Launching a restaurant is one of the most common routes to entrepreneurship in the United States. Running a restaurant is challenging because the food industry is very competitive, and the business is capital intensive. Over 60% of all restaurants close within their first three years of business. In this industry, you need to focus on your restaurant concept, vendor and partner selection, employee productivity, process improvement, and cost control to be successful. If you are planning to open up a new restaurant, we have created a 7 steps checklist for you that can help you in your startup.
Plan Your Restaurant
Your planning should start with the type of restaurant you want to open, the style of cuisine you’ll serve, and the service style you’ll use. According to the National Restaurant Association, the top industry trends for 2021 are:
- A shift to off-premises dining.
- Restaurant-brand meal kits.
- Blended meals, part homemade, part restaurant supplied.
- Streamlined menus.
Your restaurant name, logo, and menu should all present your brand’s robust and integrated image. You must choose a name and logo that is catchy and easy to remember, like Pizza Hut, Longhorn Steakhouse, or Waffle House. Design your menu with food descriptions that will entice customers to order that item.
Choose Your Target Demographic And Location
What Target Market Is Your Restaurant Going To Serve?
You need to understand the dynamics of your ideal customer to make decisions on where to locate your restaurant, what menu items to serve, who you will be competing with, and how to differentiate yourself from your competition.
McDonald’s a value-oriented clientele with fast-food hamburgers served both in the restaurant and via drive-through service. On the other hand, Red Robin serves a higher-end clientele with higher-priced gourmet burgers loaded with more than just the standard ingredients served in a sit-down restaurant.
Next, You’ll Need To Find A Location For Your Restaurant.
You’ll want an affordable place in a good spot close to the demographic you are looking to serve. If you are opening a Red Robins type of restaurant, you may want allocation near a mall if you want to appeal to a higher-income clientele. However, if you are opening a McDonald’s type of restaurant, a location in a low to the mid-income neighborhood next to a gas station might make sense.
Take The Time To Set Up Your Legal Structure
Choose the legal form of your restaurant. There are five types of business structures that can be used for a restaurant.
A Sole Proprietorship operates under your name as a DBA “doing business as.” You are the sole owner and responsible for all of the business’s liabilities.
A Partnership operates with two or more people owning and operating the business. Partnerships share in the profits and liabilities of the business.
A C-Corporation operates with a board of directors, officers, and stock. Individuals are protected from the liabilities of the corporation.
An S-Corporation has the structure and liability protection of a corporation, but it is taxed at the individual business owner level because there are no shareholders.
A Limited Liability Company limits the owner’s liability but is taxed at the rate of a sole partnership or partnership.
The legal structure you chose for your restaurant will determine:
- How much and the type of restaurant insurance your business will need.
- How you will file taxes and get your tax ID number.
- State registration and filing requirements.
- Health Department Permits and Food and business licenses you will need.
Select Your Financial Partners Wisely
Shop around and compare maintenance and transaction fees for checking accounts and loans. Establish a relationship with a bank and lender that is small business-friendly.
According to a survey of 350 restaurants, a small restaurant can require up to $175,500 in total startup costs. As a start-up restaurant, you will likely have to shop around for a finance company specializing in lending to high-risk businesses until you can establish a positive track record in your business.
Choose A Certified Public Accountant You Can Trust.
Running a restaurant involves a lot of paperwork. You’ll need a reputable, licensed CPA to prepare the accounting documents to file your taxes, apply for business financing, and internal tracking of your revenue, expenses, and profitability.
Partner With A Merchant Account Provider And Payment Processing Company.
The majority of restaurant revenue is generated through credit and debit card payments or other forms of payment such as mobile payments. Look for merchant service and payment processor that offers:
- Competitive, transparent pricing.
- Quick, reliable, secure payment processing and deposits to your merchant account.
- Easy integration with your systems.
- Solutions to mitigate risk factors for fraud.
- Wide variety of terminal systems.
- Quality service and support.
Purchase Equipment, Appliances And Technology
Now that the initial planning and paperwork are done, you need to start equipping your restaurant. It can easily cost between $40-$196K to purchase kitchen and bar equipment, tables and chairs, appliances, and technology, and other fixtures it needs to function correctly.
Hire Experienced Staff
One of the final steps to opening your restaurant is hiring all the necessary staff. The type of staff you will need depends on the kind of restaurant you plan to open. Take your time to ensure you’re hiring reliable, dedicated people. Your staff is the face of your restaurant, so you want to make sure employees are delivering excellent customer service.
Market Your Restaurant To Get The Word Out You Are “Open For Business.”
After everything in your restaurant is in place, you are ready to invite consumers to your business. Here are some tried and true marketing techniques to get customers through your door:
- Use social media channels to share photos of your restaurant and dishes, answer customer inquiries, and talk about the benefits of your brand.
- Launch a professional-looking website to introduce your restaurant brand and reach your target market.
- Offer discounts and promotions for first-time customers.
- Host a grand opening to generate interest in your restaurant and media attention.
The above discussed 7 steps to opening a restaurant will help you in a smooth and successful launch of your new business venture.
Finical Can Help Increase Your Revenue And Lower Your Costs
Finical offers significant benefits that appeal to restaurant owners:
- Ability to accept many forms of payments, including credit and debit cards, contactless payments such as Apple Pay or Google Pay.
- Secure, PCI-DSS compliant online payment processing.
- Free credit card reader and terminal for qualified merchants.
- Low transaction costs and receipt of funds within 48 hours.
- No long-term contracts or termination fees.
Finical partners with its restaurant merchants to deliver quality and secure payment processing services. Shouldn’t you be working with Finical? Contact us today to schedule a free consultation.
