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Restaurant Business Starting Guide

Starting Guide to Restaurant Business

The way to a man’s heart is through his stomach. Okay!

Then what about a woman?

It is through the stomach, too!

Undoubtedly, food is the way to reach anyone! This is the reason perhaps why a restaurant business can never get out of fashion. Even though there are sufficient risks, the rewards are attractive.

If you want to start the restaurant business and are looking for some inspiration, this article is a guide for you!

Here is a step-by-step guide on how you can open a restaurant business flawlessly and effortlessly.

Starting Guide to Restaurant Business

1. Choose Right Concept, Theme & Cuisine

The most important aspect of opening any restaurant business is getting the idea right. What does the idea mean here? It refers to the concept, the theme, and the cuisine of the place.

Your restaurant is expected to be unique. There might be hundreds of them in a single area, so how is yours any different? The theme of the place could be your answer here.

The choice of the concept depends on the APC of the place. APC refers to the average price per customer. While this value is the lowest for small food carts, it is moderate for cafes and the highest for fine dining.

How much a customer is willing to spend at your place could well determine the kind of theme you should choose. Affect your guests with quality and well-chosen restaurant furniture.

2. Determine Investment Plan

While you could be making many plans to get the perfect food joint in the area, they are redundant without proper investment. The first step here is to determine the total capital investment of the restaurant business. This depends on your chosen concept or theme. Once you have these numbers straight, you could then proceed towards getting the funding. You can finance the venture in three different ways.

  • Self-funding – This is the most convenient option if you have sufficient cash for yourself.
  • Bank loans – The next best option is to take a bank loan to fund the restaurant business. This is convenient, but the financial institutions often look for collaterals to protect the loan amount
  • Investors – You could resort to investors for the restaurant business. First-time ventures usually have a tough time persuading investors. But this offer is most applicable for restaurant chains that already have some reputation.

3. Consider Restaurant Business Hidden Costs

We hate to break it to you, but a restaurant comes with many different overhead costs and associated expenses. If you are looking for an investment, it is imperative to have an in-depth idea of all the hidden costs. This will help you in breaking down the budget and segregating it as per the requirement.

First and foremost, the food will occupy about 30-40% of the total menu price. This could give you a decent enough profit and start.

Next comes the rent of the place. Rent expense should not exceed 10% of the total revenues. Kitchen equipment can be a little heavy and drill a hole down the pockets, but they tend to recover the costs in the long run, and restaurant equipment financing can be a lifesaver for you.

The licenses are another significant expenditure in the restaurant business. Once these costs are covered, you would have to focus on marketing, manual labor, and the likes.

4. Choose the Location Well

One of the most critical decisions you have to make before starting a restaurant business is its location. It is imperative that the restaurant is situated in a good place.

  • What are some of the considerations in this regard?
  • Who are the potential competitors in the same area?
  • What cuisines are being served?
  • What are the demographics like?
  • How accessible is this location?
  • Can potential consumers locate this place easily?

A restaurant with high visibility is often a good choice and makes a decent revenue. Apart from that, there is one other aspect to keep in mind. Before opening the restaurant, the owner would have to get a No-Objection certificate from at least three neighbors in the surrounding areas. Getting a No-Objection certificate is an important consideration that must not be skipped.

5. Apply and Take Licenses

When you are planning to start a restaurant business, it is vital to do it right. You must gather information about all the applicable licenses. The costs involved depend on the type of venture you are investing in. Also, it is best to apply for these licenses early to avoid delays or hiccups. Some of these licenses include:

  • Trade license – This license permits you to run a business within the city. It usually has a validity of one year, beyond which it would have to be renewed again.
  • Food license – This is the foundation stone of the restaurant business. The venture size investments and all contribute towards you obtaining a permit.
  • Professional tax license – This allows you to hire people to work at the restaurant and to give them a salary
  • Liquor license – This would be required if you intend on providing alcohol at the restaurant.

6. Create an Attractive Menu

One of the highlights of the restaurant is the menu. The menu is the key point in the restaurant business. People remember the place based on the menu they observed. Thus, it is ideal for keeping an attractive menu that could attract consumers.

However, it is highly recommended to keep your menu items such that the required ingredients can be sourced locally without much hassle. Dishes using similar ingredients could bring down your restaurant costs.

7. Find The Right Combination of Suppliers and Vendors

Your place is incomplete without suppliers and vendors. When you start with the restaurant business, you should have at least three vendors for each supply. This will help you run things smoothly.

In the long run, it is advisable to make long-duration contracts with the vendors such that there is a fine run of resources to your business. You could get quality vendors and build a suitable inventory for yourself.

8. Hire the Right Staff

Finally, think about the human resources you would need for your restaurant business. Essentially, this can be divided into three segments.

  • Kitchen staff – Hire some quality cooks specific to the cuisine you choose, along with a food preparation workforce and support staff.
  • Service staff – This would include the waiters. Communication is expected to be top-notch for them! Along with that, you could consist of housekeeping staff and the likes in this category.
  • Management staff – This category would include the restaurant managers, cashier, head chef, and everyone involved in the restaurant services.

Your Turn

As the restaurant industry is growing steadily, there is a vast scope for another extraordinary eatery. Although the entire process of starting a restaurant business could look like an arduous task, it is worth all the effort. All you need to do is plan and execute things well with unique ideas and watch your business flourishing.

What are your views on this? Please let us know in the comments below.

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