Launching your very own restaurant can be a thrilling business venture that usually consists of several essential “ingredients.” As a food entrepreneur who aspires to bring a business idea to life, it’s critical to exhibit competency in culinary fundamentals, professional business principles, and marketing acumen. Plus resilience and grit are key.
The thought of starting this type of endeavor might seem daunting, but if you’re prepared, you can begin to execute your vision with skill. If you’re looking for a concise, step-by-step guide on how to start a restaurant, let’s dive in.
1. Pick a Restaurant Type
Your first step in starting a restaurant is simply brainstorming and choosing a concept that ignites your entrepreneurial spirit. Do you dream of opening a vegan food truck or starting a farm-to-table pop-up restaurant? Perhaps you have your heart set on only serving warm breakfast comfort food.
When picking a restaurant type, also consider the following questions:
- What type of service do you want to offer?
- What does your target audience look like?
- What is your unique brand?
Low-Cost Restaurant Start-Up Ideas
In this ideation phase, you’ll also want to consider your budget to start a restaurant. Even though there are ways to fund your restaurant (keep reading for more on this), you might want to consider some of the following restaurant models if you have minimal money to begin with.
Launch a Food Truck
Starting a food truck is still a significant investment of both money and time, costing between $40,000-$250,000 total. You’ll have to purchase your truck, outfit it with the necessary equipment, and acquire all the necessary permits.
If you buy a used truck and/or used equipment, you may be able to reduce your startup costs even further. The operating costs might be lower, too, since you can use a tablet-based point of sale (POS) system, and you’ll have much lower utilities and staff costs.
Start a Ghost Kitchen or Ghost Restaurant
A ghost kitchen or ghost restaurant operates out of a rented commercial kitchen space. Food is delivered to customers through third-party delivery apps like Uber Eats or GrubHub. This can be one of the most affordable ways to start a restaurant.
You’ll be leasing your kitchen space, but there’s no dining room or bar to pay for. Some rentals even include kitchen equipment, like ovens and refrigerators.
Startup costs for a ghost kitchen are estimated to range between $10,000 and $50,000, and in some cities, local providers offer options below $10,000.
Start a Home-Based Catering Business
With home-based catering, you may be able to cook out of your home, although it’s more likely that you’ll run the business side out of your home and do the cooking from a commercial kitchen space. This can make it another economical option and you can expect low startup costs—somewhere between $10,000 and $50,000.
2. Create a Business Plan
Now that you’re set on a business idea, it’s time to start your roadmap. Think of your business plan as a skeleton outline that carefully details each important component of your foodservice business. At the end of the day, you’ll leverage this business plan to “pitch” potential investors.
Students enrolled in Escoffier’s food entrepreneurship program can engage in a comprehensive business-oriented curriculum that can help prepare them to start a business plan. They may discuss vetting their food business idea, pitching investors, and forecasting revenue.
5 Essential Business Plan Components:
- Executive summary (i.e.: restaurant name)
- Company description (i.e.: restaurant model type)
- Competitive analysis (i.e.: target market)
- Organization plan (i.e.: staffing and customer service policies)
- Financial projections (i.e.: investment and funding plan)
Devise a Marketing Plan
It’s likely that investors will review your proposed “marketing mix” as part of your business plan. The purpose of this is to see how you’ll acquire new customers and keep them loyal through inbound and outbound marketing tactics—combined with paid media. Make sure it’s thorough and covers effective strategies such as social media marketing, branding, email marketing, SEO, and more.
“Anybody can say they are a chef. As far as the management portion, that is where Escoffier is really helping me actually run a restaurant, run a café, or run a business. And that’s what I want. I want my own restaurant.”*
Tiffany Moore, Co-Founder/Chef, Event Hall @ Cascade, Online Culinary Arts graduate, Military Veteran
3. Choose a Prime Location
What’s one key factor in how restaurants can make money? Location. This alone can make or break the success of your restaurant. Why? Because location can hold the power to attract your niche target audience. If your restaurant is located on a naturally busy street with lots of organic foot traffic, this can help you attract new customers—visibility is critical.
When it comes to location, think about the type of food you’re serving and how it might resonate in your location. For example, fine-dining Italian might do best in an upscale brick building next to boutique shops. But deli sandwiches and small bites could land better in a casual food truck environment. Also, think about leasing vs. buying a physical space. This can affect your costs and profits immediately.
Essential Location Factors to Consider
- Sizing and capacity
- Neighborhood community
- History of the building
4. Map out Your Menu
Depending on your restaurant idea, you can begin the creative and slightly technical process of building out your menu offerings. You might want to consider using high-quality, seasonal ingredients when conceptualizing your dishes… also keeping in mind associated costs and how competitors are pricing.
Escoffier’s food entrepreneurship curriculum can include dedicated coursework that explores the creation and application of various types of food and beverage menus. Topics may range from visual design to price analysis to making use of available resources.
Menu Pricing Factors to Consider
- Cost of goods sold
- Food cost
- Profit margins
- Sales forecasting
5. Prepare for Restaurant Costs
Along with choosing a restaurant space and planning a cost-efficient menu, knowing what goes into additional restaurant costs can help you plan your budget and decide where to splurge and where you can economize. Here are some of the biggest expenses you may face.
“When you’re putting together a business plan, always account for little stuff [like light bulbs, payroll taxes, liability insurance]. All these little nickel and dime things start to add up.”*
Escoffier Lead Chef Instructor Jason Goldman
Remodeling or Restaurant Improvements
Unlike a residential lease where tenants are expected to leave the space as they found it, it’s not uncommon to invest money into remodeling your commercial space when you rent. For example, you may need to change the size of the kitchen or add a bar. Landlords sometimes provide a “tenant improvement allowance” to offset some of these costs. But the details will depend on your specific lease, so make your requirements clear before signing. And if it’s a property you own, you are typically responsible for all the costs!
Ovens, refrigerators, stand mixers, fryers, and commercial dishwashers usually don’t come included with your restaurant space. You’ll probably be responsible for purchasing or leasing this equipment. An exception may be a commercial kitchen rental, which could come with some equipment already built in. When it’s time to buy, you may be able to find some of this equipment second-hand at a reseller or auction.
“I would have probably looked for more pre-owned equipment. That could have reduced our startup costs. Do I want to wash my dishes in the three-bay sink for under $1,000? Or do I want to drop $5,000 on a dishwasher and then have to re-order the chemicals over and over? Going back, we maybe could have gotten by without a dishwasher.”*
Escoffier Lead Chef Instructor Jason Goldman
Restaurant Furniture, Supplies, and Technology
A full-service restaurant will need space for guests to sit and eat. So you’ll need tables, chairs, and barstools for any indoor and outdoor spaces. Plus, you may need a host stand and server stations. There will also be costs like plates, silverware, glassware, linens and towels, menus, and technology like your POS system and your payroll system.
6. Fund Your Restaurant
So with all those costs in mind, how can you acquire enough capital to start your restaurant? If you have your business plan in place indicating cost projections, this is the time to look into additional funding resources.
Grants can be a great resource to help you start a restaurant! Auguste Escoffier School of Culinary Arts alumna Tiffany Moore won two grants to get her startup capital.* One was through StreetShares, which awards grants to military veteran entrepreneurs. The other was through Fiserv, a financial services tech provider that also provides some grants to small businesses.
“I pitched my business idea through a non-profit called StreetShares at the Military Influencer Conference to a crowd of over 3,000 [virtual] guests and three on-scene judges. I solicited votes and I came out #3 out of 160 applicants. Afterward, the viewers… and the judges awarded me first place, and I received grant money for my business.”*
Tiffany Moore, U.S. Army Veteran & Escoffier Online Culinary Arts Graduate
Many grants have specific criteria, so it may take some time to find one that you’re eligible for. However, if you do some research, you may find a grant that you can qualify for! These financial gifts usually don’t have to be repaid, and even a small grant of a few thousand dollars could help you to get closer to your funding goals.
Obtain a Business Loan
Some banks and credit unions can provide small business loans, especially if you already have a relationship with those institutions. As long as you carefully manage your expenses and don’t overborrow, outside financing can be a great way to find startup capital.
Some restaurants can get a 504 loan through the U.S. Small Business Administration (SBA). These loans are accessed through a “Certified Development Company” which provides government-backed SBA loans. You can look for qualified lenders in your area here.
No matter what type of business loan you choose, realize it can take anywhere from a few weeks to a few months to receive funding. So start the application process early to ensure you have your funds when you need them.
Bring On Private Investors
Private investors can invest in your small business in exchange for a portion of the profits. You can bring them on as partners to handle some of the workloads, or they can be “angel investors” who take a hands off approach and instead, let you run the business on your own—as long as they’re receiving their share of the profits.
If you already have a group of people supporting your restaurant concept, crowdfunding may be a fruitful funding option. By pitching your restaurant on platforms like GoFundMe and Kickstarter, you can gain financial support from individuals. And if you’d like, you can encourage donations by offering future rewards like discounted meals or invitations to a soft opening.
7. Obtain Restaurant Licenses and Permits
Opening a restaurant requires the necessary licenses and permits, pertinent to the city and state you live in. Licenses and permits will also depend on your restaurant type and if you plan to sell liquor.
Be aware that some of these can take a long time to obtain, so try and get a head start on this process. Since this process can be complicated, sometimes it’s best to hire a specialized lawyer who can help take care of this more grueling work for you.
Types of Restaurant Licenses You May Need
- Business license issued by the locality
- Employer Identification number (EIN)
- Certificate of occupancy
- Foodservice license
- Food handler’s permit
- Building health permit
- Liquor license
- Sales tax license
8. Hire Qualified Staff
Running any restaurant takes a whole crew of dedicated kitchen staff who have the proper training and experience. When hiring, you’ll want to consider the entire brigade de cuisine system, which covers the front and back of the house.
To avoid frequent turnover, ensure you have a thorough interview process in place, check references, and see if chef and management candidates have completed an accredited culinary curriculum.
Common Restaurant Positions
- General Manager
- Executive Chef
- Sous Chef
- Prep Cook
- Line Cook
- Food Runner
Begin Your Food Startup Journey….Discover How to Start a Restaurant
When it comes to starting your own restaurant, ensure you have a business plan in place that covers your bases. This may take a thorough understanding of culinary fundamentals, plus business and marketing skills to execute your food startup idea.
If you’re looking for comprehensive guidance on how to launch your own restaurant, consider Escoffier’s Food Entrepreneurship program to get your business idea in motion. Take the next step and start your entrepreneurial journey today.
If you found this food entrepreneurship article helpful, here are more you might enjoy:
- How to Start a Bakery Business From Home
- How Gleam & Escoffier’s Mentorship Program Can Guide Aspiring Chefs
- How to Attract the Best Employees for Your Restaurant
This article was originally published on June 18, 2021, and has since been updated.
*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.