How To Start My Own Restaurant Business – Download our guide to explore budget-friendly restaurant startup concepts, required licenses and permits, business planning tips and more!
Launching your own restaurant can be an exciting business venture that usually consists of a few basic ‘ingredients’. As a food entrepreneur looking to bring a business idea to life, demonstrating competence in culinary fundamentals, professional business principles and marketing acumen is critical. In addition, resilience and stiffness are key.
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How To Start My Own Restaurant Business
The thought of starting this type of endeavor can seem daunting, but if you’re prepared, you can begin executing your vision with skill. If you’re looking for a concise, step-by-step guide on how to start a restaurant, let’s dive in.
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Your first step in starting a restaurant is simply brainstorming and choosing a concept that ignites your entrepreneurial spirit. Do you dream of opening a vegan food truck or starting a farm-to-table pop-up restaurant? Perhaps you have your heart set on serving only hot breakfast food.
In this idea phase, you will also consider your budget for starting a restaurant. While there are ways to finance your restaurant (keep reading for more on this), you may want to consider some of the following restaurant models if you have minimal funds to begin with.
Starting a food truck is still a significant investment of money and time, costing between $40,000-$250,000 in total. You need to buy your truck, equip it with the necessary equipment and obtain all the necessary permits.
If you buy a used truck and/or used equipment, you may be able to further reduce your start-up costs. Operating costs can also be lower, as you can use a tablet-based point-of-sale (POS) system, and you will have much lower utility and staff costs.
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A ghost kitchen or ghost restaurant operates from a rented commercial kitchen space. Food is delivered to customers through third-party delivery apps such as Uber Eats or GrubHub. This can be one of the most affordable ways to start a restaurant.
You want to lease your kitchen space, but there is no dining room or bar to pay for. Some rentals even include kitchen appliances, such as ovens and refrigerators.
Startup costs for a ghost kitchen are estimated to range between $10,000 and $50,000, and in some cities, local vendors offer options under $10,000.
With home-based catering, you may be able to cook outside of your home, although you are more likely to run the business side of your home and cook from a large kitchen. This can make it another economical option, and you can expect low start-up costs – anywhere between $10,000 and $50,000.
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Now that you’ve decided on a business idea, it’s time to start the road map. Think of your business plan as a skeleton outline that carefully describes all the important components of your food service business. At the end of the day, you will use the business plan to “pitch” potential investors.
Students enrolled in the food entrepreneurship program can participate in a comprehensive business-oriented curriculum that can help prepare them to launch a business plan. They can discuss the investigation of their food business idea, pitch investors and forecast revenue.
Getting foot traffic through the door is key when starting a restaurant. Read our Restaurant Marketing 101 guide.
It is likely that investors will evaluate your proposed “marketing mix” as part of your business plan. The purpose of this is to see how you will acquire new customers and keep them loyal through inbound and outbound marketing tactics – combined with paid media. Make sure it’s thorough and covers effective strategies like social media marketing, branding, email marketing, SEO and more.
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“Everybody can say they’re a chef. When it comes to the management part, that’s where it really helps me to run a restaurant, run a cafe or run a business. And that’s what I want. I want my own restaurant.” *Tiffany Moore, Online Culinary Arts Graduate, Co-Founder/Chef, Event Hall @ Cascade, TBS “Rat in the Kitchen” Contestant, Military Veteran
What is a key factor in how restaurants can make money? Place. This alone can make or break the success of your restaurant. Why? Because placement can hold the power to attract your niche audience. If your restaurant is located on a normally busy street with a lot of organic foot traffic, this can help you attract new customers – visibility is essential.
When it comes to location, think about the type of food you’re serving and how it might resonate with your location. For example, Italian gourmet food may be best in an exclusive brick building next to shops. But deli sandwiches and small dishes may land better in a casual food truck environment. Also think about leasing versus buying a physical space. This can directly affect costs and profits.
Depending on your restaurant idea, you can begin the creative and somewhat technical process of building your menu offerings. You may want to consider using seasonal, high-quality ingredients when conceptualizing your dishes… also considering associated costs and how competitors are pricing.
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The food entrepreneurship curriculum may include dedicated courses that explore the creation and use of different types of food and beverage menus. These topics can range from visual design to cost analysis to the use of available resources.
In addition to choosing a restaurant space and planning a cost-effective menu, knowing what goes into additional restaurant costs can help you plan your budget and decide where to eat and where to consume. Here are some of the biggest expenses you may have.
“When you’re putting together a business plan, you always have to factor in the little things [like light bulbs, payroll taxes, liability insurance]. All the little nickel and dime things start to add up.”* Chef Instructor Jason Goldman
Unlike a residential lease where tenants are expected to leave the space as they found it, it is not unusual to invest money in remodeling the commercial premises when you rent. For example, you may need to change the size of the kitchen or add a bar. Landlords sometimes provide a “rental improvement allowance” to offset some of these costs. But the details will depend on your specific lease, so make your needs clear before you sign. And if it’s a property you own, you’re usually responsible for all the costs!
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Ovens, refrigerators, stand mixers, fryers and commercial dishwashers are usually not included with your restaurant space. You will likely be responsible for purchasing or leasing this equipment. An exception may be commercial kitchen rentals, which may come with some equipment already built in.
“I probably would have looked for more used equipment. It might have lowered our start-up costs. Do I want to wash my dishes in the three-compartment sink for under $1,000? Or do I want to drop $5,000 on a dishwasher and then have to order the chemicals over and over again again? Going back, we might have been able to do without a dishwasher.”* Chef instructor Jason Goldman
A full-service restaurant will need space for guests to sit and eat. So you need tables, chairs and bar stools for all indoor and outdoor spaces. In addition, you may need a host booth and server stations. There will also be costs such as plates, silverware, glasses, bed linen and towels, menus and technology such as the POS system and payroll system.
So with all these costs in mind, how can you raise enough capital to start your restaurant? If you have a business plan that indicates cost projections, now is the time to look into additional funding resources.
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Grants can be a great resource to help you start a restaurant! Auguste School of Culinary Arts alumna Tiffany Moore won two grants to get her startup capital.* One was through StreetShares, which provides grants to military veteran entrepreneurs. The other was through Fiserv, a financial services technology provider that also provides some grants to small businesses.
“I pitched my business idea through a non-profit organization called StreetShares at the Military Influencer Conference to a crowd of over 3,000 [virtual] guests and three judges on stage. I asked for votes and I came out 3rd out of 160 applicants. Then the viewers awarded. .. and the judges gave me first place and I got a scholarship for my business Contestant, military veteran
Many grants have specific criteria, so it may take some time to find one you qualify for. However, if you do some research, you may find a scholarship you may qualify for! These financial gifts usually don’t have to be repaid, and even a small donation of a few thousand dollars can help you get closer to your funding goals.
Some banks and credit unions can provide small business loans, especially if you already have a relationship with these institutions. As long as you manage your expenses carefully and don’t over-borrow, external financing can be a great way to find start-up capital.
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Some restaurants can get a 504 loan through the US Department of Homeland Security. it. Small Business Administration (SBA). The loans are available through
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