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A Complete Guide on How to Start a Restaurant

By Sumaiya Simran Last Updated -- Wednesday, 2024-01-10
How to Start a Restaurant

Structuring a business plan is like shaping your future goal. Just like that, organizing a complete guide on how to start a restaurant will always give you clear clarity on all the aspects of your restaurant business, the marketing plan for your product, the financial matters, operation, including product details. 

“Vision without execution is daydreaming.” - Bill Gates

A business plan not only helps to execute every mission but also helps to give a better understanding of reality. 

10 Steps on How to Start a Restaurant Business 

1. Restaurant Plan Overview

It doesn't matter whether the restaurant is large or medium or small or just a tiny cart restaurant; a business plan is mandatory. Preparing a restaurant business plan also helps attract some strong investors or banks or make silent partners. Since the investors aren’t just investing in your restaurant business, they help build your dream. And it would be challenging to convince all your investors only with your verbal words. While opening a restaurant, owners have to keep in mind. A business plan should contain the whole abstract idea involved within the restaurant, such as; service pattern, the cuisine they are going to serve, and the restaurant’s entire ambiance. Selecting a comfortable and practical environment for your restaurant will help you to attract your target customers.  

Therefore, a well-organized plan would help gain inner satisfaction among them, that you have done all your research and measured all your expenses. Hence gave them confidence that they will get the returns on their investments. Creating a restaurant business plan helps to break down all the single matters needed to start a restaurant. 

A restaurant business plan holds all the detailed answers on how to start a restaurant. It considers all the precious details on how you plan to turn all your investments into profit and how much you can stand your restaurant in the saturated market. Making a business plan may take a lot of time and stress, but the reward you will get will be worth it.

Choose The Right Restaurant Name

2. Choose The Right Restaurant Name

Deciding the right restaurant name is like naming your newborn baby. 


"The first impression is important, but the last impression we leave with the customer will leave the most lasting impression."

Quoted by Shep Hyken.

The restaurant’s name is the first thing people may know, see, confront, and hear. And in any chance, it fails to impress people's minds; therefore, people might reject the restaurant more efficiently. Deciding a restaurant’s name is quite tricky; there are seven or more essential steps you still keep in mind when determining a perfect restaurant name. Here are some primary points that help to construct the name for your restaurant:

  • The restaurant name should be easy to pronounce. 
  • The restaurant's name should be fresh and unique. 
  • Restaurant names should be both understandable and reachable. 
  • Restaurant name shall not match with the competitor.

3. Choose The Right Location for Your Restaurant

Selecting the right location is considered to be an essential and challenging decision when entering the restaurant business. You should choose a spot that can be easily accessible and draw your targeted audience’s attraction. Choose a visible and convenient location for the passerby, such as; people on foot or in cars. On the other hand, you have to make sure the location comes within your budget.

You might think, why do you need the business plan for selecting the correct location for your restaurant?. The appropriate answer to your question is that the restaurant business plan contains all the researched points of all the sites that consider being a perfect spot for your restaurant. A restaurant business plan contains 

  • Which location is most famous for the restaurant/cafe/juice or mocktail bar/small snack parlor?
  • Where do people most visit for their meal? 
  • Per square feet rent?
  • Which is the most crowded place?
  • Which location has no or decent quality full restaurant, and people of that location crave a place to eat?

Tips 1# Just imagine you are new in this restaurant business, with no backup experience. And you have selected a narrow, empty, dark path for your restaurant, where people rarely visit. Just because the rent is low, but there is no crowd, and the number of people crossing from that street is low, it won’t help your restaurant growth. Hence soon, you may get kicked from this restaurant business.

Tips 2# As a start-up restaurant owner, it is better to lease a space for your restaurant. Leasing space for your restaurant not only opens up an opportunity to research, discover and explore the specific location you choose but also have the flexibility of shift in case you didn't like or didn't get enough productivity.

Even if you plan to open a small cafe or start a low budget restaurant, make sure you have a proper restaurant business plan. Because entering a restaurant business may not only be just a business for you, it’s the investment for your daily bread and butter too.

4. Decide Your Mission of Starting a Restaurant

The restaurant business plan’s mission statement is the most crucial part that many investors will read or identify. Because in this part, the whole restaurant business activities are going to break down. This mission statement of a restaurant business plan summarizes, “why did you plan to start a restaurant?”

  • How will you manage to run your business on your own
  • What kind of services you’re going to offer 
  • The number of staffs you are going to hire    
  • What kind of foods you’re going to serve 
  • Find a punctual supplier team. 
  • A concise description of their management system

5. Analysis of Target Customer 

The first step of setting any business is deciding who your target audience is. The better you understand your customer first, the more you will be able to satisfy your customer by fulfilling their needs. And identifying your target market is also a big part of your restaurant business plan. 

The only tool through which you can identify your target customers is research. And you must mention all that researched output in your business plan.

  • What demographic group are you going to target? The age range.
  • What gender are you going to consider? 
  • Their income level?
  • Target customers' purchase habits?
  • What should be techniques to cope with the new generation?

 Tips# you can only apply all those target customer tools when you finalize your menu, interior, price of foods, and restaurant names. 

For example, suppose you come up with a restaurant named “men on the house,” the interior refers to the age range of 40 to 50 people. Since you design this restaurant to serve 40 + aged people, the food should be healthy and be fewer calories full. 

But according to the menu, if you offer cheesy steak and mash potato, etc., which contain an outrageous amount of calories. Therefore, the problem with this restaurant is that name is quite confusing. The word “men’s” does raise a lot of confusion, such as referring to the young, middle-aged, or old aged? 

Remember # Never confuse a customer; otherwise, you may lose the customer. 

6. Find Out Who Your Competitor Is

Always keep your eye on your competitors: research your competitor, both the traditional and digital competitors. First, find out who are your competitors?. Make a list of them. And then do some analysis. Understanding your competitors better, only then you can easily measure and have an unobstructed view of your business’s weaknesses. As a result, you can defend or come up with an alternative solution, which may help you perform better. Hence it can generate more effective value propositions and create unique marketing strategies. 

  • Traditional competitors: there are two types of traditional competitors, direct and indirect competitors. Direct competitors whose restaurant is similar to yours, the interior, cuisine, target the same segmented customer. Therefore, it will be wise for you if you study or monitor your direct competitors intensely. By analyzing those direct competitors, you are able to know and understand their mistakes and come up with some keen solution and unique technology and facilities. 

In the indirect competitors whose restaurant won’t match your theme, cuisine, and so as your targeted customer. By observing the indirect competitor, you can adopt some of their techniques; such as “how they approach their customers?”, “what is their menu?” “ which strategy they follow to create their uniqueness?” “ etc.

  • Digital competitor: a restaurant should also keep in mind, the modern generation usually searches on Google Maps for the nearest restaurant or cafe. Therefore, it is also essential to make your restaurant trackable on the Google map. 
  • Local competitor: local competitor is always your first competitor since both you and other restaurants will be doing business in the same location. Your target customer is already the competitor's loyal customers. So plan your restaurant business game wisely. 

7. Restaurant Marketing Plan

Marketing is like advertising all your products/services to your customers. So the entire marketing plan in your restaurant business plan should be more powerful than anything else. Restaurant marketing plans explain “how you’re going to reach your targeted customers' minds.” Don't worry if you’re starting as a small, medium, large restaurant; you need to do some marketing; otherwise, you may fail to reach your product to your customers. 

You might think what the components that should be included in a marketing plan are:

  • The most effective and unique idea will be that which comes from you, so you do some kick-ass brainstorming. 
  • Apply SMART techniques to set up your marketing objectives 
  • Apply the PESTLE analysis to understand better your restaurant’s correct position to the outside environment and how much it affects your company.
  • With no hesitation, apply as much as marketing strategies. Make sure it pokes your customers’ minds.
  • After you are done with the brainstorming, make the proper implication of the marketing strategies.
  • Keep in mind your restaurant's marketing budget. 

The above paragraphs will only instruct you on organizing and constructing a marketing plan for your restaurant. This marketing plan should also include an advertising plan for your restaurant. Advertising for a business is considered an essential part, though applying different advertising strategies a business owner develops to attract the customers. 

8. Restaurant Unique Promotional Ideas

After finishing with planning a great marketing plan for your restaurant, now is the final verdict time. At this period, you can ultimately confront the result, whether your marketing plan has been successful in reaching the customers’ mind. For your essay accessibility, here are some unique promotional ideas:

Unique Promotion Ideas

You might think, “how will you understand that your marketing plan is working or not?”. Fortunately, the answer to this question can be seen with your own eyes when you see the crowds in your restaurant. People are enjoying your food. Many different social media are buzzing or gossiping about your restaurant. You can share some eye-catchy glimpse of GIF videos or photos or some behind the scene process to grab the probable customers’ attention. Such as Facebook, Twitter, Instagram, etc.

Don't get intimidated by the customers' negative reviews. Every response is a positive response. Here are some tips for handling negative criticism:

  • Don't panic. Reply calmly and wisely.
  • Criticism is part of your life. 
  • Always reply positively 
  • Don't get depressed or frustrated, 
  • Enjoy the negative response, too, because it opens the scope of improvisation   

9. Restaurant Management Team 

Managing a restaurant is not easy. There are thousands of complex matters that need to be deal with. To make the complete process more effortlessly and handier, many restaurant owners hire many external sources to handle the whole management system of a restaurant. A restaurant business needs a lot of human help to serve the customer, for example, waiters, chefs, account heads (who control the pos machinery), cleaners, etc.

  • Human resources: With adequate human resources, a restaurant owner can control the whole restaurant operation. Such as kitchen management, staff control, customer relationship management, etc. 
  • Technology supports “A Complete Guide of POS”: apart from the human resource, a restaurant owner must have bought or rented a restaurant POS software. With the assistance of restaurant billing software, it controls up to almost everything operation of your restaurant. Here are some facilities that you might enjoy by using the Restaurant billing software

Restaurant POS Software

enlightenedCheck Out: Top Restaurant Software

10. Budget Analysis

I know what you are searching for in this guide on how you can start a restaurant business. The budget plan. Before opening or even planning to enter the restaurant business, the significant thing that comes and knocks your brain and mind to that, “Yes, I am ready to start my own restaurant business,” but wait:

  • How do I generate that kind of money?
  • If I do get or arrange any capital source, how will I divide, plan, spend, and calculate financial statements?
  • What is an appropriate Initial investment? 
  • Forecasted profit and loss (at least 3 to 5 years of forecasted operation) 
  • Forecasted cash flow
  • How to open a cafe with a low budget
  • How much cost to open a small restaurant
  • Restaurant monthly expenses
  • Break-even analysis

Remember# budget planning is the crucial part of your restaurant business plan. Whatever question arises in your mind regarding your restaurant budget should be mentioned with details in your restaurant business plan. 

Tips# If you want an accurate forecasted financial statement, it is wise to consult or hire a professional accountant. Who can confront the real scenario of owning a restaurant such as 

  • How much cost is going to spend on your furniture and kitchen stuff?
  • How much should you spend on your interior?
  • Per dish profit margin 
  • How much to spend on training the staff?
  • Average customer per day 
  • How much money to spend on daily food shopping? 

enlightenedCheck Out: A Details View of Restaurant Billing Software

Overview of How to Start a Restaurant


Bonus Formula Guide on How to Start a Restaurant

1. Legal Authorization 

You cannot just open a restaurant; you also need to go through some severe legal procedure. Before opening a restaurant, you must obtain permission from both state and local permits. The legal procedure of starting any business is to collect a trade license, alcohol license, Tin, and Bin certificate. Additionally, since you’re going to open a restaurant, you also need to get a clearance certificate from a food hygiene certificate, food premises acceptance, to prove that you will serve fresh food. Last but not least, must obtain a clear chit certificate from the food inspector. 

Hiring Suitable Staffs

2. Hiring Suitable Staffs

It is quite challenging to run a restaurant without any human resource or any unqualified staff. Hiring a qualified staff will help you to carry through the whole operation of your restaurant. 

Tips# Before you go through the recruitment process, jot down a list of how many staff you need to run both front and back of your restaurant. Managing the entire human resource team can be tough; this is when you can use some brilliant advanced technology such as Bhojon- Restaurant management system. This software can conveniently manage the whole team, such as supervisor, food and beverage purchasing, inventory management, cooking helping hand, cleaner, marketing team, accountant, etc. 

You should make sure that the staff you choose should have a general knowledge of their appointed position. Besides, all must have the ability to perform multiple tasks and must have the potential to work calmly under pressure. 

 Some fundamental position that is needed when opening a restaurant

Restaurant Staffs

3. Buy The Correct Kitchen Equipment

Collecting the correct kitchen equipment is very important. Cooking a dish or meal with the assistance of proper kitchen equipment will make the dish much more delicious. On the other hand, this kitchen equipment is very expensive, so it’s better you buy the right one. Additionally, you may need to set a separate or emergency budget for the kitchen equipment because new kitchen equipment might be needed anytime.

It will be better if you jot down all the equipment you are going to need depending on the menu you’re going to cook. After you list down all the equipment, you’re going to need. Then set your budget and financial plan according to that and show it in the business plan. All the cash inflow and outflow spent on the kitchen equipment should be mentioned in the business plan.  

4. Constructing Menu

Fixing the right cuisine and hiring a skillful chef is another essential key to start a restaurant. The menu is the only main thing that attracts and retains the customer to your restaurant. The taste of the food will reflect all the other aspects of your restaurant such as; Restaurant name, restaurant location, unique restaurant promotion ideas, restaurant marketing plan, etc.

Before setting the menu, you must analyze the target customer; the latest food trend, hot-selling dish/snacks/drinks. 

Tips#  you can show off the description of the dish, the item you’re going to use to prepare the food. You can also provide a realistic image of the food to attract the customer. Providing a realistic image also might open an opportunity for impulse buying.    

Restaurant Hospitality Style 

5. Restaurant Hospitality Style 

Apart from its food taste and interior, a restaurant hospitality service is also vital to attracting and attracting customers. 

Protip # make sure all your human resources are well behaved both face-to-face and online How to handle the customer’s negative response

A well-behaved staff will always enhance the reputation of your restaurant’s name and brand. Therefore, it is better to train them well, behave, and handle the complicated situation efficiently.  

I have categorized three different hospitality style criteria: lower scale, medium scale, and upper scale.

  1. Lower scale 

A lower scale usually considers being served “quick service” to the customers and therefore can’t afford extra-Pos billing machinery and so much human resource. They generally use cash in hand service or traditional payment systems and also just only need one helping hand staff. Quick service usually refers to the fact that customers don’t have to wait in a long line. Their menu is usually very limited and low in price. They provide take away service or serve in a one-time plate.

  1. Medium-scale 

The medium-scale restaurant falls under the quick service and upper scale. This kind of restaurant provides both lunch and dinner full meals with a comfortable ambiance. Choose to run with a limited number of waiters and a very ordinary Pos billing machinery. The price charges significantly fall under the affordable and reasonable range. 

  1. Upper scale 

The upper-scale restaurant offers a very exotic and authentic cuisine. This type of restaurant owner usually doesn’t care about price; they only believe that quality is the key to reach the customers’ mind. This type of hire a limited number of well behaved human resource and owned an advanced Pos billing machinery. This kind of restaurant owner only believes in their customer satisfaction. Most prominent businessmen or celebrities prefer to go to this kind of upper-scale restaurant for their business meeting or hangout.

Segmentation of The Restaurant Industry

6. Segmentation of The Restaurant Industry 

While entering this restaurant industry, you might face a strange dilemma since there are different restaurant industry criteria. The better you specified your restaurant, the better you concentrate on your potential customer. Not only that, determining which kind of restaurant you want to open will help you to draw the budget business plan better. There are different criteria for a restaurant: 

  • Fast food restaurant

This restaurant usually hands over the food quickly. The sitting arrangement for this kind of restaurant typically takes small space or limited space. Customers usually consider this kind of restaurant a “take away” restaurant. Besides, this restaurant provides a speedy payment service with their POS billing system.

  • Fast food cart or truck

This kind of small cart or truck type restaurant is usually about a small or little budget. This kind of restaurant doesn't have any fixed location. This kind of restaurant’s owner roams around with their food truck or cart. And wherever they get a crowd, such as outside the corner of any corporate office, school, college, etc., they start to do their business. This kind of food truck or cart usually serves overnight prepared ready-made food or fast food.

  • Casual dining

This kind of restaurant provides a full sitting and relaxed ambiance experience, and the price range of the food always stays in the affordable range. 

  • Family restaurant

This restaurant provides a family ambient. This kind of restaurant has a separate kid zone or specialized baby chair so that the rest of the family members can enjoy their meal. This kind of restaurant usually serves medium price range meals. This kind of family restaurant also may provide some special meals for children too.

  • Candle night dining 

Candle night dining restaurants usually for couples, the food is quite expensive. The interior of this kind of restaurant is very romantic and aesthetically ambient. People typically visit this kind of restaurant when they want to spend some exceptional quality with their loved ones. 

  • Juice bar

The juice bar is usually not a restaurant; they typically serve juice. Those restaurants serve three different kinds of types; small, medium, and large. And each size has a diverse price range. Additionally, this kind of bar ordinally has very limited or no seats. Can serve a different kind of juice shake of many other exotic fruits. The price range of this juice fixes based on how rare the fruit is. 

  • Coffee and tea bar

This kind of restaurant serves different types of coffee and tea. This restaurant usually is sized in a medium. As a side dish, this restaurant may also serve side snacks facilities. This restaurant’s main attractions are that; they serve different tea and coffee criteria and types.

  • Meat and seafood restaurant

The kind of restaurant serves a different type of meat and exotic seafood. All of these items are usually charged at a very high price. Since both meat and seafood are a perishable item. On the other hand, most of the seafood is only available in some specific seasons. Both meat and seafood are midscale and upscale products in the market. The decor of this kind of restaurant applies a western or cowboy theme with a comfortable seating arrangement.

  • Chinese restaurant 

We are all familiar that Chinese people consume raw foods, which is, on the other hand, challenging to adapt to many countries. Therefore, even though you can start a Chinese restaurant, you may not sell authentic Chinese food. Maintaining the originality of Chinese food may not match your country or state’s culture. Hence it will be wise if you mix up the Chinese cuisine with the home country’s cuisine. 

  • Burger and pizza restaurant 

Burger and pizza restaurants usually provide a comfortable and colorful interior. Interior decor in such a way that even the walls are also talking about burgers and pizza. Apart from serving burgers and pizza, you can also serve sandwiches, different beverages or shakes, french fries, crispy cheese ball, etc. This pizza and burger restaurant usually charge very affordable and reasonable prices.  

  • Chocolate and jam restaurant 

If you choose to develop this kind of restaurant, I would like to inform you that chocolate is generally an expensive commodity. You can also serve a different type of exotic dessert made of chocolate, such as trending chocolate bomb ball, chocolate pie, chocolate truffle, chocolate lava cake, etc. To increase the variety on your menu, you can add different fruit jam items on your menus, such as apple jam, cranberry, strawberry jam, dragon fruit jam, jam, chocolate cookies, and pie, etc. This restaurant’s ambient and interior always sets a classy, relaxing mood with a comfortable seating arrangement and esthetic design in the walls.    

  • Biscuit, cakes and cookies bakery  

If you are very much an expert in bakery, you can easily open a cake and bakery restaurant. This kind of bakery restaurant doesn’t require that much decoration; they mainly concentrate on keeping the food fresh and keeping everything hygienic. The price charge depends on how much it costs to produce the products. As extra accessories, you can keep balloons, sparkling candles, birthday candles, snow spray, etc. Nowadays, most of the booming generation are doing this cake and bakery business online. “How to sell food online.”

  • Ice cream parlor

There can be two types of ice cream parlor. One is upscale, where you can offer many exotic home real fruit ice cream. These types of ice cream cost a very expensive price. Besides can also serve a different kind of wafers to complement the ice cream. The interior of this upscale ice cream parlor offers a very posh, classy, and expensive seating arrangement.

On the other hand, is a lower scale,  it usually comes up with either in a small shop or travellable cart. The price range of this kind of ice cream is very low since this kind of ice cream cart offers a very less flavor and company made ice cream. 

  • Buffet restaurant 

Nowadays, most restaurants are now following this buffet-style lunch and dinner system. This kind of restaurant system is all the items will be there, open-endedly, and a customer can eat as much as they want to, just by paying a fixed one-time payment. Buffet type restaurants usually charge very reasonable prices to the customers, and the ambient is comfortable and cozy. They don’t serve any side dishes or snacks. 

enlightenedNeed a smooth operating system for your restaurant? Bhojon - Restaurant Management System

Closing Thoughts 

You might face real difficulty in structuring all the pieces of your dream project in the right position. It might suck all your time and energy, make you stressful but trust me, it will be worth it. Planning a business plan helps you to stick with your dream and goal. 

The above steps will assist you in developing a proper restaurant business plan. The most common mistake that any business planner makes is to show self defecting nature to “the whole plot designed to build a business.” They put it in the drawer and forgot about it. Therefore a smart move is always to revisit; keep updating your business plan as your business grows.

Would you like to read? 7 Unique Ideas to Create a Restaurant Marketing Plan That Maximize ROI

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