8 Steps to Opening

How to Open a Restaurant

Introduction

Opening a restaurant? There are 660,775 restaurants in the U.S. as of spring 2018 according to NPD Group

That’s why now, more than ever, new restaurants are finding creative ways to differentiate themselves, experimenting with front of house, back of house, and guest-facing technology.

While you may have an idea for what type of restaurant you’d like to own, it’s important to sit down and think through all the variables when it comes to opening a restaurant. Read on for your step-by-step handbook to opening a new restaurant.

Ready to open your next restaurant and impress investors? Use this free template for developing a custom restaurant business plan.

Chapter One

How to Develop the Vision for Your Restaurant

If you’re reading this, you most likely already have a vision for your restaurant. But have you seen it on paper? Here are some tips for refining your restaurant ideas.

If you’re opening your second or third restaurant, you know that you need a clear concept or theme. Is it going to be a fine dining or fast casual restaurant? Will there be a bar? Will you use new order-ahead technology? What separates your restaurant from others in the area? How will you pitch your restaurant to consumers, investors, and potential employees?

Create a mood board or a basic collage of your future restaurant, clipping pictures from magazines or printing patterns from the internet. Examples include: color, furniture style, cloth swatches, decorations, and pictures of food.



When it’s done, choose your favorite elements and focus on incorporating them into your restaurant. How can you make your dining area feel more like a Parisian cafe? What is it about the checkered tablecloths that you like?

Write a short pitch about your restaurant and share it with your business partner, your spouse, or anyone who would be totally honest with you. If they’re confused about your concept, it’s back to the drawing board. If not, move on to #2!

I opened because I wanted to bring something to my community that they would be proud of."

Logan Hostettler

General Manager, The 1894 Lodge

Chapter Two

How to Secure Funding for Your New Restaurant

While your dream may be to sling burgers and garnish dishes, the reality is that a lot of your time as a business owner will be spent analyzing the books. Here are some tips for securing financing for your next venture.

If you don’t have a CPA, submitting taxes and general accounting will need to be a skill in your wheelhouse.

For example, you will most likely have to finance your real estate, or even your technology, over several years. You will need to learn the basics of restaurant finance and restaurant metrics to track so you can spend and invest money earned from restaurant sales wisely.

Here are a few options for restaurant business loans:

EQUIPMENT LOANS

Negotiate with your bank or provider a way to procure loans for kitchen equipment, which can often be the most expensive. Many point of sale providers, like Toast, offer 0% financing to offset the initial cost of the technology.

WORKING CAPITAL LOANS

Working capital loans help cover operating costs while your restaurant has more expenses than income. Ideally, budget 6-12 months of operating costs until you reach break-even point.

LINES OF CREDIT

If you are approved for a business line of credit, you will get a maximum credit amount, but only have to pay what you use. Like a credit card, the line of credit constantly revolves. As you pay your balance, you have more credit to draw on for future expenses.

Estimate expenses for every facet of your business, including food delivery, employees, lease, furniture, liquor, and more. Then, create a budget based on what you need to spend, including a flex budget for any obstacles that will come your way. Don’t forget to factor in break-even point and forecasting to see when your restaurant will be profitable.

I opened because I wanted to build a comfortable environment for the guests and community in Union Square".

Sam Treadway

Bar Manager, Backbar

Chapter Three

How to Choose the Right Location

After hours spent developing your restaurant concept and building a predictable business plan, you can now start looking for restaurant real estate.

Choosing the right location for your concept is critical. You’ll need to do copious research on demographics, competition, and more, not to mention on the actual place and its size, visibility, and history.

Here are some criteria to focus on.

  • Target Market and Ideal Customer Profile: Think about the demographic information of the guests you think will be your best customers — families, working professionals, new moms, etc.
  • Market Conditions: Consider economic conditions and forecasts, traffic (including foot traffic), and nearby places of interest. Will your target market be there?
  • Community: Visit restaurants that already exist in the area and get to know your potential neighbors. Learn how your restaurant will fit in with the existing community.
  • Size of the Site: Think through the intended seating capacity and operations, as well as where to build a bar area or dining area, and where in the kitchen you will store ingredients and equipment. Work with a restaurant architect to draw out detailed floor plans.
  • Previous Tenants: Who occupied the space in the past? Why did they leave? What was their experience with the landlord? 

Now that you've thought about key criteria and ideal customer profile, narrow down your restaurant location using the criteria outlined to the right. If you don’t know where to start, check out Zillow or Trulia, , or simply take a walk through a neighborhood you’ve narrowed down as a good choice. You will want to work with a real estate agent who specializes in restaurants and is committed to finding the perfect site for your restaurant. Remember to focus on what the space can become, rather than what it looks like now.

I opened because I have always had a passion for the restaurant industry and saw a void in the market that I thought I could fill.”

Adam Talbert

Owner, 312 Beef and Sausage

Chapter Four

How to Apply for Licenses and Permits

Acquiring all of the necessary food licenses and permits involves paperwork and patience. Here are a few tips for finding out how to acquire the right permits.

Depending on your concept, and the city or state where you open a restaurant, the necessary licenses and permits you will need to acquire are different. The costs can vary between $100 and $10,000 depending on expected profit.

For example, if you plan to serve liquor, each state and city has different liquor laws and you will need to research at the appropriate .gov sites.

If you plan to offer valet parking, you may need to apply for a valet parking permit in order to do so.

Here are some other licenses and permits you will most likely need:

  • Business License
  • Employee Identification Number
  • Certificate of Occupancy
  • Sign Permit
  • Food Service License

I opened because I wanted to introduce and share delicious Filipino cuisine to everyone in our community. My daughter has been in the restaurant business for many, many years and I thought it would be great to use her talent and skills managing our own full-service restaurant.”

Teresita Herradura

Owner, The Corner Q

Chapter Five

How to Hire Your Restaurant A-Team

Time to interview candidates! Learn how to hire the best chefs, servers, and managers just in time for your grand opening.

You have a plethora of options for acquiring new restaurant employees, including employee referrals, job boards, and career sites. According to the Bureau of Labor Statistics, the restaurant turnover rate is 73% — one of the highest in the business sector. It’s important to be creative when hiring restaurant staff and to provide employees with the best experience possible.

Focus your efforts on hiring the perfect head chef first. Post job openings for your new restaurant online, on FacebookIndeed.com, and Poached Jobs, and encourage your friends to share the news. The amount of people you hire depends on the size and concept of your restaurant, but you will most likely need a hostess, a few cooks, a few servers, and a bartender if necessary. In some cases, it may make sense to incentivize staff through an employee referral program.

You can’t do this all alone. In many cases, you’ll need to gut check your ideas with someone else who has more experience and can act as a mentor, helping you think through every facet of starting your restaurant business. The restaurant atmosphere is very team-oriented, but you’ll want to identify one person that can act as second-in-command. If you’re away, he or she is in charge. Both of you can strategize together. For most restaurants, this is the head chef, but it may be different for you if you have a business partner, a restaurant consultant, or a close friend who is extremely invested.

Look at your new hires and gauge how excited each of them was about your new restaurant. Whoever expressed the most genuine excitement about it may be a good fit. Then, look into their background to see if they worked as a leader in a past job or if they ever had experience strategizing a new business trajectory.

I opened because there was a need in my community to keep the American Legion Ball open and my wife and I are good at this business. It provided an opportunity to become part of our new community, as well as create jobs for it.”

Brian Bonnell

Owner, Sutton Legion

Chapter Six

How to Design a Unique Restaurant Menu

Next up is the fun part — designing your menu! Learn how to decide which dishes to offer based on food costs and popularity.

With your head chef, brainstorm your menu offerings. Depending on the type of restaurant you own, there are many avenues you can take.

For example, if you’re selling barbecue, how can you make your ribs different from the local barbecue concept? What can you learn from that restaurant, and how can you partner with them to offer menu items everyone in the town will love? What “special sauce” can you add? What garnishes will you use? Is there any way you can market your company through your menu? How do your prices compare to other similar restaurants in the area?

Using menu engineering, you can think through which menu items you may want to offer, and then offer them to a select group of staff members, family, or friends and hear their feedback (written down or verbally given).



The executive chef should have complete reign over the menu. When you’ve decided on your top menu items, work with your second in command to design a menu and decide on menu prices.

“My partners and I opened our first restaurant because we love food and serving people. We love the fast pace of a restaurant. We saw it as an opportunity to earn a living doing what we love.”

Jeff Jacobson

Coo, Costa Vida

Chapter Seven

How to Choose the Best Restaurant Tech Stack

Now it’s time to do some more research, this time into something that will impact your bottom line: technology. What will be in your restaurant technology stack?



Restaurant guests are expecting technology in their restaurants now. According to Toast’s Restaurant Technology Report, 95% of restaurateurs agree that technology improves business efficiency.

Get a leg up over your competitors by investing in restaurant POS software that offers pay-at-the-table devices, online ordering, inventory management, guest feedback options, and much more.

Read our interactive ebook The Definitive Guide to Restaurant POS Systems to learn more about what exactly goes into this decision, what questions to ask your POS partner, and how to simplify your search process. You can also schedule a demo with Toast to learn more about our system and determine whether Toast is the right fit for your restaurant business.

By equipping our servers with Toast handheld tablets, we’re doing at least two extra turns per night per location. That equates to roughly $10,000 in extra revenue per week."

Brandon Hunt

Co-owner, Via 313

Chapter Eight

How to Market The Grand Opening of Your Restaurant

You’re almost live! Now it’s time to do some PR — public relations, that is. Learn how to market your grand opening with much fanfare.

You want your restaurant opening to make a big splash on the scene. Don’t just open on Friday night and invite your friends and family. Instead, throw a big restaurant party, proving to journalists and to the community at large through your superb customer service and delectable food that your restaurant is the place to be.

After you decide on a date and time for your restaurant opening, reach out to local bloggers and journalists. Follow your local paper, and call bloggers on the number listed on their site.

Proxi, the sister restaurant of Sepia in Chicago, built hype around their restaurant opening by posting “hard hat” photos on social media.

Invite your friends, their friends, and your family. Give a call to your POS provider and see if any of their employees in the area can come (they most likely will already be there to help you install and train). Place an ad in the local newspaper. Write a blog post about your new restaurant opening on your website and push social updates on Facebook, Twitter, and Instagram, with the appropriate hashtags. In the next few months, consider investing in ads and other creative restaurant marketing strategies to keep driving new guests to your restaurant.`

I opened because I was looking for a local opportunity to make people smile!”

Kim Wilhemlson

Owner, Koehn Bakery

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