How to Start a Restaurant Business

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Written by BusinessAlligators Support

Support Staff at BusinessAlligators is a team of business experts led by Shilpi Singh Trusted by over 100K readers worldwide.

November 8, 2017

Businesses are always a better option than jobs; a restaurant is one great option if you are planning to start a business. However, it should be kept in mind that starting a restaurant from scratch is not that easy job. One has to be very precise and patient to make it worth starting. According to Sage Journal, the shutters of around 60 percent of new restaurants get closed within the first year of their establishment. While around 80 percent restaurants couldn’t even survive to celebrate their fifth anniversary. Keeping in mind the hard work and risks involved in this business, if you can overcome such things, then opening a restaurant business would be the best decision of your life.

It is often seen that many restaurants fail in their debut year, due to improper planning and setup. However, with proper planning and execution, one can succeed in a restaurant business. This section is dedicated to present to you a complete guide and the know-how of starting a restaurant business. Take a look:

Before you know the detailed procedure of starting a restaurant business, here are the key stats about the same.

  • Difficulty Level: Hard
  • Time Required: It totally depends. However, between a month and a year is considerable.
  • Key Requirement: Patience

Make the Concept Clear

Well, if you are starting a restaurant for the first time, then one thing that you should be aware of is the theme or the concept of the restaurant. There are several different styles of restaurants in the market with different concepts. Some of them are fine-dine, others are takeaways and some do have a bar along with the restaurant. Thus, it is important to understand your competitors and opt for the restaurant which you can run in your niche. So, make it a clear point from the very beginning about the concept of your restaurant, before proceeding any further.

Along with the concept of the restaurant, then comes another tough question. What are you going to serve? Go through the location thoroughly and choose a cuisine according to your competitors and that suits your style of cooking. Well, here is a trick, you cannot go with your heart if you are into business. This means, say you are very fond of Italian cuisine and you always wanted to open an Italian restaurant. However, the locality which you have is not suitable for any Italian cuisine. Thus, work accordingly with your brain and choose the cuisine perfectly, as this is going to be an important part of your restaurant.

Budget Needed

The budget needed for a restaurant is completely dependent on the type of restaurant and many other factors too. So I am considering a small restaurant just to give an idea about the budget.

  • Space for rent: Rs. 50, 000 per month onwards (depending on the type of location)
  • Set up: Rs. 2 lakh
  • Licensing and permit: Rs. 1 lakh
  • Equipment: Rs. 5 lakh
  • Staff: Rs. 1 lakh per month
  • Advertising: Rs. 1 lakh per month

Choose the Location

This is yet another problem when you are going to run a restaurant for the first time. There are people who run a lot for getting an ideal location for their restaurants. However, before you start an intensive search for a location, do an intense homework about the place. This means, check the crowd there, does it have enough foot space or parking space? What is the age group of the crowd, your competitors and things like these?

Choosing the best location for the restaurant is always important because; it is always said that location can bring you more customers than that of your advertisement. So, choose the apt location for your restaurant, so that you can have the best crowd for the same. The below are some of the points which must be considered while choosing a good location for your restaurant.

1. Visibility

It is pretty normal that you must look for some place which is easily accessible or visible to your customers. That is to say, if you choose a location in some rural place and intend to run an AC restaurant over there, it is better to not run it.

2. Accessibility

Yes. Your place must be easily accessible. Moreover, if you looking to open a fine dine or a banquet style restaurant, where people will spend a lot of time, then enough space for car parking is very important.

3. Crowd

Be very sure about the crowd in your location. The crowd must adapt to your cuisine and style for best results.

4. NOC

This is pretty important when you are opening a restaurant. You will need at least 3 no objection certificates or NOC, and then only you can start off your business. Usually, it is from the Police, local society, and government for opening your restaurant. It is a legal certificate issued by different organizations stating no objection to the restaurants. Basically, it is a kind of legal permission from those organizations.

Name and Logo

Though it is the most amazing part of setting up a restaurant, you need to be clear about the same. The reason behind this is, you do not want to name your restaurant with something which does not have a meaning. However, there are a few restaurants with absolutely abstract names, but careful while you opt to use a name like such. Restaurant names and its logos are what people remember at first, thus it is very important that you should have a nice one, which can actually leave an impact on your customers. Here are the few things which should be maintained while choosing a name and a logo accordingly, for your restaurant.

1. Easy to remember

The name of your restaurant should be easy to remember. This will help you get repeated customers. This is because; a customer will only come to you twice if they can remember your name.Besides, the name should reflect the menu or theme of your restaurant such as The Pizza Plaza, The new Great Wall, The Latino heat, The Burger heaven, Thai Tannic, Fish & Chips, Spago, etc.

2. Suits your Identity

Choose a name for the restaurant and the logo that would suit your style. This means, make the name and the logo in accordance with your restaurant type and style.

3. Attractive

An attractive logo will always help you to gain some attention. Thus, in case of both logo and the name, choose something which is very attractive.

Business Plan for Restaurant

This is just another important part of opening a restaurant. However, this is the most ignored part of all. There are mainly two reasons, why you should need a full proof restaurant business plan. One, it will help you out with all the difficulties which you will be going to face while running a restaurant. Two, well, if you are going to need financial help from a bank or so, this is the most vital part. As this will be the only single thing which will approve you a loan for setting up a restaurant. So, this plays a pretty important role in your restaurant.Thus, if you are short on your plans, hire professionals or choose a software, which can guide you with the best possible solution.

While planning your restaurant business must answer following things to yourself

  1. Cost per plate you are targeting.
  2. Combo that increases the sale of the bigger plate.
  3. Why will you be recognized?
  4. How can you scale?

Finance for Restaurant

This is most difficult part of starting a restaurant business. However, it is absolutely fine for people who are making their own restaurant with taking any help from financial institutions. For individuals who will be needing loans for starting up a restaurant, it is important to be very careful while applying for the same. Do make a full proof business plan with a lot of perspectives. The reason behind this is that the plan is the sole thing which can help you out. It does not matter where you are taking the loan from, be it banks or some individuals, present the whole plan with confidence, rather professionally. Once, you are out of this stage, your restaurant is almost ready, as there are a few things left which can be easily handled.

It is recommended to market initially with the help of social media and internet before you get the full financing. The Digital way of marketing can really give your restaurant a good start. According to a popular website Toasttab, restaurants are opting for digital marketing as a preferred way of advertising themselves. There has been more than 20 percent increment in advertising on social media of restaurants. Moreover, search engine ads for restaurants increased by around 36 percent in the year 2017. Hence, just like other restaurants are opting this technology, you should also tilt towards it.

Licensing and Permits

Once you are sure about the financing part, it is time for you approach the local Government for licensing and Permits. The procedures totally vary with different government rules in accordance to the country you intend to open your restaurant. However, it may take a month or even more than that to clear all the legal procedures. Thus, it is best to the start with all the processes the next day after you are done with the finance part. License and Permits are pretty important to run a restaurant peacefully, as, without these, you can well get into legal troubles. So make them clear as soon as possible.

Build up the Restaurant

Now that all the hectic parts are finished, take time to choose a great design for your restaurant. There are a number of architects in the market who can help you out in this regard. Plan early about the color combination, interiors, and the theme. Plan with the help of a 3D design, as you can well feel the color combination and interior designing of the restaurant with this. While designing the same, keep one thing in mind; decoration and ambiance play a major role in representing your restaurant and creating an impression on the customers.

According to a study carried in the year 2014 at Rochester Institute of Technology, the design of restaurant also influences customer satisfaction. Your restaurant needs more than good food and great service to stand out from the crowd.Thus, take your time and come up with something astonishing. In other words, choose your color and interior according to your style that can match the whole ambiance.

Decide the Menu

This is another fascinating job, while you look forward to opening a restaurant. Though the cuisines are decided earlier, it is now time for deciding the menu. It is always recommended that, do not make it too complicated initially. As later on, you can well improve just after the restaurant gets going. So, start with simple and ravishing menus and try improvising them later on.

Just that you know what to serve, now concentrate on how to serve. Besides, you have to finalize different tariffs of your restaurant such as cost per plate, the average cost per plate, maximum cost and minimum cost per plate. In accordance with your cost price, decide the selling prince in menu keeping your aimed profit and market price in mind. You can also give some combo menus which will not only attract customers but also will aid you in some profits.

Get all the Equipment Right

This deals with a lot of effort as you have to make a long list and start off. Starting from kitchen utensils to restaurant decors, you have to get everything right. Thus, take help from your friends and adviser and seal the deal in this regard. One thing which is advised, do not compromise with quality, as this will build some goodwill for you in the market.

This will take some effort as you have to keep in mind your menu and but table accessories accordingly. Moreover, the size, shape, weight and minute details like these will also affect the ambiance of your table. So, make it a point that you choose them wisely. Apart from the table accessories, the furniture inside should also be in perfect size and shape. After doing all these, jump into the kitchen utensils, where you have to look for the perfect ovens and burners, knives and things like these. To run your business smoothly, every single thing is important, thus buy them accordingly.

Hire Restaurant Staff

After you are done with all other things, it is now time that you should look for the people who will actually run your business. From waiters to Chefs, you should try to hire the best professionals for your restaurant. It is because the success of your restaurant largely depends on food and service. Only highly trained and experienced staffs can deliver excellence to make your restaurant stand loud in the crowd. So, try to opt for the best professionals in the market and make an agile team, who can run your restaurant smoothly.

Advertisement and Marketing

This is the last step in starting a restaurant. The reason behind this is one cannot depend solely on repeat customers. All you have to look for is some new ones. So, continue your marketing by all means possible. Try social media marketing, just like most of the restaurant owners are doing. Other Digital marketing tools which can be considered are an official website, a mobile application, banners, and digital campaigns, etc. Whatever marketing mode you are opting, do not stop your marketing for the best results.

Eventually, you should do hard work and have a bit patience as they are the main key to make your restaurant thrive. Some difficulties might come there, but witnessing and moving forward is what you should be doing. Use this information and start off with your dream restaurant soon.

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