How to Open a Restaurant in Arizona

Opening a restaurant is a lengthy process, usually taking over a year (or much longer), and involving dozens of overlapping tasks. Whether it’s your first time being a business owner, or you’re an industry lifer with a few new restaurants under your belt, it’s helpful to follow a guide of the most important steps.

In this guide, we’ll outline the 10 main steps that Arizona restaurant owners will need to do to take their restaurant idea and bring it into reality — whether you’re dreaming of opening a steakhouse in Flagstaff, a takeout Thai restaurant in Phoenix, or a burrito-slinging food truck in Tucson.

How to start a restaurant in Arizona

1. Decide on a restaurant concept

Figure out what kind of restaurant you want to open — think about your experience, your expertise, and your passions, as well as more concrete factors like how big of a staff you want to manage, the price of ingredients, and how many diners you want to serve every shift. Consider the following factors:

• Will you specialize in one cuisine? What menu items will be your star items?

• What’s the competition like in your area? How will you stand out?

• Full-service, counter-service, or takeout only?

• Who’s your target market? What demographics do you plan to appeal to?

• Will your restaurant be a small business and stay that way, or do you plan to expand and franchise?

• What style of service will your front-of-house team offer?

• What will the physical business look like? What kind of space will you need?

Outline your mission and values — and how they’ll impact your brand

Consider the values you want to embody as a business and the mission you and your team will work towards every shift. This big-picture thinking will help guide your decisions as you hire staff and build your brand.

Then, start brainstorming a business name and designing a logo. How will you weave your food, cuisine, and values into your aesthetic decisions?

2. Create a restaurant business plan

Every Arizona business can benefit from a business plan — especially a restaurant business.

Business plans are roadmaps to opening day — but they’re also an important piece of the puzzle when it comes to securing funding.

First, pick a type of business entity. Choose from one of five business structures common in the US: LLC (limited liability company), sole proprietorship, partnership, S corporation, or C corporation. Learn about the benefits and drawbacks of each structure in our guide on restaurant business entities.

Then, decide on how you’ll distribute profit. Will you, the owner, be the sole recipient of profits, once you’re bringing them in? Or will you do profit-sharing with employees, or give investors a stake in the business (entitling them to a portion of the profits)?

Work with a lawyer and accountant to draw up all the necessary paperwork and contracts.

Now you’re ready to create a restaurant business plan. Include the following sections:

• Executive summary, including your restaurant name and what you bring to the table as an entrepreneur

• Company overview, including your business model

• Industry analysis (target market, location analysis, competitive analysis)

• Marketing plan (how you’ll stand out from other food establishments and get people in the restaurant from the beginning)

• Business model and service model

• Operations plan (staffing needs, customer service policies and procedures, payroll plan, which restaurant POS you’ll get, which vendors and providers you’ll use for produce, laundry, and more, which types of business insurance you’ll get)

• Financial analysis (investment plan, financial projections like break-even point, expected cash flow, expected costs)

• Your contact information

3. Secure Restaurant Financing

Starting a restaurant in the US costs anywhere from $95,000 to $2 million and beyond.

Unless you’ve been saving for this venture all your life (and even if you have!) you’ll likely need some external funding support. New restaurants can find funding through SBA loans, lines of credit, crowdfunding, personal loans, bank loans, or alternative loans. Learn more about each of these options, including application info and time to access cash, in our guide to restaurant financing and loans.  

4. Choose an Arizona Restaurant Location

Location is everything, so it’s worth doing some serious digging before you sign on any dotted lines. Do some market research on the demographics of your potential neighborhoods and learn all about the competition nearby.

Buying, leasing, or building restaurant space are all available options, but each have their benefits and challenges — and they’ll each impact your opening process as well as how much startup capital you’ll need.

Here’s some of the factors Arizona businesses should focus on when evaluating a restaurant space:

• Target market and ideal customer profile

• Real estate market conditions

• Community population

• Size of the site

• Previous tenants and their experiences in the space

• Zoning and previous type of usage of the space

• Foot traffic and transit proximity, or car traffic and parking

5. Apply for Arizona Restaurant Licenses and Permits

Arizona restaurants, like all businesses in the state, will need to obtain licenses and permits before they’re able to open their doors. Some licenses are federal, while others are administered by the state, or by the county or city you’re in.

The list below is not exhaustive — check with your local restaurant association and your local government to find out what you need.

For more information, check out the Arizona Commerce Authority (and their 10-step guide to opening an Arizona Business) and the Arizona Corporation Commission.

Some of the licenses and permits you may need to open a restaurant in Arizona include:

1. Employer Identification Number (EIN), which connects a new business to the IRS.

2. Register your business by submitting your formation documentation with the Arizona Corporation Commission, which can be done online.

3. Complete a transaction privilege tax application with the Arizona Department of Revenue (only applicable to some types of businesses, so check on their website). Though often confused with sales tax, transaction privilege tax is a tax on a vendor for the privilege of doing business in the state.

4. Get a business license and city-based registration through your local government, which will then connect you to other local permits.

5. Certificate of occupancy, which shows that the physical space has been inspected and found to be compliant with local building codes and other restrictions. Not all new businesses will need one, but if you’re doing a new build, you will.

6. Liquor license permit, administered through the Arizona Department of Liquor. It can be applied for online, and you’ll need one if you intend to serve alcohol at your food business.

7. There’s no state-wide requirement for every staff member to have a food handler card, but some counties do require it, so consult with your local health department. This food safety license shows that each staff member has been trained in the proper food handling protocols that prevent foodborne illness.

6. Develop your Menu and Beverage Program

Now it’s time to put pen to paper (or fingers to keyboard) and get all your menu and beverage program ideas out. Then, whittle down the list to a manageable list of items, ideally with some overlapping ingredients to make inventory easier and prevent food waste.

You may do this in conjunction with a chef or bar manager if you’ve hired one already, or do it alone. Either way, prepare to workshop the menu and beverage program with your kitchen and bar staff once they’re hired and trained. It’s good to get their input, and they’ll feel a sense of pride and ownership over the menu.

Make sure your menu is unique, and that you have plans in place for how to make every item as tasty as possible — and always better than what the competition offers.

In Tucson, AZ, Analy Guzman recently opened El Antojo Poblano alongside her husband and kids. The family business created a menu that reflected their culinary history, and brings something new to the scene. “We bring different foods, like mole poblano, huaraches — I like to share our food which is different from what is sold here in Tucson," Guzman said to KGUN9 Tucson.

Consider also how you’ll price your menu items, and what your menu will look like. Learn more about menu design and menu engineering to make the most of your menu.

7. Hire and Train Restaurant Staff

Your staff are what will keep your restaurant running day after day, shift after shift — and they’ll be the reason your customers keep coming back. The amazing food cooked by your back of house team, and the warm service provided by the front of house, are what will make your business stand out from the pack.

You’ll need to do a lot of hiring: there are dozens of restaurant positions to fill. To find the right candidates, you can tap into your network from previous restaurant jobs, post on restaurant industry job boards, post in neighborhood Facebook groups, and recruit new grads from area culinary schools.

In order to retain the best staff in the restaurant business, you need to make your restaurant an amazing, sustainable place to work — by providing good compensation and meaningful restaurant employee benefits, including health insurance.

Here are some resources from Toast to help you attract, hire, and retain restaurant employees:

• How to Be a Boss at Restaurant Recruiting

• How to Onboard a New Restaurant Employee

• How to Train New Restaurant Employees

• How to Reduce Restaurant Employee Turnover

• How to Ask Great Restaurant Industry Interview Questions

To learn even more, go through our video course on hiring and retaining restaurant employees.

8. Invest in Equipment and Restaurant Technology

There are tons of restaurant technology options to consider, and lots of pieces to buy. Sign up for demos and find what combination of products and systems make sense for your type of restaurant.

New restaurants should strongly consider investing in the following:

• A cloud-based restaurant point of sale system with handhelds

• Kitchen display screens

• An online ordering system for restaurants

• Restaurant reporting and analytics

• Restaurant inventory management software

• Restaurant accounting software
  Simple scheduling and team communication

• A restaurant payroll solution

• A restaurant loyalty or rewards solution

• Contactless payment options

Restaurant tech helps your business run smoothly while helping you track how well you’re doing. With easy-to-access KPI dashboards, you can get insights on the changes that will help you grow your revenue and become a more successful restaurant.

9. Create a Restaurant Marketing Plan

Arizona restaurants need to start their business with a marketing plan in hand. How will you reach your first customers and keep them coming back? Marketing channels like social media and email marketing can be extremely powerful.

Learn more about building a restaurant marketing plan with our marketing plan template, our social media guide for restaurants, and our guide to restaurant email marketing.

10. Host a Soft Opening and Grand Opening

Once you’re almost ready to open, with a full team hired and your walk-ins stocked with ingredients, it’s time to run a soft opening. Keep the guest list closed, made up of friends and family of the team, and run through service for the first time. This process helps restaurants work out any problems in their setup before they open to the public.

Then, start planning (and advertising!) your grand opening. Share photos and videos all over social media, send out flyers, and ask your friends and family to share their experience to entice new customers for the big day.

You’re ready!

To keep track of everything you need to do within a year of opening your new restaurant, check out our time-bound restaurant opening checklist below.