche with high demand or that creates a new niche is likely to attract business, especially in the opening months.

When designing your menu, make sure to dive into menu engineering to make the most out of every square inch. A well-designed menu can increase revenue by nudging customers toward popular yet profit-friendly items.

Bear in mind that your menu is the single most important piece of information a customer has about your restaurant. The menu items, prices, and design should tell customers just about everything they need to know about you. It doesn’t matter if you have a small restaurant or a large one—the menu absolutely must match the theme and restaurant branding, all the way down to the font and color scheme.

Steps to designing your menu:

1. Choose a menu template.
2. Choose consistent font and design elements like graphics, icons, and images.
3. Run a cost and sales analysis on each dish.
4. Place menu items on the menu based on their popularity and profitability using the idea of the Golden Triangle.
5. Use descriptive language, and edit your writing multiple times.
6. Don’t overwhelm your diners—cut dishes where necessary.
7. Launch a digital menu that’s accessible via your website and through QR code.

4. Find an excellent food supplier

Your relationship with your food supplier will be one of the most important you’ll have. A quality supplier will be able to find you good deals on in-season produce and point you toward products you may not have known were available. Their success helps guarantee your success, so look for a supplier who has excellent customer service.

You may find you need multiple food suppliers for different ingredients. That’s OK. Compare both costs and quality across food suppliers for different ingredients before making any decisions. The ingredients available to you will help determine your menu, since good ingredients are key to making good food. If you have a menu item you’d like to add but can’t find fresh, high-quality ingredients for it at a reasonable price, you’ve just found a menu item you should probably ax and replace.

Steps to finding a good supplier:

1. Shop around—you may be surprised at price differences between suppliers.
2. Buy in bulk if you can, or consider teaming up with other restaurants to buy in bulk; also aim to buy ingredients with a long shelf-life.
3. Buy in season: Swap in seasonal ingredients whenever possible to keep food fresh and lower costs, and advertise your seasonal menu.
4. Go local: Source as locally as possible, and play up that local-ness in your marketing.

5. Assess your budget and get funding

Before you move your restaurant past the idea stage, much less write any checks, you need to understand your access to capital.

The average cost of opening a restaurant in the U.S. is $375,000 if you’re leasing or $735,000 if you want to buy the building. Food trucks are significantly less expensive, averaging around $60,000 to start. Franchising can also be quite costly: While starting a Chick-fil-A can cost as little as $10,000, owning a Wendy’s can cost between $1.1 and $2.8 million.

If you have the money or real estate available to open your own restaurant, determine how much of your personal savings or assets you’re willing to commit to your business. However, it’s more likely that you won’t have this kind of cash on hand, so decide how you’ll go about raising money.

• Traditional lenders, such as banks, are your most commonly available option for standard and small business loans (known as SBA loans because the U.S. Small Business Administration backs them). Opening a business account with some financial providers may give you access to business lines of credit and a business credit card.
• Crowdfunding platforms, such as Kickstarter, help fans of your restaurant idea support you through donations. Successful crowdsourcing campaigns require a substantial time commitment and some fees of their own, and many platforms require you to reach your goal in order to get any of the funds. You can offer rewards at different donation levels, like an invitation to your soft opening or a free meal for two.
• Private lenders, such as investment firms or even venture capital, can be tapped if you have connections, though few options exist formally in this space for restaurants.
• Financing plans for individual purchases, such as kitchen equipment, can help push you over the edge if those specific expenses are all that prevent you from opening a restaurant.

Forecasting the amount of money you can gather to start your business may require you to go back and rethink your business model. No matter what you think your eatery will cost, it’s always good to err on the side of caution and add some financial padding in the likely case that things go over budget. You won’t know what to expect for your restaurant profit until you’ve been open for a few months at least.

6. Choose a location that fits your target market

Determining your location is a critical aspect of your business plan: Choosing the wrong place is one of the top reasons why many restaurants fail.

The most important thing to consider in selecting your restaurant location is its natural foot traffic. The people who frequent the area should match up with the demographics of your target market.

While a strong marketing plan and great social media may motivate some people to drive out to dine with you, accessibility always reigns supreme. The bulk of your customer base will likely be the people who live close by, or in cases of touristy locations, the people who are visiting the area.

When scouting out locations, spend significant time in those places yourself. Visit during the week and weekend at various times a day to see how the foot traffic changes. Walk the streets and get a feel for your potential customer base. Ask nearby business owners about their customer demographics and how they bring in foot traffic. Survey pedestrians about your restaurant concept.

Securing a lease or buying a restaurant property is a complex process that will likely take several months and many attempts. Patience is crucial and allows you to work on other priorities while hunting. Once you find that perfect location, you’ll be able to hit the ground running.

Steps to choosing the right location:

1. Know your desired demographic. Who do you anticipate coming to your restaurant? What proportion of customers do you expect to come by foot versus by car?
2. Know your competition. What do you offer that other restaurants in the area don’t?
3. Follow your budget. What’s the best location you can afford? How would a cheaper location affect business?
4. Know your capacity. What’s the maximum number of customers you’re prepared to serve at any given time? What’s your minimum seating needed to make a profit?
5. Think ahead: How can you expand your business in the future? And if you have a section for outdoor seating, how can you maximize your restaurant patio space?

7. Design around your restaurant’s operations

There are two categories of restaurant design: front-of-house (your dining room and anywhere else your guests see) and back-of-house (your kitchen). It goes without saying that your seating, decorations, and other things guests will see should align with your concept, vision, budget, and operational needs. Yet it’s important that your restaurant equipment, from dishwashers to industrial freezers and ovens, also aligns.

Front-of-house (FOH): Combine ambiance with practicality

Your dining room is where you begin to see your dream take physical form. Your front-of-house design should accomplish two goals:

1. Align with your concept vision and justify your menu prices
2. Allow for as many tables as possible to maximize capacity

For full-service concepts, the experience of dining out is part of the meal itself and one of your biggest selling points. Lighting, art, music, seating, and even server uniforms are critical elements that should all align with the brand you’re creating.

From a practical standpoint, you want as many people as safety regulations permit to dine in your restaurant at once. Each customer you can fit in your dining room further maximizes your profitability potential. You can rearrange smaller tables to accommodate groups of all sizes to meet ever-changing customer needs, while fixed booths may force you to seat two people at a six-person booth while larger parties must wait.

Back-of-house (BOH): Prioritize efficiency and safety

While the front-of-house is all about the customer, the back-of-house is all production. Even in open-kitchen concepts, where the back-of-house is part of the customer experience, the kitchen equipment and layout have to meet the needs of your restaurant operations first before satisfying aesthetic goals.

Your kitchen design should accomplish two goals:

1. Permit safe and efficient movement among your staff
2. Allow the type of food you plan to sell to be cooked as quickly as possible without sacrificing quality

An inefficient back-of-house design can limit turnover because guests are waiting forever for their food. Higher turnover (less time spent at a table) means you can seat more customers, leading to greater profitability.

So when designing your back-of-house, structure your kitchen in a way that allows your line cooks to easily hand off dishes to one another and minimize movements needed to construct an order from start to finish.

Kitchen design often takes a team of people to cover everything from architecture to procurement. If you’ve never designed a commercial kitchen before, it’s a good idea to hire an expert who specializes in restaurant kitchen design.

8. Get excellent equipment

Once the kitchen is designed, it’s time to fill it. Every restaurant needs good appliances. Finding and purchasing kitchen equipment can be one of the most expensive parts of opening a restaurant, so look to save wherever possible without reducing quality.

Look to restaurant auctions for high-quality, secondhand equipment like stoves, refrigerators, dishwashers, and other potentially pricey items. Purchasing in person is best for large, expensive items, while online auctions can be valuable for less expensive and therefore less risky items.

If you’re new to the industry, you may want to rely on your head chef or other kitchen staff to help you make decisions. Experienced chefs know the difference between good and mediocre equipment and can teach you how to start a restaurant kitchen off on the right foot.

Don’t be afraid to pay for good kitchen equipment. Professionals need high-quality tools to do their job right, and the quality of a kitchen’s equipment can make or break a restaurant.

Steps to getting the best equipment:

1. Tap the knowledge of your chefs and managers.
2. Triage equipment into three categories: absolutely necessary, nice to have, and maybe one day.
3. Set up a budget for equipment purchases to cap spending and encourage saving where possible.
4. Search online to get an idea of overall pricing.
5. Scour auctions and secondhand equipment stores for deals.
6. If upgrading equipment, look to save money through tax deductions.

9. Obtain restaurant business licenses and permits

Before opening a restaurant, you’ll have to obtain a series of licenses, permits, and approvals that each come with their own cost and timeline.

Make sure to get these necessary licenses and permits:

• Business license, issued by your state
• Employer identification number, or EIN, issued by the IRS
• Certificate of occupancy, issued by your city
• Seller’s permit, issued by your state
• Food service license, issued by your local health department
• Food handler’s permit, issued to individual employees
• Building health permit, issued by your local health department
• Resale permit, issued by your state
• Liquor license, the requirements of which vary significantly by state

There are other niche permits depending on your state, like a pool table permit or dumpster placement permit. Since they vary so widely by city and state, research the requirements for your exact location.

Steps to getting licenses, permits, and approvals:

1. Hire a lawyer and accountant to review all the documents you need for your specific area.
2. Contact your local Chamber of Commerce for guidance.
3. Ensure your taxes are set up with the aid of your accountant.
4. Set aside adequate time and money to get these necessary documents (since not doing so isn’t an option).

10. Hire talented staff for a successful restaurant

Staffing is one of the biggest challenges in the restaurant industry. Many restaurants constantly find themselves on the lookout for talented employees. Managing high turnover as well as ever-changing wage and labor laws are all vital for a restaurant’s success.

Hiring a reliable restaurant management team for both the front- and back-of-house is a critical first step. They can help you find talented restaurant staff and may well have people in mind whom they already know and trust.

For full-service restaurants, a general manager should be responsible for front-of-house operations and administrative tasks such as payroll, procurement, and point of sale management. They’ll oversee your managers, who’ll oversee your servers, hosts, bussers, bartenders, and barbacks.

In the back-of-house, you’ll want to bring on an executive chef who oversees all kitchen operations and will play a leading role in your menu design. A good executive chef will create a menu that matches your target market, effectively manages food cost control, and minimizes the risk of spoilage. Sous chefs will report to them, with line cooks responsible for dish construction and plating.

Refer to your budget when determining how many staff to hire and how much to pay them. Labor is one of the most significant costs for a restaurant, typically hovering at around 30% of your total sales. While hiring too few people won’t allow your restaurant to operate effectively, too many will reduce your ability to operate profitably.

Successful restaurants will have structured, documented training programs to quickly and efficiently onboard new employees. Create templates for food service standards, food safety, service recovery, upselling, and all other touchpoints of your restaurant, and develop thorough training for the various technology platforms you work with.

11. Pick your POS and other software

One of the first technology platforms to invest in is a point of sale or POS system. Your POS will help streamline processes for entering customer orders, communicating with the kitchen, and handling payments.

POS systems can fully integrate with front-of-house software like Yelp Guest Manager, which in turn syncs with third-party delivery apps. So you’re looking at push-button FOH management, digital payment solutions made easy, and a paperless communication system for orders, as well as clear communication between FOH and BOH.

Servers can manage all this from a tablet, rather than having to run back and forth to a POS station. This is something busy servers will appreciate, since any trip saved is more time to dedicate to serving customers.

If you’re new to POS systems or simply don’t know which one to pick, don’t stress about it. Your FOH staff or your manager will almost certainly have a preference based on their previous experience in the industry. The goal here is to make your staff’s life as easy as possible, so if there’s a particular POS system they’re comfortable with already, there’s no need to reinvent the wheel.

The POS systems that Yelp for Restaurants integrates with include:

• Omnivore
• Oracle Micros
• Dinerware
• Lightspeed
• Squirrel systems
• Xpient
• NCR Aloha
• POSitouch

What should you look for in a POS system?

1. Consider POS hardware requirements (card readers, receipt printers, iPads, touchscreen kiosks, kitchen displays, cash drawers).
2. Keep in mind ease of use (user-friendly features like a mobile POS option, intuitive user interface, and easy payment processing).
3. Don’t forget the need for customer support (training videos or real people you can talk to).
4. Decide what integrations are most valuable (FOH management, third-party apps).

12. Invest in marketing to your target audience

Your marketing strategy is crucial to kick your eatery off on the right foot. To bring in new customers, create a website with your menu and hours and start building up your social media presence. Claim your business on popular restaurant search tools like Yelp, where you’ll reach 9x more consumers than on OpenTable.* Promote your opening week with Yelp Connect, which lets you tell your story and post custom calls-to-action on your Yelp page as nearby diners scroll.

As you test menu items, start creating content. Mouthwatering food photos and inviting dining room videos help convert curious browsers into diners. While your smartphone could get you pretty far, investing in a food photographer could benefit fine-dining concepts and other restaurants looking to take it to the next level.

To best reach your target audience, concentrate your marketing efforts on where your audience spends their time. You know the drill: Instagram is a catch-all for pretty much all age groups, with TikTok and Snapchat skewing toward younger demographics. Facebook skews slightly older these days.

If you have the budget, investing in a public relations (PR) firm will help get your restaurant featured in local newspapers, magazines, and blogs. PR professionals can connect you with many of the area’s prominent journalists and social media influencers, who can then promote you to their readers, subscribers, and followers.

Check out our full restaurant digital marketing guide for more targeted tips.

Steps for setting up your marketing:

1. Claim your page on Yelp, Google, and other restaurant review sites.
2. Set up social media accounts on all relevant platforms.
3. Create a social media branding guide so your posts will be consistent; establish a tone of voice, photo style, and video editing style, and determine your posting frequency.
4. Build and maximize your website with restaurant SEO.

13. Get ready with a soft opening

Before your opening day, it’s best to hold a soft launch. A soft launch allows you to open your restaurant to those who won’t judge you for any hiccups that inevitably come with starting a business. Soft launches can last several weeks, starting with friends and family of staff and steadily opening up to a broader network. By allowing your front-of-house and back-of-house to warm up to your restaurant operations, they’ll be able to hit the ground running when it comes time to open to the masses.

Talk to customers regularly during your soft opening. They’ll give you valuable feedback from the ground level that could determine your success. Tweak your menu and service standards based on their feedback, and expect to keep changing as your customers’ needs change.

Steps for a successful soft opening:

1. Begin a social media campaign.
2. Conduct in-house taste testings of menu items.
3. Dive into POS training and conduct mock services.
4. Adjust lighting, furniture, and décor to make sure everything is tasteful.
5. Spend some time on menu engineering (see step 3 above).
6. Conduct a practice run with your closest friends and family.
7. Once you host the soft opening, collect feedback anonymously from guests to ensure honesty.

14. Get the best digital tools for opening a restaurant

So there you have it: Our step-by-step guide to opening a restaurant. If you follow the steps above, you’ll set yourself up for a euphoric grand opening. And after all that work, opening day is just the beginning. You want to be sure that you position your business for long-term success.

That means being available in the way modern customers expect. We’re talking online waitlists, check-ins, and reservations; syncing with third-party delivery apps; integrations with the best POS systems; and more. Add to that new features like Guaranteed Seating Areas on Yelp Guest Manager, which allows guests to choose their favorite seats before even setting foot in your restaurant.

Check out Yelp’s suite of tools for restaurant owners that will help you turn casual customers into regulars. And if you’re ready to see how it all works, reach out to us for a free demo.