How to Start a Restaurant in 12 Steps

Although many dream of opening their own restaurant, would-be entrepreneurs are often stopped by the thought of a long, complicated process that isn’t clearly defined. With the prospect of a hectic restaurant launch timeline stretching out for months, many give up before they even start. If you’re a potential restaurateur in search of direction, this guide on how to start a restaurant outlines the 12 steps needed to launch a new business quickly and easily.

1. Pick a Concept

From fine dining to ghost restaurants, there are a ton of different types of restaurants to consider when thinking of opening up your own. First, you’ll need to think about the menu and pricing, then do some research about the area you’re looking at to see what the competition looks like. Lastly, consider the storefront. Do you want indoor/outdoor seating or counter service? These aspects can help you decide on the business you want to open. Learn more about the types of restaurants there are to make the right choice for you and your interests.

2. Determine the Legal Framework

Next, you’ll have to choose the right business entity for your restaurant. Although sole proprietorships are simple to set up and maintain, they offer no personal asset protection and no payroll tax reduction. Partnerships are an easy way for multiple people to work together, but the lack of liability protection remains: if protecting your assets is a priority, an LLC may be ideal. When there are multiple founders or you need to raise capital, a C Corporation may be best. For minimizing taxes, the pass-through taxation and payroll tax exemptions of an S Corp are great. If you want to learn more about the legal structure of a restaurant, see our full-length guide.

3. Create a Business Plan

Writing a restaurant business plan is one of the first things you’ll have to do when starting a food business. But if you’re staring down a blank screen with inspiration sticking out its tongue at you, don’t slam the laptop shut just yet. The first word is always the hardest. That’s why working from a template can help get those words flowing faster than you can type. An executive summary, company description, marketing analysis, financial analysis, prospective locations and a sample menu are some of the most important parts you’ll want to include. While all of this might seem intimidating, our guide to restaurant business plans will help get you started.

4. Determine the Costs

From licenses to leases, there are many costs to consider when starting a restaurant. With purchase prices ranging from $100,000 to $1,000,000 and monthly rent about $2,000 to $12,000, acquiring the commercial space will be your biggest expense. Kitchen equipment is usually the second greatest expense, sometimes costing in the six figures, but purchasing used units can lower the price tag. Besides physical assets, a new restaurant also needs permits and software, along with services from lawyers and consultants. You’ll also need to recruit and train employees, as well as market your restaurant through methods like Internet ads or mail flyers. For a detailed breakdown of small restaurant startup costs, see our comprehensive article.

5. Secure Funding

Getting funding for a restaurant can seem like a daunting task when just beginning to research your options, but once you know what those options are, you’ll find that the process isn’t so scary. After developing your pitch, it’s time to hunt for sources of funding. From asking friends and family to invest to finding the right crowdsourcing site, there are many ways to secure the money you need to get your restaurant started. Even though raising capital is difficult, we have plenty of tips on how to get restaurant funding to make it a little easier.

6. Obtain Permits & Licenses

Like any other business, new restaurants need to demonstrate compliance with local regulations by obtaining certain licenses. While not all localities require a general business license, almost all require a certificate of occupancy to show that you’re following building codes, as well as a fire inspection permit to make sure you pass safety inspections. A food service license ensures you’re following food safety guidelines, and a seller’s permit gives you the ability to collect sales tax. You’ll also need a music license if you want to play copyrighted music. For a more detailed overview, see our guide to the top permits and licenses for restaurants.

7. Choose a Location

One of the most important factors in a restaurant’s success is the location. Although you want to avoid saturated markets, opening near competitors will give you more visibility and validation. Being near your target market and complementary businesses is important, so placing a donut shop near a commuter train station or an ice cream parlor outside a children’s amusement park are smart moves. It’s also important to make accessing your business as easy as possible, so be sure you’re in a visible location with ample parking. If you need a breakdown of what to consider when selecting a restaurant location, see our full-length article.

8. Design the Layout

A well-designed layout is critical for your restaurant’s operation and growth. In addition to allocating about 60% of your total space to the dining room and 40% to the kitchen, designating a takeout and delivery area can maximize efficiency. If you want to boost sales, make the bar the focal point. For a more pleasant atmosphere, creating a pleasant entryway, decorating the ceiling and using themed décor are all effective. Although designing a small restaurant isn’t easy, our main article has a lot of helpful advice.

9. Decorate the Interior

How your business looks has a huge impact on customers’ perceptions, so make sure your restaurant is well-decorated. Although paintings and posters are common ways to enhance the walls, colorful murals and decorative signs can be effective, too. Special light fixtures and decorative ceiling ornaments bring life to an otherwise empty space, and showcasing your food with open kitchens or display cases can boost sales. However you decide to decorate your bar, always stick to your theme and be mindful of the cost. There’s a lot to consider, so be sure to learn more about decorating a restaurant in our comprehensive overview.

10. Buy Equipment & Supplies

After choosing a location, the next step in opening a restaurant is acquiring equipment and supplies. While the need for refrigerators and ovens is obvious, smaller food prep units like slicers and blenders are also critical to kitchen operations. In addition to cooking equipment, apparel such as uniforms, aprons and hairnets contribute to hygiene and professionalism, as do tableware items like plates and napkins. If you want to offer takeout or catering, you’ll need paper plates and disposable containers, too. Cleanliness and safety are important as well, so don’t forget about janitorial supplies like mops and safety equipment like fire extinguishers. For more information on the top items needed to start a restaurant, read our full-length article.

11. Hire Staff

As with launching any business, recruiting employees is a critical step in starting a restaurant. After gauging staffing requirements, it’s important to identify the skills needed to be successful in each role, as well as establish clear expectations for new hires. Although you don’t want to overcomplicate the recruiting process, asking good interview questions is one of the best ways to assess skill level and cultural fit. Once new hires start, make sure they receive adequate training to improve efficiency and good compensation to reduce turnover. Finding employees isn’t easy, so refer to our overview of how to hire restaurant staff if you need more tips.

12. Open to the Public

A strong start will put your restaurant on the path to success. Instead of launching at full-scale, you might consider a soft launch so you can fine tune operations or a tapas-style tasting menu so customers can try multiple items and find their favorites. If you want to jump start your marketing efforts, invite social media influencers or partner with local charities. When it comes to getting people through the door, discounts and giveaways are very effective strategies. If you need more information on these and other ideas, see our restaurant grand opening guide.