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How to Start a Restaurant

Wondering how to start a restaurant? Our guide includes everything from creating a business plan to taking payment for your first covers.

20/03/2024

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You’re passionate about food. You love to cook and see customers enjoy the fruits of your labour. But being a great chef and being a restaurateur are two different things that require very different skills.

You’ve almost certainly spent some time thinking about creating the perfect restaurant experience. Maybe you’ve spent sleepless nights thinking about crafting delicious food, finding friendly staff, securing the perfect location and creating an exceptional ambience.

Perhaps you’ve worked in a restaurant back office for years mastering the numerous intricacies of the business. Or maybe you are a chef that wants to take charge of a kitchen and have your name above the restaurant door. Whether you want to test the water with a pop-up restaurant or go the whole hog with a high-concept eaterie. Regardless of how you got here or what your ambitions are, we’re going to help you take that first step towards opening your own restaurant..

Opening a restaurant: A step-by-step guide

Opening your new restaurant may seem like a pipe dream. But like any serious undertaking, it becomes much less intimidating when broken into a series of steps. Join us as we explore the steps necessary for opening your own restaurant.

Step 1: Choose a restaurant concept and brand

When opening a restaurant, the importance of concept and branding cannot be understated. Especially in today’s food service sector.

In the age of Deliveroo, Uber Eats and Just Eat, customers are able to get restaurant-quality food delivered straight to their homes. And while this may be a future revenue stream for your restaurant, it behoves would-be restaurateurs to develop a concept that will get diners off the sofa and to your tables.

When chefs are taught the importance of presentation, they are often told that the first bite is with the eye. By that same token, a restaurant’s branding and concept need to be carefully developed to be as inviting as possible to your prospective diners.

Your concept will determine everything from the cuisine available on your menu to the decor, signage, website and diner experience. It will influence how your guests order their food and how they pay as well as what they eat. A vegan fast food diner, for instance, will offer a profoundly different experience to an authentic French bistro.

Your branding is more than just the colour scheme on your walls or the design of your logo. It’s everything from how you select and present your dishes to how you train your staff and where you buy your furniture.

In summary, when deciding on your concept and brand, you should consider:

  • Your service style (fast, casual, table service, fine dining etc.)
  • Your theme (traditional, contemporary, atmospheric, specific ethnic cuisine)
  • Your customer journey
  • Your decor and signage
  • How you recruit and train your staff

Step 2: Identify your target demographic

Who do you want to dine at your restaurant? How will you tailor your experience to their tastes and needs? While your first instinct may be to say “everyone”, it pays to identify a target demographic. Do you want to create a social hub for trendy youngsters? Offer a prestigious or romantic haven of fine dining for couples? Or provide experienced foodies with the authentic taste of another part of the world?

Your target demographic will determine the type of dining experience you offer, how much you charge for your dishes, and even your location. A casual fast food experience may do very well in a bustling urban centre, while a relaxed family restaurant may do better in the suburbs.

Before opening a restaurant, it is a good idea to consider market segmentation and where your offering will sit within the broader culinary map in your area:

  • Fast food restaurants, also called quick-service restaurants (QSRs), specialise in quick preparation and service of casual food items. Seating is limited since most customers order at the counter and take their food to go
  • Fast-casual establishments mirror fast food service but offer freshly prepared food with wholesome quality
    casual dining offers a full-service, sit-down experience for customers at an affordable price. With a relaxed ambience, consumers can come in, sit down and enjoy a meal without breaking the bank
  • Family dining follows a similar format to casual dining. Family dining usually offers breakfast, lunch, and dinner options, making them open for more hours
  • Fine dining restaurants provide customers with an elegant and upscale dining experience. While these restaurants have higher price points, customers are paying for top-quality food and the best service the industry can provide.

Step 3: Write a comprehensive business plan

A strong business plan is arguably the foundation on which the opening of your new restaurant will be built. As well as shaping the operational blueprint for your business, it is also extremely important in attracting outside investment or business loan funding. A comprehensive business plan shows lenders and investors that you’ve done your market research and have a strategy in place to cover your costs and make a profit.

If you are in the rare position of not needing any financial backing, a written business plan will still be extremely valuable. It will help you to organise your ideas, follow through on them and retain a clear vision of how to move forward. Your business plan is a detailed document that outlines exactly what your restaurant is all about, what financing you need, how you’ll attract customers and how you’ll grow. It’s the master plan for your restaurant dream.

A restaurant business plan should include:

  • An executive business summary – an overview and introduction to the restaurant you plan to create, including a ‘mission statement’ that explains the purpose and overall vision behind opening your restaurant
  • Company description – a summary of basic facts about what the restaurant will be like, its size, proposed turnover, staffing numbers etc and location
  • Market research and industry, geographic and competitor analysis
  • SWOT (strengths, weaknesses, opportunities and threats) analysis
  • Menus and supplier information
  • Marketing strategy
  • Organisation, management and staffing information
  • Financial plan – detailed information and breakdowns on costs, profit margins, funding, food cost percentage and break-even analysis
  • More detailed advice on this is included in: How to Cook Up a Killer Restaurant Business Plan

Step 4: Secure restaurant funding

How much does it cost to open a restaurant? This is a complicated question but one that will need to be resolved prior to your restaurant opening. Would-be restaurateurs need to know exactly how much they need to secure in order to fund their restaurant startups. Borrow too little and they risk being unable to cover the cost of opening a restaurant. Borrow too much, however, and this may lead to added interest impinging on profit margins, which are notoriously slender in a restaurant’s early years.

Restaurant costs are dependent on a series of factors including:

  • The size of the restaurant
  • The type of restaurant (see above)
  • The number of staff
  • The restaurant’s location
  • The degree of renovation necessary for the premises

Starting a restaurant is usually an expensive proposition, and incorrect forecasts and budgeting are major contributors to the failure of new restaurants. Avoid these situations by learning what costs you can expect and how to keep costs low so you can forecast a realistic budget.

As well as business loans, you may be eligible for grants offered by your local authority, especially if your restaurant aims to become a social enterprise that benefits your community as well as serving delicious food. Alternatively, you may be able to secure funding from an angel investor who may offer more favourable terms than a bank or business lender. They will also give you the benefit of their business knowledge and guidance.

Take a look at our guide to funding your small business, and don’t forget that we offer our own highly competitive small business loans.

Step 5: Select an ideal location and lease a commercial space

The right location can shape the fortunes of a restaurant, so it is not a decision that should be made hastily or arbitrarily. The better you understand the needs of your target demographic, the more data you will have to guide your choice in location. Opening your restaurant in the wrong location could mean that your target audience is either unable to access it or never realises that your doors have opened.

Of course, the ideal location is subjective and depends on your vision for the restaurant as well as the needs, location and habits of your target market. You may be looking for a location that is within easy reach of where your prospective customers live or work. You may want a location with an alluring feature that pulls people in or a nearby attraction that creates footfall.

Crucially, the premises will have the physical ability to house a restaurant and be in an area where local planners will accept one.

Things worthy of consideration include:

  • What demographics make up the local community? Consider if the restaurant you are planning is likely to appeal to the people living and working on the doorstep. If not, you’ll be missing out on a lot of trade opportunities. You also need to consider if the customers you want to attract will be prepared to travel to the neighbourhood you occupy

  • Is the location serviced by good transport links and / or ample parking? Ideally, you want to capture nearby trade, but you also want to be able to attract and accommodate people from further afield. Consider how people will travel to the restaurant. If it’s close to well-used public transport, such as a major train station, you may not need to worry about parking, but in many places onsite parking or a very close car park (preferably one that is free to use) is vital

  • How many tables can the site accommodate? When you work out your finances, you’ll see how many covers you need to do per sitting to break even and make a profit. It’s important to consider a floor plan for your restaurant before you commit to a premises. Is there enough space to accommodate the number of tables you need once you’ve set aside space for the kitchen and serving areas?

  • Is there an attraction nearby? Depending on the type of restaurant you’re creating you may wish to consider if there’s an attractive view that customers might enjoy or alternatively an external attraction in the area that may lead to footfall (like a stadium or theatre)

  • What was the building previously used for? If it was a restaurant before, you may have the benefit of not needing to apply for change of use planning permission but it may also carry a reputation, which can be good or bad

  • What competition is nearby? If there are no restaurants currently open in the area, you may rightly wonder at what restaurants have come and gone in the area over the years and what put them out of business. Are you confident there’s enough trade in the area for your business to thrive? The answers will lie in your market research

    Step 6: Obtain the required restaurant permits and licences

Before opening your restaurant, you will need to look into obtaining the necessary permits and licences to ensure your operations are compliant with local and national regulations.

These include:

  • Alcohol licence: If you plan to serve beer, wines or spirits at your restaurant, you will need to look into obtaining appropriate alcohol licences. You will need both a premises licence and a personal licence for the bar manager. You will also need to ensure that your alcohol suppliers are HMRC approved.
  • Pavement licence:** If you intend to put tables and chairs in front of your restaurant, you may need permission from your local authority to do this. This is known as a pavement licence
  • Music licence: If you intend to play music at your restaurant in order to establish the correct ambience, this too will require a licence. This applies whether you will play live or recorded music. The permit is obtained from PPL PRS and the fee you pay will depend on the size of the area in which the music will be audible.
  • Change of use permit: If your chosen premises was originally used for any purpose other than food service, you will need to apply for a change of use permit from your local council

While not technically a permit, your restaurant staff will also need to undergo food hygiene training as your restaurant will be subject to inspection by your local authority.

Step 7: Design your restaurant layout and space

Having navigated the intricacies of planning, chasing funding and requiring permits, the next step is to focus on the fun stuff. Designing your restaurant is a great chance to express yourself creatively and bring your brand to life.

It is also, however, an opportunity to engineer your customer experience and ensure that the quality of your guests’ surroundings matches the quality of their food. Designing your restaurant’s layout and managing the space are equal parts art and science.

Here are some tips:

  • You never get a second chance to make a first impression, so make sure your entrance entices customers while also giving them a flavour of what to expect on the menu and beyond
  • Keep the sensibilities of your target demographic at the forefront of your mind
  • Consider colour psychology when establishing your restaurant’s colour palette. This will play a big part in determining how your diners feel when they walk through your door. For instance, neutral tones with splashes of natural greenery will help to create a relaxed atmosphere with connotations of nature and freshness. On the other hand, rich reds, mahogany, gold and ivory tones create the perfect atmosphere for fine dining
  • Consider the effect of lighting on enhancing the atmosphere, creating a sense of intimacy and calm while also helping to mask limitations and flaws within your space
  • Make sure you have a good mix of two, four and six-seater tables to match the probable group sizes of your target demographic
  • Ensure that the layout of your tables provides accessibility and room to manoeuvre as well as a good sense of flow and clear visibility for toilets, function rooms and other areas
  • Don’t forget the toilets. These are an important yet oft-neglected aspect of the dining experience

Step 8: Source reliable equipment and food suppliers

Your restaurant’s food is only as good as its suppliers. As well as sourcing the highest standard of ingredients, restaurants should also have reliable equipment to ensure that the food is cooked to perfection and the customer experience is not sullied by temperamental equipment.

As a nascent startup, you’ll likely be highly cognisant of prices. But while you should absolutely seek out value for money, you should be wary of false economy. Saving £200 on a cheap second-hand pizza oven, for instance, may seem like a good idea. But if the oven develops a fault, it won’t take long to exceed the £200 saved in lost revenue from pizza sales.

When courting prospective suppliers, it’s a good idea to consider:

  • How quickly can they deliver? Slow deliveries of ingredients may lead to popular items being struck off the menu for days
  • What is their returns policy? Being lumbered with faulty equipment can put a serious dent in your operating cash flow
  • Can they be flexible with payment dates or instalment plans if your restaurant runs into cash flow crises?
  • Will you be able to test the products or visit their warehouse prior to a sale?
  • Which suppliers are most trusted by other restaurants in your area? Competitors and angel investors may be able to recommend the perfect suppliers prior to your restaurant opening

Not sure what equipment you’ll need for your restaurant business? Take a look at our comprehensive equipment checklist.

Step 9: Recruit and hire the right staff

The restaurant business is notorious for high employee turnover. But having the right people in the front and back of house can make all the difference to your customer experience. A fridge full of quality ingredients and a belly full of passion cannot make a great restaurant without the right people chopping, prepping, cooking, pouring and serving. When you have the right team behind you prior to opening your new restaurant, the world is your oyster.

So, how do you recruit and hire the right staff?

The first step is to establish a framework for excellence so that you and your managerial team know exactly what sort of person you’re looking for. You will need to look for a combination of both hard skills (such as cooking prowess, culinary training, salesmanship and knowledge of food and wine) and soft skills such as interpersonal skills, empathy, time management and the ability to prioritise a workload.

When posting job ads, you should be as forthcoming and informative as possible in terms of what you expect from new additions to your team. It should describe the culture and atmosphere of your restaurant as well as the duties that applicants will be expected to fulfil.

Try and agree on a core set of questions for interviewees that can be adapted or adjusted depending on the role and the applicant’s prior experience. Don’t forget that interviews should also be a two-way street. The questions an interviewee asks can provide vital insights into their mindset and professional priorities.

Remember that skills and knowledge can be taught. But attitude, personality, teamwork and sensitivity are innate, and extremely important both in the kitchen and in customer-facing roles.

Step 10: Implement effective restaurant advertising and marketing strategies

It’s arguable that when it comes to opening a new restaurant, outstanding quality is the best form of advertising. When your guests have an exceptional experience they will be more likely to return and to spread the word among their friends, family and colleagues.

But why leave the success of your new restaurant to chance?

There are many marketing channels available to help you promote your restaurant. Digital channels like social media, content marketing and email are often low-cost and do a great job of engaging (and building relationships with) prospective customers. Social media can help small businesses to grow, both through paid ads and organic engagement with prospective and existing guests. That said, more traditional channels like advertising in local newspapers or distributing fliers can help you to target an older clientele that is less amenable to digital advertising.

You should test these channels to see what works for you but regardless of the media, you should use your brand visuals and unique tone of voice in all your marketing communications.

Of course, whenever you use any kind of direct marketing tactics (such as email or phone calls) it’s important to abide by the laws that regulate it. Marketing emails can only be sent to customers who have agreed to receive them and they must be able to opt out. Using a marketing system with built in devices to help you fulfil your obligations is one way to ensure you stay compliant. Make sure you provide a tangible incentive for customers to subscribe to your mailing list such as personalised offers, exclusive discount codes and coupons, or a special treat on their birthday.

A loyal following is one of the most powerful and authentic marketing tools you can get. And it cannot be bought, it can only be earned. Consider building a customer loyalty programme, that rewards customers for repeat visits. It can turn a first-time customer into a regular customer into a brand advocate. And advocates have huge value to your business because they are happy to spread the good word about your restaurant at no cost to you.

Step 11: Conduct a successful soft opening event

You’ve found the perfect space, you have a great team, and you have a mouth-watering menu. You’re ready to open your restaurant with an ostentatious grand opening. But like any great show, your opening should have a dress rehearsal.

This is why many restaurants undergo a ‘soft opening’ for a select few guests before they open their doors to the broader public.

The exclusivity of a soft restaurant opening intrigues a crowd and gets people talking about your restaurant, and building hype is important. Additionally, the soft opening gives your staff a practice run and helps you make subtle tweaks to your menu and get feedback before anything is set in stone. Culinary combinations that work beautifully on paper may represent logistical and practical hurdles that do not become apparent until the kitchen comes to life.

Brainstorm soft opening launch ideas that blow your competition out of the water and give you a leg up when it’s time to open your doors.

Final thoughts on starting a restaurant business

Opening your own restaurant can be an exciting, creative, challenging and occasionally terrifying endeavour. Nobody should start down this path expecting it to be easy. After all, there are many factors conspiring against your business success from notoriously thin margins to famously high staff turnover and capricious customers who have more choice than ever. But a combination of passion, dedication to culinary excellence, branding savvy and obsession with creating the perfect customer experience can give you a fighting chance in this competitive field.

The steps above will help you to build your new restaurant on a strong foundation and establish a framework for success. And don’t forget to seek out further insight and inspiration in our many food and beverage focused articles in our business resource centre.

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