Those with entrepreneurial dreams often set their sights on the restaurant business.
However, while there is always a demand for great food at interesting locales, the restaurant business is a particularly challenging one to enter into. It’s always been a challenge for up-and-coming restaurateurs to break into the industry, but the recent COVID-19 pandemic has ushered in a handful of new and overwhelming challenges for even the most experienced restaurant owners.
While the current economic and social climate may not be ideal, there are still possibilities available for those who want to own a restaurant. In fact, now is a great time to start preparing and learning how to open a restaurant.
According to Johnson & Wales professor and online instructor, Patricia Bowman, this might even be the moment for entrepreneurs to get creative with new restaurant concepts. “One of the best concepts in the industry to open right now would be one where they customize meals that people can then take home and make themselves,” she explained. “Another great concept would be one that only offers take-out and delivery.” Regardless of your concept, our guide, which includes an opening-a-restaurant checklist, will help you get started.
Facts and Figures: What You Need to Know About Opening a Restaurant
Before you go renting a space and designing a menu, you should analyze important data from the restaurant industry. The reality is, a lot of restaurants—particularly new, independent restaurants—have a long road ahead of them before they are profitable. And many do fail. By understanding these important facts and figures, you can create a realistic business plan for your restaurant and set yourself up for success.
These are a few important statistics to note:
- 17 percent of start-up restaurants fail within their first year. According to the Bureau of Labor Statistics, this is actually good news, as 19 percent of all other service-related businesses fail within the first year.
- 4.5 years is the average lifespan of a new restaurant. The Bureau of Labor Statistics notes that restaurants with more than 5 employees have a better chance of succeeding for the long-term.
- Americans spend nearly $2,800 per year on food from restaurants, according to the Bureau of Labor Statistics. It’s important to note that even restaurants who had to close during the COVID-19 pandemic found that their carry-out orders increased and they still earned significant revenue during this challenging time.
While aspiring restaurateurs have challenges that lie ahead, with the proper education and preparation, any new restaurant can be a success.
How Much Does It Cost to Open a Restaurant?
Any entrepreneur recognizes that there are start-up costs associated with their next venture. Those who want to open a restaurant should understand the costs that are involved.
A survey from RestaurantOwner.com highlights the fact that start-up costs can vary significantly for a restaurant depending on a variety of factors. On average, start-up costs will likely fall somewhere between $175,000 and $750,000. The factors that may influence the cost of your new restaurant include:
- Cost of commercial space.
- Cost of licenses and business permits.
- Renovation costs to update the commercial space.
- Equipment costs to prepare the kitchen.
- Technology costs to allow for virtual queues, digital menus and more.
- Marketing costs to promote the restaurant.
Opening-a-Restaurant Checklist: 12 Steps You Need to Take
Once you have evaluated the data and analyzed the start-up costs, you will want to know more about how to open a restaurant. This checklist will guide you through the process:
1. Focus on the concept for your restaurant.
It’s important to create a restaurant concept that takes advantage of current trends while also looking toward the long-term preferences of diners.
2. Create an engaging and effective business plan.
You will need a specific business plan that highlights what you will do to make your restaurant succeed in order to sway investors to provide you with much-needed capital.
3. Begin generating capital for your new restaurant.
Take your concept plan and your business plan to interested investors in order to get the start-up costs you need to launch your restaurant.
4. Investigate the local competition.
You will want to evaluate the other restaurants in your local community. Is your concept similar to theirs? What are they doing that works? What are they doing that does not work? Use their successes and failures to guide your own opening.
5. Find a spot where your restaurant will thrive.
A successful restaurant is all about finding the right location. Many restaurant owners find that downtown spots that attract walk-in diners are a great option, while others prefer busy intersections off of nearby highways.
6. Acquire all of the licenses and permits that you will need.
Once you have generated the capital you need and firmed up your location, start applying for the business licenses and permits that you will need to operate.
7. Hire a chef, and write your menu.
Your chef can help you create a menu that suits your concept and will appeal to your target audience. “The menu is the one most important document that the operation will develop, it will drive all future business decisions, including what equipment is needed,” Bowman explained.
8. Begin hiring staff members, and focus on the quality of your staff.
All successful restaurants have one thing in common: They have an excellent team of staff members. You will need to hire loyal and reliable staff members who will treat your customers well. These positions range from waiters to waitresses to kitchen managers and everything in between.
9. Invest in equipment and technology for your restaurant.
State-of-the-art kitchen equipment and technology are needed in order to have a smooth restaurant opening. But according to Bowman, you should let the menu you’ve chosen guide this step. “When buying a piece of equipment it is important to know exactly what you are going to be using it for,” she said. “This may sound easy but it all starts with knowing exactly what menu items you plan to serve before you buy the equipment.”
10. Create and implement a marketing strategy to promote your new restaurant.
A dynamic marketing strategy will use a combination of traditional and digital marketing materials to get the word out. Social media is also a powerful force when launching a new restaurant.
11. Begin to network with other local businesses.
Local business owners can help promote your business and give you advice as you establish yourself in the community.
12. Plan a grand opening celebration for your restaurant.
A grand opening will generate buzz in the community and will provide you with an exciting moment to introduce your new business to the public.
Although opening a new restaurant can feel like a daunting task, Bowman thinks that at the end of the day, if done correctly, it can be a huge payoff. “We, in the restaurant industry and all of hospitality, invest our heart and soul into this business not only because we love it but because we love what it means to our guests,” she said. “The silver lining is our guests love to eat, they love to go out and experience what we offer and we feed off of their energy.”
If you want to open your own restaurant, make sure you have the necessary education to make your venture a success by earning your degree in Food & Beverage Entrepreneurship at Johnson & Wales University College of Professional Studies. To learn more, complete the Request Info form, call 855-JWU-1881, or email [email protected].