Step-by-Step Guide to Start Up a Restaurant Business

By Sajitha Banuz, Contributor

Just like starting any other business, starting a restaurant business and ultimately continuing it successfully all stems from the amount of passion you have for the venture and your business know-how. Will you be able to work longer and harder than your usual routine and make the right business decisions when the time comes? 

The restaurant industry isn’t an easy one, but it can be a highly satisfying career path if you have the passion, energy, and skills needed for long-term success. This blog is designed to help you go over the basics of opening a new restaurant.

Should You Open an Independent Restaurant or Franchise?

Independent or franchise restaurant?

When entering into the restaurant industry, one of the first things you’ll need to decide is if you want to open a franchise restaurant or create your own, unique and independent restaurant. There are pros and cons to both that you should consider before making a decision.

Advantages of Restaurant Franchising  

Your business set up “instantly.” It’s all there for you, right from the name to the marketing. You do not have to set up anything new and franchises have a wealth of support and knowledge to draw upon.

You get an ideal support system. A restaurant franchise provides you with a perfect support system. As you begin your restaurant business you might tend to falter at many places due to inexperience. You can always rely on the head office of the franchise when encountered with problems or queries to support you efficiently.

You get unmatched buying power. Food and related inventory can be procured at a much lesser price if you fall under a franchise, meaning you can keep your overheads lower and profits higher. 

Nil start up advertising costs. There is little to no start up advertising cost when you opt for a franchise as they have already established a brand name.

Disadvantages of a Restaurant Franchise

Sticking to franchisor rules. Once you are under a franchise you will have to go by the rules set by the corporate office. These rules and regulations are set to make sure a certain standard of customer service is maintained and consistent across its franchises. 

Limited independence. The independence you will have to decide on certain basic aspects of your restaurant functioning like the design of your menu, decor, and signages may just not sink in with what the franchisor demands. On every step of setting up your restaurant you will be feeling restricted. 

Royalties. Apart from the franchise amount that you make, you are liable to pay royalties as well which includes advertising, training, and other support the franchise offers you throughout the year. This amounts to about 3% to 8% of total turnover.

Limited growth & exit strategy. When you decide to sell your restaurant as part of your exit strategy, your franchisor will make the decisions on finding the right potential new franchisees and also the growth prospects are very limited. 

The final choice is yours. Whether you want to start a franchise or your own restaurant will entirely depend on your wallet, experience, time, and career endeavors. If you are someone who is comfortable working under a team of people and is happy to do what is told, a franchise model might just work fine for you but if you are trying to run away from being pushed around and want to taste freedom by doing something of your own then starting your own restaurant might just be the way to go about it.

Create a USP (Unique Selling Point) for Your Restaurant

Create a USP for your restaurant

A USP is an essential and key factor that will help your restaurant stand out from the rest. How do you find it? The answer is research. Find a niche that will be best suitable for your restaurant. Seek inspiration from what is happening around you in the market and latch onto something that is new and fresh, and be the one to market it first. 

You can also learn from what the big restaurants do and ideas, as they implement various strategies after doing considerable market research. If you are looking for ideas, you can also think of going on a road trip to find new restaurants and get inspiration. You can also collect menus, memorabilia, and capture lots of photos to add to your idea reserve.

Deciding on a Location for your Restaurant

Choose the best location for your restaurant

Never rush to your decision and take enough time to decide on a location that is perfect for your restaurant. Some factors that you need to consider while choosing your location are:

Unlike any other businesses, opening your restaurant right next to a competitor isn’t necessarily a bad idea as your potential guests might be visiting this area several times throughout the year, and having a crop of strong and unique businesses can create a positive business atmosphere that everyone benefits from. 

Should You Buy or Lease a Location?

Buying a location will primarily depend on whether you have enough capital. It is also a long-term commitment and investment. The upside is you do not have to worry about a rent hike and you have more freedom to alter the design of the.

The advantage of leasing out a space for your restaurant is that you can start with a lower budget and if your business does not go according to your plans you can withdraw easily without much liability.  

Another advantage of buying a property is that in future based on the location of your place, the real estate value may increase and thus make the ownership a rewarding one. Even if your restaurant fails, there’s still value in the land.

Identify the Pitfalls Before Leasing

It is best to consult property experts before renting a location. According to your business requirements, a chartered surveyor or real estate business agent will suggest to you the best deal and will bring in more clarification regarding the legal points present in the lease.

How to Go about Designing Your Restaurant  

Tips for designing your restaurant.

If you have the budget, then hire an experienced interior designer or firm to design your restaurant. Make your designer aware of the fact that you need to make your restaurant look good and have improved functionality through the best design within your budget.

Think of an open kitchen design so that guests can see who is preparing their meals and also gives chefs a new experience. Design your kitchen space in such a way so as to allow free movement of your employees to and from the kitchen. Design your restaurant’s kitchen to work at busy times with maximum staff as well as quieter times with less staff. 

Choose Your Restaurant Menu Design

Design your restaurant’s menu

Offer a restaurant menu that balances unique dishes and hot selling items. Balance the food cost so that you reap profits and maintain dishes that are easy to prepare during busy dinner hours. Try to balance out between high and low food costs to maintain a reasonable profit margin and avoid food fads long-term.

Also try to include dishes that are easy to prepare but which are healthy and provide a tasty experience for guests rather than opting for dishes with exotic presentations as it can affect the productivity of kitchen staff during peak lunch or dinner hours. 

Seep in versatility to your menu, you can do this by implementing cross utilization of menu items. This way you can use ingredients in many dishes and also keeps the food spoilage down.

Update your menu frequently and get rid of items that are not selling to improve productivity and enhance the efficiency of your restaurant business.  

Start-up Costs for Restaurants

Start-up costs of an independent restaurant

There is no single source of answer as the operations of each restaurant differs but some common start-up costs are:

  •  The cost for lease and professional fees

  • Refit of premises

  • Instruments such as ovens, kitchen fit outs, and refrigeration

  • Recruitment of staff and their accessories,

  • Furniture, crockery, table-cloths, flowers, interior pictures, signage

  • Stock of food

  • Capital required for working and the fund for launching the marketing.

Also make sure that you have enough funds in hindsight to keep your restaurant business running for at least six months. Not having enough funds in this regard is the cause of failure for many restaurants. Keeping the start-up costs to a minimum can also help you to save money and not cripple you for funds in the later stages of your business journey. 

Wrap Up

Starting up a restaurant business is a dream that many entrepreneurs cherish and keep close to their hearts. It is a behemoth task and going about it in an organized and planned way can help you establish a successful restaurant business. The above-mentioned points that can help you in your journey towards running a successful restaurant business!

Hope it will prove helpful for you and all the best!


About the Author
Sajitha Banuz is a content writer at POFI Technologies, Sajitha has extensive experience in writing web content, growth hack strategies for restaurants & food e-commerce industries & predominantly writes content for its flagship product shopurfood. She believes writing should intrigue her audience and work with passion.


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