Starting a Food or Restaurant Business

A shift in consumer lifestyles means that more people are eating out or ordering food in than ever before. As a result, the future of the food industry looks bright, provided that you’re willing to work hard and plan ahead.

Whether you’re interested in starting a catering service or opening a full-fledged restaurant, we’re here to help. We’ll go through the main steps to getting started in the food industry.

Choose Your Food Service

The first step in joining the food industry is to decide what kind of company you’re looking to start, whether it’s catering, casual, mid-scale or fine dining. Make the decision based on a combination of your existing talents and the desires of your target market. For instance, if there are already 100 pizza joints, you might want to consider an alternate niche with less competition.

Take the time to study the food services already available. Understand what competitors charge for particular menu items, and look at their clienteles.

Legal Requirements

Once you’ve chosen a name for your restaurant, you need to register with your city, county or state administration. You will also need a vendor’s license, which enables you to collect sales taxes. Be aware that particular states of municipalities may require further licensing, so do your due diligence.

Financial Planning

Next, you’ll need to determine how you’re going to fund your new restaurant. You could invest from your own savings, or you can bring in investors. You may also apply for loans from your bank or from business associations.

However you choose to fund your company, you’ll need a business plan that lays out how you intend to make money and pay back any creditors. A business plan should include:

  • Description of target market
  • Menu and pricing
  • Who’s providing funding and how much
  • Expected costs and income
  • Employee hiring plans
  • An exit plan

Define Your Target Market

In food service, you can’t expect to please everybody. You need to consider who you want to target, and how best to target them. Example demographics include:

  • Unmarried working professionals – they may desire quicker service and less variety in dishes.
  • Seniors – seniors may prefer restaurants that are open at earlier hours and provide specials for their age group.
  • Couples – couples may be more concerned with ambiance than anything else, and the pricing should be adjusted accordingly.
  • Kid-Friendly – a restaurant that targets the whole family may require games to keep children entertained, as well as a child-specific menu.

There are many other potential targets, but these are some of the common ones.

Which you choose affects your startup costs – a restaurant for couples may require fancier table settings and décor than a service that’s friendly to children.

Choose a Location

Once you’ve made your business plan and defined your target market, you need to put the restaurant together. This means sourcing a location and then outfitting it. When choosing a location, think about your target market, and where to reach them. Keep in mind that certain high traffic areas will have higher rent.

Source Suppliers

Contact wholesale suppliers and compare prices. Select the one that provides you with the quality you need at the lowest price per item. If you call the National Restaurant Association, they can provide you with a list of local food and supply wholesalers.

You will also have to source furniture, utensils, and appliances such as refrigerators, ovens, and cookware. Try to negotiate a bulk rate with a single supplier, as they will give you a better rate with higher volume.

Marketing

When you get closer to the restaurant opening, you need to start advertising for employees, and marketing the restaurant in general. Invite the local newspaper to review your restaurant. Also consider promotional offers for the first week, in order to get new customers to try it. Once the restaurant is open, you should consider other advertising opportunities, such as television and radio, in order to maintain public interest.


Similar to opening a bar or nightclub or starting a food truck business, a restaurant requires multiple licenses, permits, and considerations. If you’re thinking of turning your culinary skills into a sustainable business model, here are some of the most important things to remember.

Critical Things to Know Before Starting a Restaurant

1. Investigate all Federal and State Regulations

If you intend to sell alcohol in your restaurant, it’s important to note that there are both federal and state regulations you must adhere to in order to be in compliance with the law. Part of these regulations is to have both state and federal liquor licenses. In some instances, you will also need a liquor license for the specific city where your restaurant is located.

Conduct a search to discover all of the required licenses and permits you’ll need with online engines. Your state government’s website is also a great source of information.

2. Lock Down Your Concept

Many restaurants have a core concept that it is at the heart of what they do. For some, it’s a family-friendly atmosphere with food everybody will love. For others, it’s a culinary oasis with the latest in gastronomical art on display. Whatever your restaurant ideal is, be sure you have a clear vision of it when you start planning. You will find that it is this concept, more than just about anything else, that will inform your decisions and shape your restaurant’s identity.

3. Seek Out Advice from Experts

The restaurant industry is one of many that have national and regional organizations made up of members who go to work in eating establishments every day. In the case of the National Restaurant Association, it also lobbies in Washington and provides its members with valuable information. While these organizations normally require dues to join, many times the information and support you get from other members is immeasurable. Look into national associations, as well as local chapters to see what type of support system you may be able to find.

4. Pick Your Spot

As with just about anything, your location is key. When selecting a spot, take into account not only the building itself, but also it’s surroundings. Is it in an up-and-coming area or one that might be in decline? Is there potential for an influx of new people or can you do a steady business with just the “regulars?”

Also, consider the demographic makeup of your location. A gastropub may not succeed in the suburbs, but a sports bar might.

5. Forecast Early and Often

When starting the business plan process for your restaurants, you’ll more than likely begin with a budget in mind to get the doors to your restaurant open. Keep these initial numbers with you and adjust them as your business plan becomes more complete. Keep in mind that you’ll probably need more money than you think, so overestimate and work toward that goal.

Remember that when applying for small business loans and visiting lenders, a complete business plan, with short- and long-term financial projections will be a key selling point in your pitch. Lenders want some kind of proof that your venture will be successful and you’ll be able to start paying back the money you were loaned sooner rather than later. Spend extra time on these projections of the future, as well as close attention to start-up costs. Be realistic.

6. Find Your Staff

Your head chef is the key member of your restaurant enterprise and it’s important to have that person locked in from the beginning. Often their strengths and weaknesses will inform your restaurant concept, so collaborating early and often with your chef is key.

Your chef will also likely inform the type of kitchen staff you’ll need to hire. He or she may know some people they’ve worked with before, but don’t be afraid to vet your own line cooks or sous chefs. Also, keep management top of mind; do you want your head chef focused on managing people or making the best food possible? If it’s the latter (and why wouldn’t it be?), make sure you find someone who can manage the kitchen so the chef can focus his or her attention on cooking.

Once you’ve your kitchen squared away, take some time to consider the rest of the stuff you’ll need. Aside from wait staff and bartenders, who will manage your staff and the dining room? Will you take reservations? If so, what is the process of these calls being answered? Many of these questions you may have already answered while completing your business plan and thinking through your concept. It’s not a bad idea to revisit them throughout the process as your ideas or needs change.

Owning and operating your own restaurant can be quite a lucrative career; however, it will also be hard work with the chance for a little pay-off in the beginning. By walking yourself through the steps outlined above, including meeting all of the food safety and health regulations, you’ll have a lasting impact on the culinary world.

Leave a Reply