How to Open a Restaurant in Tennessee

Opening a restaurant in Tennessee can be daunting: it’s a long process, with overlapping steps and requirements, and it requires a significant amount of both passion and capital.

In this guide, we’ll cover what Tennessee restaurant owners need to know about the process of opening a restaurant — whether you’re opening a tapas restaurant in Nashville, a barbecue joint in Memphis, or a family-friendly Szechuan restaurant in Knoxville.

How to start a restaurant in Tennessee

1. Decide on a restaurant concept

It’s time to brainstorm: What kind of restaurant do you want to open? Investigate your local area, and find out what kinds of restaurants are missing — and create a plan to fill that niche.

Answer the following questions to narrow down a concrete, viable business idea that you’re ready to invest in.

• 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 be opening 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

Now, think about the values you want to follow as a business, and the mission you and your team will work towards. It can feel silly at first, especially if you’ve never done this before, but it will help guide major business decisions, like who you hire and what kind of environment you’ll cultivate — both for employees and customers.

Then, come up with a business name and create a cohesive visual brand, 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 Bad Idea Nashville — their branding is an amazing example of thoughtfully bringing their concept to life through visuals.

2. Create a restaurant business plan

A business plan helps new restaurants secure funding, helps you open a business bank account, and it also provides a roadmap to follow throughout 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: LLC (limited liability company), sole proprietorship, partnership, S corporation, or C corporation. You can learn about the benefits and drawbacks of each in our guide on restaurant business entities.

Then, decide on a profit structure. Will you, the business owner, take home all the profit? Will you profit-share with your employees? Will investors get a stake in the business? 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 the following sections:

• Executive summary, including your restaurant name

• 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, costing from $95,000 to $2 million and beyond. Unless you’ve recently won the lottery, you’ll want to pursue some external funding options, like Small Business Administration (SBA) loans, lines of credit, crowdfunding, personal loans, bank loans, or alternative loans.

4. Choose a Tennessee restaurant location (and start renovating)

Commercial real estate, especially for a service-based business like a restaurant, is all about location. Do some market research on the demographics of your potential neighborhood and the competition nearby.

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.

Here’s a few factors Tennessee businesses should focus on when evaluating a restaurant location to decide if it’s right for your business:

• 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 Tennessee restaurant licenses and permits

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

Learn more about new business licensing in Tennessee from the Tennessee Department of Revenue.

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

2. Register to pay business tax using the Tennessee Taxpayer Access Point (TNTAP).

3. File a DBA (or Doing Business As), if applicable. Learn more about this process from the Tennessee Chamber of Commerce.

4. Submit a new business license registration at the county clerk or municipal clerk.

5. Submit an application for name reservation and file articles of organization through the Tennessee Secretary of State.

6. Learn about your business’s sales tax obligations with the Local Tax Lookup tool on tn.gov.

7. Apply for a liquor license through the Tennessee Alcoholic Beverage Commission (TABC).

8. Apply for a certificate of occupancy from your local government’s business department. This certificate shows the physical space is safe to work in and visit, and complies with local safety regulations.

9. Tennessee state law says that restaurants need to have at least one certified food safety manager, but they don’t require all employees to have a food handler card. These food safety licenses show that either a manager or each staff member has been trained in the proper food handling protocols that prevent foodborne illness. Learn more about food safety processes in Tennessee through the retail food establishment page on the Department of Agriculture website. Consult with your local county’s Department of Health and the Food Service Establishment Program to learn if you’ll need to fulfill further requirements.

10. Fill out a Food Retail / Plan Review Questionnaire that demonstrates the space is safe and up to code, in line with health and safety requirements. Submit this questionnaire to Consumer and Industry Services (CIS).

6. Develop your menu and beverage program

Start mapping out your menu, either collaboratively with a chef-owner or GM, or by yourself. Once you hire a full BOH staff and a bar manager, consider workshopping the menu and beverage program with them — they’re the ones who will be bringing the menu to life every day, so it’s worth it to get their input.

At Bad Idea in Nashville, sommelier Alex Burch worked with Chef Colby Rasavong to pair interesting, exciting wines with the creative Laotian menu. “Wine comes from all over the globe, yet most wine lists focus on what’s comfortable. There will be some familiar subjects on the list, but many people haven’t heard of. It’s our job to make sure guests feel comfortable trying something new," shared Burch with The Tennessean.

Learn more about menu design and menu engineering to make the most of your menu.

7. Hire and train restaurant staff

A restaurant’s success hinges on its employees, and there are dozens of restaurant positions to hire — so it’s worth it to put the work in upfront to find (and retain) the best staff in your area.

When searching for new restaurant employees, ask 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 thing you can do when staffing your restaurant is to make your business a great place to work — by providing good compensation and meaningful restaurant employee benefits, including health insurance. Yes, it’s pricey, but 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

Restaurant technology helps your restaurant run smoothly while helping you track the performance of your business every day.

When you’re approaching the end of the restaurant opening journey, 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

Tennessee restaurants need to be proactive about marketing — especially in cities with tons of competition, like Nashville. Test out marketing channels like social media and email marketing. Posting regularly on social media is an important way to share what your restaurant is about, showing off the food, the space, and your overall vibe. And once you get those first guests in the door, you can use email marketing to share exclusive offers with them, getting them back in the door.

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 your space is renovated, your staff is hired, your inventory is stocked, and your equipment is all set up, it’s time to test it all out with a soft opening. Invite family and friends, as well as the family and friends of your whole staff, and run through service for the first time. A soft opening will help you work through any snags and update processes accordingly. Once the soft opening has come and gone, you can start planning (and advertising!) your grand opening.

Post all over social media, send out flyers in your neighborhood, and ask your network to share the grand opening event information widely to fill the restaurant on that first day (and beyond).

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.