How to Start a Restaurant, Step by Step

Start with a focused concept

Define who you serve, what you sell, your price point and why guests will choose you over the places near them.

Write a one-page concept: cuisine, average check, service style (counter, full service, delivery-heavy), and the hours you will open. A narrow menu is cheaper to stock and faster to cook. Visit competitors at different times and note traffic, prices and what they do poorly.

Pick a location that fits the model

Foot traffic, parking, visibility and lease terms matter more than a trendy address. Negotiate the lease as carefully as the menu.

Check zoning for restaurant use, ventilation and grease-trap requirements, seating capacity and the cost of build-out. Ask about tenant improvement allowances and personal guarantees on the lease. See how to pick a location for a framework you can reuse.

Licenses, permits and inspections

Expect a business license, food service permit, health inspection and possibly a liquor license. Rules vary by city and state.

Contact your local health department and state business office early, because approvals can take weeks. Register your entity and get an EIN; see choosing an entity. Add insurance for liability, property and workers' compensation.

Budget for startup and the first six months

Add one-time costs, working capital for payroll and food, and a reserve for slow weeks.

• One-time: build-out, kitchen equipment, furniture, signage, deposits, licenses
• Opening: initial inventory, training, marketing
• Monthly: rent, payroll, food cost, utilities, insurance, card fees
• Reserve: months of expenses for ramp-up

For a detailed look at costs, read the chef's guide to startup costs.

Know your key numbers

Track food cost, labor cost and prime cost weekly. These decide whether a busy restaurant is actually profitable.

Prime cost is food plus labor. Many owners aim to keep it near the low end of a rule-of-thumb range, but your concept sets the target. Daily sales reports help; see the daily cash report. Also read seven things that kill a restaurant.

Hiring, training and daily routines

Staff quality drives guest experience. Hire for attitude, train on systems, and write down opening and closing checklists.

Plan to open with a smaller menu and a trained core team. Run mock services before opening day to test timing and tickets. Checklists for opening, closing, cleaning and food safety keep standards steady when you are not there. Review schedules weekly against sales so labor stays in line.

Marketing before and after opening

Build a local audience before you open, then focus on repeat guests and reviews.

Claim your online listings, post photos of the menu and space, and invite neighbors to a soft opening. After launch, ask happy guests for reviews and collect emails for specials. Third-party delivery apps bring orders but charge commissions, so price your menu with that in mind. See DoorDash and Uber Eats for restaurants.

Systems that protect margins

Costing every dish, counting inventory weekly and tracking waste keep a busy restaurant profitable.

Calculate the plate cost of each menu item and price to hit your target. Count inventory on a set day, compare to purchases and sales, and investigate gaps. Waste logs show where food is thrown away. Small corrections here add up quickly when margins are thin.

Funding a restaurant

Startup loans for businesses under 6 months are not placed by ROI Funder. Open restaurants can use working capital or equipment financing.

Once you have 6+ months of operating history and $20,000+ monthly revenue, with 500+ FICO, options such as equipment financing for a new hood or oven, or working capital for a second shift, may fit. See restaurant financing options.