Opening a Restaurant

How to Open a Restaurant in Kentucky

Katherine BoyarskyAuthor

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Opening a Restaurant Checklist

So many things go into opening a restaurant. Use this free PDF checklist to set your new restaurant up for success.

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Kentucky has a thriving food scene, with flavor and fusion in every bite. With its beautiful surroundings, accessible location, and among the lowest business costs in the country, Kentucky has a lot to offer restaurateurs and customers alike.

There's a wide variety of cuisines and concepts for any dining enthusiast to choose from, and your restaurant might just be the next thing on their Kentucky 'must try' list. Opening a restaurant is a big process, so we've created a free checklist to help you break down the process into manageable steps.

You'll start with the fundamentals: laying down a business plan to follow and seeking the financial backing required to get your idea off paper and into reality. With those steps accomplished, you can proceed to licensing your restaurant, designing a menu, and rolling out your marketing plan.

If you're dreaming up a fine dining experience in Lexington or a jazz bar in Louisville, we're here to help you navigate Kentucky's restaurant scene as you commence operating a safe, legal, and successful establishment.

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Opening a Restaurant Checklist

So many things go into opening a restaurant. Use this free PDF checklist to set your new restaurant up for success.

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Step by Step: Opening a restaurant in Kentucky

1. Concept: Define your restaurant

Coming up with a concept is the first step in becoming a successful restaurateur. It's helpful to list out all the advantages and limitations of each potential idea as you mull them over. You might need to wade through many different ideas to find your favourite, or it could take you a few minutes to hash out what type of restaurant you want to run.

Your values and mission are highly relevant to this stage of the process. Aligning your concept with your values will have a huge impact on your business over time. Values influence all your decisions - who you hire, what you serve, how you approach challenges - so it's important to keep them front of mind when deciding what type of business you will operate.

Using the following prompts, you can refine your ideas into a viable, concrete business that will attract customers and return on investment.

  • What kind of dishes will you serve? Are you focusing on a single cuisine or blending flavors with a fusion concept?

  • How do you envision the layout and interior design of your restaurant?

  • Who is your target audience? What customer demographics are you aiming to attract?

  • Will this be a standalone business, or do you plan to grow into a larger chain with multiple locations?

  • Have you analyzed the competition in your area? How will your restaurant differentiate itself from others nearby?

  • What service style will you offer — fine dining, limited seating, takeout, or a mix of service options?

  • How large will your staff need to be? Will the atmosphere be refined and formal, or relaxed and welcoming for a casual dining experience?

Now you've established the basic concept, you can let your creativity shine. A name and a logo are both essential to your restaurant image. Customers will form a connection with both elements, so it's important that you choose something memorable, simple, and aligned with your restaurant's aesthetic.

2. Business Plan: A road map for your restaurant

After the name and logo, a business plan is the next item on your list. A strong grasp of where you want to take your business and how you'll get there is crucial to any restaurant hoping to survive in the long term.

One of the first technical requirements in this process is to register your business as an entity with Kentucky's relevant authorities. Each option has a different tax structure and operating costs. Our guide explains the range of restaurant business types available.

Regardless of how you choose to run the business, every owner is advised to enlist the services of an accountant and lawyer to draft up sound and binding contracts for operation. Their input can help you lay out the following aspects of your business plan:

  • Company overview, including your business model

  • Executive summary, including your restaurant business name

  • Operations plan (team size, SOPs, customer service policies, payroll plan, POS software and systems, your chosen vendors and providers for consumables)

  • Business model and service model (Quick service or fine dining? Fast food or sit-down experience?)

  • Marketing plan (content schedule, advertising budget and strategy, social media channels, KPIs for engagement and reach)

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

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

The other structural decision you will want to nail down is how you will manage ownership and profit-sharing. Many restaurants operate with owners and investors holding equity and employees taking home a wage and bonuses once certain profit thresholds have been surpassed. You may choose to offer your employees a portion of the company (co-operative) or retain sole ownership.

Choosing what type of entity you will register as will depend on your individual situation. Likewise, how you choose to distribute profits is up to you, and there is no 'one-size-fits-all' solution. Consider the pros and cons of each model thoroughly, and be crystal-clear on how much everything will cost.

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Restaurant Business Plan Template

No matter where you’re at in your restaurant ownership journey, a business plan will be your north star. Organize your vision and ensure that nothing is overlooked with this free template.

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3. Financing your restaurant

Kentucky business owners have a variety of options when it comes to financing their ventures. These include SBA loans, bank loans, alternative loans, lines of credit, merchant cash advances, crowdfunding, and negotiating person loans from friends or family.

Each option will differ in the application process, the loan limit, spending restrictions, how long you will have to repay, interest rates, and time required to process your funding request. As the starting cost of a restaurant ranges from $95,000 to $2,000,000, it's important you secure your funding as soon as possible. 

It’s important to evaluate which option aligns best with your needs and financial goals. You can explore each option in more depth by reading our guide about restaurant financing and loans.

4. Location: Finding the perfect spot

A good location is hard to beat when it comes to any brick-and-mortar business. In the restaurant industry, having an accessible, inviting space is an important hurdle to clear. Finding the right spot for your new establishment may be a tricky process, but we have some helpful pointers for this part of your venture.

While hunting for a location, you need to research thoroughly - investigate the demographics, current competition, and market trends. Understanding the general statistics of your chosen area will help you determine if your venue is likely to appeal to the neighbours. For instance, if you're planning to open a 24-hour cocktail bar, setting up shop next to a school is not the best way to draw a local crowd.

Choosing a space that complements your restaurant's concept and brand will also factor into your final decision. Different service styles thrive in different environments. An ice cream parlour may be perfectly placed in a small corner shop, whereas a pizzeria focused on groups will work better in a larger space with comfortable seating.

Aligning your space with your service model will ensure a smoother operation and a better customer experience. Other important criteria to consider when selecting a Kentucky restaurant location are:

  • Building condition

  • Zoning

  • Previous tenants

  • Real estate market conditions

  • Square footage

  • Previous occupancy usage

Finally, consider the terms of your location. Are you buying the space, leasing from its current owner, or building your venue from scratch? Each option will impact your restaurant's timeline and budget. If you're renovating or constructing, it's likely you will need a plan review to ensure the project meets local, state, and zone regulations.

5. Licences and permits: Kentucky restaurant regulations

Kentucky has a list of rules for all business and restaurant owners to comply with. Some will be state-wide, and others will be mandated by your county or city authorities. Understanding how these permits and licenses co-exist is crucial to operating as a safe and legal establishment.

Some of the restaurant permits and licenses for your new business may include:

  1. Federal Employer Identification Number (FEIN): This connects your business to the IRS. You can find the application (and all instructions and restrictions) on the IRS website.

  2. Food Handler Card: All employees of a food service business must hold a food handler's card, which is also known as a food handler license. These can be obtained online and are reasonably priced, with fees as low as $10 per license.

  3. Business Registration: This is provided by Kentucky's Department of Revenue, with the application available online. Many local and county health departments will require a separate permit for food venues to operate, so you will need to contact your relevant representative for this process.

  4. Liquor License: If you plan to serve alcohol in your restaurant, the Department of Alcoholic Beverage Control is responsible for this process. You can apply for or renew a liquor license online.

We have also written a more detailed guide about Kentucky's restaurant permits and licenses, available for you to read now.

Kentucky has a valuable resource for new business owners, providing all the information and steps regarding business registration, licensing, and withholding legislation. Visit the Kentucky Business One Stop website to start the process.

6. Menu: Creating your dishes and drinks

Draft your menu with the input of trusted, experienced culinary professionals. This may be a fellow restaurateur, your head chef, or simply someone who knows a good menu when they see one.

There are endless different options for menu design and layout, and you can spend a lot of time playing with fonts, graphics, and wording choices. Don't try to reinvent the wheel - ensure that everything is clearly labelled, priced, and the customer is confident in placing their order.

Ensure your menu is priced with a focus on profit, and matches your overall brand and presence. There should be a range of appealing, distinctive dishes made with quality ingredients that will stand out to customers and keep them coming back for more.

If you are struggling to choose what dishes should make the cut, consider rotating them throughout different seasons, months, or other calendar periods. Changing the menu creates a lot of work, so think carefully about how you will communicate any changes to your chefs, servers, and suppliers.

Once the menu has been finalized and put into practice, be prepared for feedback. Your staff and customers may pick up on small errors or confusing descriptions. This is a good thing - once you start getting critiques, you can choose to grow and improve.

To help you serve up a world-class, we have created extensive guides about menu design and menu engineering.

7. Marketing: Developing an effective strategy

Standing out amongst the Kentucky crowd will require a strong and consistent marketing plan. Like any business across the state, you will have a wider impact on customers if they can find you online, learn about what you offer, and get a visual sense of your general vibe and atmosphere.

Starting out with a new venue has the advantage of being a novelty - you may be opening the first sushi bar in your town or breathing life into a longtime local favourite that needed a revamp. Focus on this element to promote your business and appeal to potential customers.

Social media, email marketing, and mailouts are all cost-effective and proven to be effective when targeting different customer groups. With the right approach, all these channels can help connect you with new customers and convert them into returning guests.

Self-promotion might sound daunting, but you need to remember that one of the most important factors in marketing success is passion. Who is going to be more passionate about this project than you? Putting time and effort into spreading the word about your new business is worth every penny once you start to see the results of authentic, dedicated marketing.

To help get you started, we've developed a suite of resources to help you roll out your restaurant marketing plan. Explore our marketing plan template, our social media guide for restaurants, and our guide to restaurant email marketing.

8. Staff: Hiring and training in Kentucky

Your staff are the backbone of your restaurant. They will spend the most time with your customers, operating your chosen systems, and can play invaluable roles in the growth and success of your business. Finding reliable, trainable, and passionate employees is an ongoing mission for business owners.

Once you know how many staff you will need to operate your restaurant, brush up on your understanding of Kentucky state labor laws. Your local city and county may have additional requirements to be aware of before you commence hiring and paying a team of employees.

Typically, you will be searching for a variety of positions to fill in the restaurant: front-of-house, kitchen, bar, and support staff are all part of the daily operational team. We have collated a series of guides to support employers as they recruit, train, and manage staff in a restaurant setting:

You can also watch our video course on hiring and retaining restaurant employees to further educate yourself on successful recruiting strategies.

As an employer, you have several options at your disposal to find your dream team. You can tap into your own network for any job-hunting connections. Social media is always a cheap and often effective way to spread the word about open positions. Seeking out food institutions or training venues in your area can link you to culinary professionals searching for their next role in the industry.

Once you've found them, the next challenge is keeping them on the payroll. Retaining quality employees requires you maintain an appealing work environment. Competitive pay, clear boundaries around working schedules, and other valuable employee benefits, are all ways to stand out as a desirable employer.

9. Technology: Investing in quality systems

As the saying goes, a chain is only as strong as the weakest link. In this context, a restaurant with shoddy systems will constantly struggle to meet its full potential. As the owner, you want to simplify routine tasks to a) support your staff, b) provide consistent service, and c) manage costs.

Some of these solutions may be obvious necessities, such as a contactless payment system, a customer loyalty scheme, or a restaurant payroll program. Looking for a user-friendly, easily teachable platform can be time-consuming, but it pays to have quality systems in place.

Some other valuable investments for new restaurants include:

There are many restaurant technology options on the market for Kentucky venues to choose from. You'll need to think carefully about what selection of products will work together cohesively and enhance business performance.

With the right tools, it's easier to measure your business' performance. Knowing performance stats will, in turn, help you decide how best to grow revenue and lower expenses. When implemented correctly, the solutions listed above can all enhance your restaurant's success and business longevity. 

10. Restaurant Launch: Hard and soft openings

All the paperwork has been finalized. You've assembled your staff. You've fine-tuned every dish and drink on the menu. The restaurant is laid out to the very last napkin, and your investors are keen to see sales start rolling in. It's finally time to launch your restaurant, but not so fast…

A soft opening is a clever way to help identify any issues or gaps you may have missed during your preparation stages. This event is best run with your friends, family, and your staff's connections in attendance. Fill the tables, serve the food, and with a more forgiving crowd in-house, troubleshoot any problems that crop up during the trial run.

Once this has taken place, you can focus on promoting your grand opening event. This time, invite anyone you can reach to attend the first official service in your establishment. Leverage your networks, anyone involved with the restaurant, and as many locals as you can connect with.

Social media, radio advertising, and flyers in mailboxes or at local meeting points are all effective ways to spread the word. Draw as many tables as you can sit for the opening, and enjoy the sensation of finally being a real-life restaurateur!

Choose Toast To Boost Your Restaurant Performance

Running a restaurant requires a lot of time and energy, and you will have a to-do list that seems never-ending. Choosing technology that helps you manage responsibilities, measure performance, and support your daily workload is a wise investment.

Despite the challenges involved with opening a restaurant, it has the potential to provide you with a sense of accomplishment and tangible success with each new goal you reach.

FAQs

How much is a business license in Kentucky?

Kentucky doesn't require businesses to hold a license on a state level. However, your local county or city may require you to gain an occupancy permit to conduct business in your chosen location. Contact your local council or health department to learn what rules apply to your restaurant.

What permits do I need to sell food in Kentucky?

Besides registering your business with the state and connecting to the IRS for tax purposes, Kentucky restaurant requirements include:

  • Local Health Department Permit: contact your city or county to learn your local procedures

  • Food Handler Card: widely available online for as little as $10

  • Liquor License: contact Kentucky's Alcoholic Beverage Control Department for information

How much does it cost to open a restaurant in Kentucky?

Opening a restaurant in Kentucky will vary in start-up costs, based on your concept. In general, the amount will range between $95,000 and $2 million. Kentucky offers a range of grants, relief funding, and subsidies through various state-backed programs, and it is recommended that restaurants apply for any assistance where eligible.

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This calculator lays out some of the fundamental financial costs of opening a restaurant, so you can start planning and bring your dream restaurant to life.

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