How to Open a Restaurant in Rhode Island

This eleven-step guide will take you through the essential steps needed to open a restaurant in Rhode Island, a state renowned for its coastal charm in New England.

A critical part of starting a restaurant in Rhode Island involves complying with local rules and regulations. Whether you’re opening a small café, bar, or any type of eatery, obtaining the necessary permits and licenses is essential.

These permits can include liquor licenses, health inspections, and occupancy permits, each with its own set of requirements. Staying up to date on the legal obligations in your city, county, and state is key to ensuring your restaurant operates smoothly.

Key takeaways

• Define your unique concept: A solid concept is vital for your restaurant. Start by defining it, as it will shape every aspect of your operations.

• Create a business plan: This includes an executive summary, company overview, industry analysis, marketing plan, business and service model, operating plan, and financial analysis.

• Get funding: Options consist of traditional bank loans, alternative lending, small business loans, merchant cash advances, lines of credit, crowdfunding, and financial assistance from friends or family.

• Choose the best location: Concentrate on your ideal customer profile (ICP), real estate market, community, size of the space, previous tenants, and zoning.

• Apply for licenses and permits: These include an employer identification number (EIN), business license, certificate of occupancy, food seller’s permit, food handler’s permit, liquor license permits, and a food facility health permit.

• Insurance for Rhode Island restaurants: This includes workers' compensation, general liability, commercial property insurance, business income insurance, and cyber liability insurance.

• Design your menu items: Includes food and drink options that set your restaurant apart in a competitive market. Set prices that support long-term profitability.

• Hiring and onboarding employees: Network with industry professionals, use social media, connect with culinary schools, and post job openings on industry boards.

• Invest in important technology: Implementing the right technology can streamline your operations and provide valuable insights into your business.

• Create a marketing plan: Word of mouth can be powerful once your restaurant is established, but reaching target customers and turning them into regulars depends on marketing channels like social media and email campaigns.

• Plan your soft launch and grand opening: Conduct a soft opening to evaluate your operations, then shift your focus to planning and promoting your grand opening.

How to Open a Restaurant in Rhode Island

1. Develop a unique restaurant concept

What kind of atmosphere do you envision for your restaurant in Rhode Island? Start by brainstorming your ideas. Consider these key questions before embarking on opening one of the top dining spots in town:

• What food will I specialize in? There are many possibilities to consider.

• Who are my local competitors, and how will my restaurant stand out from theirs?

• Will I offer full-service dining with ample seating, or will I emphasize takeout with limited seating?

• Who is my target audience or ideal customer profile (ICP)?

• Am I planning to operate a single location, or should I consider expanding to multiple locations down the line?

• How many employees will I need, and what atmosphere will they help create—casual and inviting, or more formal and sophisticated?

• What will the restaurant's layout and design look like?

Define your mission and core values to create your restaurant’s brand

Creating a strong brand identity is important for a successful restaurant. Start by defining your mission and core values.

These elements will guide everything from hiring staff to your marketing efforts. With a clear vision in place, you can come up with a memorable name and logo that reflect what makes your restaurant brand special.

2. Create a detailed business plan

A restaurant business plan serves as the blueprint that will turn your dream of owning a restaurant in Rhode Island into reality.

The first step in writing your business plan should be selecting your legal business structure. Consider options such as a limited liability company (LLC), sole proprietorship, partnership, S corporation, or C corporation. For a detailed overview of these structures and their pros and cons, refer to our guide on restaurant business entities.

Ownership models in the restaurant industry can vary significantly. Some restaurants are operated by a single owner with a team, while others involve investors who have a financial stake. Co-op models enable all employees to hold an ownership share. Many restaurants opt for a hybrid approach, where partners and owners run the business while employees receive a share of the profits after achieving certain milestones.

Next, decide what kind of leader you want to be and how you plan to distribute profits within your restaurant. It's important to consult with a lawyer and accountant to ensure that all legal and financial aspects are properly managed.

Your business plan should include this information, along with sections that cover key areas such as:

• Executive summary (including your restaurant's name)

• Company overview (business model)

• Industry analysis (target market, location assessment, competitor analysis)

• Marketing strategy

• Business and service model (Quick service? Fine dining? Fast food? Sit-down restaurant?)

• Operations plan (staffing, customer service policies, payroll, POS system, suppliers for food, laundry services, etc.)

• Financial overview (investment strategy, financial forecasts, cash flow estimates, and food cost projections)

3. Obtain financing for your restaurant

Starting a restaurant can cost anywhere from $95,000 to $2 million, which is an amount that many potential restaurant business owners may not have handy. If you're thinking about financing your restaurant in Rhode Island, there are several options to consider:

• Traditional bank loans

• Alternative lending sources

• Small Business Administration (SBA) loans

• Merchant cash advances

• Lines of credit

• Crowdfunding

• Financial assistance from friends or family

Each option varies based on application requirements, loan amounts, collateral, repayment terms, and how quickly you can access the funds.

Traditional bank loans offer longer terms and fixed interest rates, making them ideal for those looking for stable, conventional financing. SBA loans are popular due to their lower interest rates and extended repayment periods, but they involve a more complex application process. Merchant cash advances are accessible to those with lower credit scores but usually come with higher fees. Crowdfunding allows businesses to raise capital from a broader audience, often in exchange for future products or services.

For more detailed information on these options, check out our guide on restaurant financing and loans.

4. Choose the perfect restaurant location

Selecting the perfect location for your restaurant in Rhode Island is crucial. You’ll need to take into account local demographics, market trends, competition, and other important factors such as the restaurant’s size, visibility, and history.

Deciding whether to buy, lease, or build your space is a significant decision that will affect your startup costs. Each option has its own pros and cons. If you choose to construct or renovate, be ready to navigate regulatory challenges and obtain the necessary permits and approvals.

When evaluating potential locations, keep in mind these factors:

• Ideal customer profile (ICP)

• Local real estate conditions

• Community dynamics

• Size of the property

• History of previous tenants

• Zoning regulations and previous use of the space

Make sure that the size and layout of your restaurant align well with your unique concept. For example, a small space might be perfect for a family-owned beachside cafe in Narragansett, while a larger venue is necessary for breweries serving craft beer and comfort food for college basketball fans in Providence.

5. Obtain the necessary licenses and permits for your Rhode Island restaurant

Like any state, Rhode Island has specific requirements for the licenses and permits needed to open a restaurant. Some licenses are regulated at the state level, while others are managed by the local cities or counties. Understanding both is essential to ensure compliance and avoid any delays in your grand opening.

In Rhode Island, some of the licenses you’ll need to open a restaurant include:

1. Employer Identification Number (EIN), which links your business to the IRS. You can access the restaurant license application on the IRS website, along with all the instructions and requirements.

2. Business License, issued by the state of Rhode Island. You can register for and manage your new business license through the Rhode Island Business Services website.

3. Certificate of Occupancy, which is issued by your city or county when necessary, verifies that your restaurant space complies with commercial codes and local regulations.

4. Food Seller’s Permit, which is essential for any business that sells tangible goods subject to sales tax. This permit enables your restaurant to collect sales tax.

5. A Food Handler’s Permit, also known as a Food Service License or Food Handler Card, is not required for every employee statewide; however, every restaurant must have at least one trained Food Safety manager. This permit shows that employees or managers have completed a course on proper food handling protocols to prevent foodborne illness. You can get this training through the State of Rhode Island, Department of Health website.

6. Liquor License Permits are required for any type of restaurant to sell and serve alcohol to its customers. Since alcohol has a high markup and a long shelf life, it’s often beneficial from a profit standpoint for a restaurant to sell alcohol. A liquor license can be acquired through the State of Rhode Island, Division of Taxation application form, and typically costs between $500 - $2,000.

7. Food Facility Health Permits in Rhode Island are managed by city and county authorities. You’ll need to consult your local public health department to get a clearer understanding of the application process. All restaurants must obtain their health permits before opening and comply with safe food sanitation standards, including proper handling, storage, and preparation practices throughout their operations.

Learn more about the types of permits, license fees, and license costs in Rhode Island at RI.Gov.

6. Essential insurance coverage for restaurants in Rhode Island

Here are several types of insurance that restaurant owners in Rhode Island should consider:

• Workers’ Compensation Insurance: This required insurance helps employees who become ill or injured while on the job by covering their medical expenses and lost wages throughout the year.

• General Liability Insurance: While not legally mandatory, this insurance is highly recommended as it provides protection against lawsuits related to customer injuries or property damage.

• Commercial Property Insurance: This optional coverage is important for repairing damage to your restaurant or equipment, even though it’s not required.

• Business Income Insurance: This type of insurance can help cover lost income due to unforeseen events like fires, theft, or natural disasters.

• Cyber Liability Insurance: This protects your business from data breaches, especially if you manage sensitive customer information like credit card details.

7. Creating your menu and beverage offerings

Design your menu, whether you’re collaborating with a chef-owner, a general manager, or creating it on your own. Be prepared to adjust your food and drink selections in partnership with your kitchen and bar team once they’re on board and trained.

Make sure your menu features unique dishes and beverages that set your restaurant apart in a competitive market like Providence. Price your items thoughtfully to ensure long-term profitability.

Consider menu design and engineering to enhance the attractiveness and performance of your offerings, helping to make your restaurant a local favorite.

8. Hiring and onboarding your restaurant team

When hiring staff for your restaurant in Rhode Island, ensure you comply with local city and county regulations regarding state labor laws.

Your staff is essential to your restaurant's success. From the front-of-house team that creates a welcoming atmosphere to the chefs who prepare delicious meals and the support crew that ensures everything runs smoothly, hiring for these roles is vital.

Connect with industry professionals, leverage social media, engage with local culinary schools, and post job listings on relevant boards.

To attract and retain talented employees, prioritize creating a positive work culture. Offering competitive wages and benefits, such as health insurance, can help your restaurant differentiate itself from your local competition.

Here are some helpful resources from Toast for recruiting, hiring, and keeping skilled staff:

• How to Recruit Your Next Star Employee

• How to Onboard a New Restaurant Employee

• How to Train New Restaurant Employees

• How to Reduce Restaurant Employee Turnover

For more tips, check out our video course on hiring and retaining restaurant staff.

9. Invest in necessary equipment and technology

As your opening day approaches, think about investing in various restaurant technologies to ensure your operations are set up for success from the very beginning.

New restaurants in Rhode Island should strongly consider investing in:

• A cloud-based POS system with handheld devices

• Kitchen display screens

• An online ordering system

• Reporting and analytics software

• Inventory management software

• Accounting software

• Scheduling and team communication tools

• Payroll solutions

• Loyalty or rewards programs

• Contactless payment options

Implementing the right technology can streamline your operations and offer valuable insights into your business. With these tools, you can make informed decisions to enhance efficiency, increase revenue, and ensure long-term success.

10. Create a restaurant marketing strategy

Like any other state, a Rhode Island restaurant business needs a solid marketing strategy to enhance visibility. While word-of-mouth can be powerful once your restaurant is established, engaging with your target audience and turning them into loyal customers often depends on marketing channels like social media and email campaigns.

Take advantage of local festivals and celebrations in Rhode Island to promote your restaurant. These events also provide excellent opportunities to source local ingredients and network. Some notable ones include:

• WaterFire Providence Festival

• Taste of Rhode Island Festival

• Beervana Festival

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

11. Plan your soft launch and grand opening events

Once your restaurant is fully prepared, host a soft opening to test your operations. Invite family and friends, and encourage your staff to do the same for a trial run. This will help you identify and resolve any issues before the official launch of your Rhode Island restaurant.

Afterward, concentrate on organizing and promoting your grand opening. Use social media to generate excitement, distribute flyers around your city or town, and leverage your network to increase attendance for this important event.

You’re good to go!

Opening a restaurant is a lengthy and challenging process, but it can also be highly rewarding. To help you stay organized and ensure you complete all the essential tasks during your first year, refer to our time-bound restaurant opening checklist below.