How to Open a Restaurant in Illinois

Opening a restaurant in Illinois is time-consuming, expensive, and also incredibly exciting and often rewarding. In this article, we’ll cover what aspiring restaurant owners need to know about opening a restaurant in Illinois — whether you’re opening an upscale Salvadoran restaurant in Chicago, a craft beer bar with small plates in Springfield, or a family-friendly grilled cheese restaurant in Peoria.

How to start a restaurant in Illinois

1. Decide on a restaurant concept

There are thousands of types of restaurants — this is the moment to narrow it down to a viable business idea. Check out the restaurant landscape in the areas you’re considering, and figure out how you can fill a space that’s missing.

For example, Ukrainian-American Johnny Clark recently opened Anelya, a Ukrainian restaurant meant to celebrate the food and culture that he learned from his grandmother — and to dispel false notions about Eastern European food. “I hope this can be a place where people are proud to bring their friends or family and show them borscht is not disgusting — it’s actually very delicious,” he shared with Eater Chicago. His restaurant is staffed by Ukrainian refugees, and is named after his grandmother.

This step is all about consulting with your gut: what kind of restaurant do you want to open? Answer the following questions to nail down a viable business idea that you’re ready to invest in — financially, emotionally, and physically.

• What kind of food will you serve? What kind of cuisine will you specialize in? Are you an expert in this cuisine, or will you hire one?

• How will you differentiate your restaurant from the competition nearby?

• Will you offer a full-service experience or open a takeout counter with a few tables?

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

• Will you open a small business, or will you eventually expand and franchise?

• How many staff members will you hire? What style of service will the restaurant offer? What skills do your new staff need?

• What will the physical business look like?

• How many business owners will be involved in the restaurant?

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

Also consider the values you want to embody as a business, and the mission you’ll work towards with your team. It might feel silly, especially if you’ve never selected business values before, but it will help guide major business decisions, like who you hire and what kind of environment you’ll cultivate for employees and for customers.

Finally, come up with a business name and create a visual brand to match, including your logo, color scheme, and the fonts you’ll use for graphics on social media, on your menu, and throughout your restaurant space. Check out Atlanta-based Brush Sushi’s Instagram page for an example of what a cohesive and visually stunning brand looks like.

2. Create a restaurant business plan

This is one of the most important early steps of opening a new restaurant. A restaurant business plan helps restaurants secure funding, helps you open a business bank account, and it provides a roadmap to follow throughout much of the entire opening process.

Before you dive in, pick your preferred type of business entity. Choose from one of five business structures common in the US: Limited liability company (LLC), sole proprietorship, general partnership, S corporation, or C corporation. You can learn about the benefits and drawbacks of each in our guide on restaurant business entities. Some businesses will also consider an LLP, or a limited liability partnership.

Then, pick a profit structure. Will you, the restaurateur and business owner, take home all the profit? Will you have investors who get a stake in the business? Will you profit-share with your employees? How much? Work with a lawyer and accountant to draw up all the necessary paperwork and contracts.

Now you’re ready to create your business plan. Include detailed information in each of the following sections:

• Executive summary, including your restaurant name, concept, and type of food

• Company overview, including your business model

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

• Marketing plan

• Business model and service model (Quick service restaurant? Food truck? Fine dining? Fast food? A sit-down dining room?)

• 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 and 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 history and qualifications as an entrepreneur

3. Secure restaurant financing

Opening a restaurant in the US is an expensive process: it costs from $95,000 to $2 million and beyond. Most restaurant owners will need to pursue some external funding options, like Small Business Administration (SBA) loans, lines of credit, business loans, 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 Illinois restaurant location (and start renovations)

Buying, leasing, or building restaurant space all work, but each option has positives and negatives. No matter which route you go, it’ll have an impact on your opening process as well as your startup costs.

Do some market research on the demographics of your potential neighborhood and the competition nearby — picking the right location is critical to the success of your restaurant, so gather as much information about the neighborhood and the space as possible.

Here’s a few factors Illinois businesses should consider when evaluating a restaurant location:

• Target market and ideal customer profile

• Real estate market conditions

• Community

• Size of the site

• Previous tenants

• Zoning and previous type of usage of the space

• Foot traffic or car traffic

5. Apply for Illinois restaurant licenses and permits

Restaurant businesses in Illinois will need to apply for licenses and permits before getting started. Some licenses are administered federally or by the state of Illinois, while others are local, often administered by the city clerk.

Learn more about new business licensing through this guide from the Illinois Department of Commerce & Economic Opportunity, and the DCEO’s First Stop Business Information Center.

For restaurants opening in Chicago, the City of Chicago put together an excellent guide to the specific licenses and permits you’ll need. If you’re outside of Chicago, check if your local county has a similar guide.

Here’s an outline of some of the license applications and permits you’ll need to open in Illinois:

1. Get a Federal Employer Identification Number (FEIN, also referred to as an EIN), which connects your business to the Internal Revenue Service (IRS) and registers you to pay federal taxes.

2. Set your business up to pay business taxes and collect sales tax: Register with the Illinois Department of Revenue through MyTax Illinois and by filling out an Illinois Business Registration Application. If applicable, you’ll receive your Certificate of Registration or Business License and your taxpayer ID. If applying online doesn’t work for you, you can also register in person. Also, contact your county clerk to find out if there are additional tax requirements for businesses in your area.

3. Some legal entities, like corporations, will require you to file articles of incorporation with the Illinois Secretary of State.

4. Apply for a liquor license through the Illinois Liquor Control Commission (ILCC).

5. Contact your county or city government Department of Buildings to learn how to apply for building permits and/or an occupancy permit, including plan reviews and inspections. For example, here’s more information about the process for Chicago.

6. The Illinois Department of Public Health says all employees need to have a food handler card within 30 days of employment, and every business have at least one Certified Food Protection Manager (CFPM). These food safety licenses show that either a manager or each staff member has been trained in the proper food preparation protocols that prevent foodborne illness. Consult with your county health department to learn if food service establishments in your county need to fulfill any other requirements.

7. Consult your county to find out if you need a Food Service Sanitation Certificate for your restaurant space, and apply for it.

6. Develop your menu and beverage program

Build the menu that will leave your customers raving about the food and drinks at your restaurant. Create a draft yourself, and share it with senior employees as you hire them — your chef and bar manager will have helpful ideas and notes.

Narrow it down to a menu that’s profitable, manageable in terms of inventory and prep tasks, and always delicious.

Learn more about menu pricing, menu design, and menu engineering to make the most of your menu — and start thinking about how you’ll manage inventory of both food products and beverage components.

7. Hire and train restaurant staff

There are dozens of restaurant positions to hire, and it’s not always easy to prevent that classic restaurant industry turnover — so put in the work in upfront and find (and retain) the best staff around. When searching for new restaurant employees, put calls out to your network and community from previous restaurant jobs, post on social media like Instagram and in industry Facebook groups, seek out new grads from culinary schools in your area, and post on industry job boards.

The most important way to get ahead of any staffing issues in your business is to invest in making it an exceptional place to work — by providing good compensation and meaningful restaurant employee benefits, including health insurance. Building staff support into your budget from the beginning means you’ll face less turnover and fewer hiring headaches.

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

Read our list of essential restaurant equipment, from knives to burners to walk-ins, and start shopping — then, pivot to thinking about restaurant tech.

Restaurant technology helps your restaurant run smoothly while helping you track the performance of your business. Peruse your restaurant tech options and choose the combination of products and systems that make sense to help you set your operation up for success. 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

9. Create a restaurant marketing plan

Illinois restaurants should be proactive about marketing — especially in cities with heavy competition, like Chicago. Word of mouth won’t cut it!

Some of the most effective marketing channels for restaurants are social media and email marketing.

Post regularly on social media to share what your restaurant is about: show off your food, your space, and the vibe of your restaurant.

Once you get those first guests in the door, try out email marketing to share promos and offers with them, getting them to come back soon. You can also set up special events, like Sunda New Asian’s AAPI Heritage Month celebration, where the Chicago restaurant shared a special limited-time menu with their diners.

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

Host a soft opening: invite family and friends, and the family and friends of your whole staff, and run through service. This event will help you work through any snags and update processes accordingly.

Afterwards, you can start planning (and advertising!) your grand opening — post all over social media, reach out to local media, post flyers, and do whatever else you can think of to get the word out. Fill the restaurants and run through service for real. Good luck!

You’re ready!

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