Step #1 Decide Whether to Open a Restaurant
(Educate Yourself and Do Research)
A. Develop a Business Plan
If you are going to open a restaurant you are going to need a plan and developing a thorough business plan just might be the most important step you take. A good business plan will give you an idea of what it will take to be successful. It also allows you to identify flaws in your business concept and make adjustments before you start investing a lot of time and money. Poor planning is the leading cause of new business failures.
Every new business needs a comprehensive business plan – this is your roadmap to success. Your plan should outline your restaurant concept and how you intend to make a profit. The business plan is essential before you approach banks for financing. The loan officer at the bank needs to know you are serious, and a business plan shows you have a well thought out plan. The success or failure of your restaurant can hinge on the strength of your business plan, so take the necessary time to prepare a strong business plan.
A typical business plan should include, but not be limited to, the following components:
- Mission & Vision Statements – (concept and menu)
- Business Description – (ownership, type of business, location, and start date)
- Financing Plan – (projections of start-up and operating costs)
- Marketing Plan – (how will you get customers)
- Operations Plan – (all the basic details of operating your business)
- Project Completion Plan and Timeline (timeline and schedule for reaching your deadlines to open on time)
Resources to Develop a Business Plan
Determine Food Concept & Menu
The concept is the type of food you will serve. A food concept is the first thing to consider when planning to open a food establishment. The type of food you plan to prepare will drive the entire project. Are you aiming for casual dining, fast food, pizzeria, seafood or perhaps a bakery? Also keep in mind that your location should fit your concept.
After you have determined a food concept you can begin working on the menu. Take into consideration what other food establishments are offering in the area or other potential competitors are offering. Where will you get the ingredients, will you need special equipment for the preparation of your menu items? Take the time to carefully think through your menu and determine what will be required to meet your needs.
B. Evaluate Your Business Plan
Once a business plan is complete, you must evaluate it to determine if it is viable, and if so, determine key decisions to initiate the establishment of your business:
Steps in Establishing Your Business Must Include the Following:
- Determine the Type of Restaurant or Food Establishment
- Decide on Business Structure (Business Formation) and Business Name
- Determine and Plan Financing Needs
- Consider Utilizing Advisors and External Resources for Help
For Evaluation Guidance and Resources
New Construction or Renovations - Retail Food Establishment–you would need to complete this application for new construction or if the cost of renovations will exceed 50 percent (50%) of the value of the establishment. https://health.ri.gov/applications/FoodEstablishmentNewConstruction.pdf
Retail Food Service Restaurants with Seating - Eat-in restaurants are licensed by the number of seats they have. Licensing fees are based upon the number of seats.
Food Caterer/Commissary - Caterers or anyone who prepares food in one place and serves it in another needs a caterer/commissary license. Use the same application as the Retail Food Service Application: https://health.ri.gov/applications/FoodServiceBusinessRetail.pdf
C. Evaluate Potential Locations
Location. Location. Location! Those are the top three rules in real estate and in the restaurant business. The right location can mean tremendous success while the wrong location can mean almost certain failure.
Once you know what type of space you need, consider working with a commercial realtor to identify locations near your target market and a restaurant-focused engineer or architect to evaluate potential locations.
Know Your Needs Before You Lease or Buy
A location is often the first tangible sign that your restaurant is becoming a reality. It’s hard not to get caught up in the excitement but try to make an honest evaluation of the space before you buy or lease. Consider what equipment you’ll need, local permitting requirements and even environmental exposure the location may have to elements such as wind or flooding.
There is a lot to consider when looking for the right location. Here is a tool to help you find the perfect location; a Location Selection Checklist.
Location Selection Check List
Check Local Zoning Ordinances
One of the first things you need to do is research local zoning ordinances and regulations before deciding on a location for your restaurant. Local zoning ordinances may deem that a commercial property, such as a restaurant, cannot be located in a residential zone. Therefore, you should contact the local municipal building or zoning official to find out if your potential property is properly zoned for a restaurant, or type of food establishment you have in mind, before moving forward with the landlord on lease options.
- Zoning ordinances also regulate how you intend to use the space within your property, along with any renovations or improvements you plan on making, so it is important to understand all the ins-and-outs of the zoning ordinances regarding that specific property before you commit to a lease. Small Business Administration (SBA) Link: https://www.sba.gov/business-guide/launch-your-business/pick-your-business-location
- If you intend on having a bar in your restaurant, be sure to ask about serving alcohol in that particular area as well. Some cities and towns may prohibit the sale of alcohol in certain zones.
Once you’ve determined the location to be in the proper zone for a restaurant, you need to know how safe the structure is. You may want to hire a professional commercial property inspector, engineer, or architect to review your building. Have a professional walk you through all the structural and safety requirements needed to pass a building inspection. Prior to opening, a local building inspector or code enforcement officer may inspect the building for completion of any construction or other necessary permits. The local Fire Marshal will also be inspecting the building to decide if it is fit to operate as a restaurant. Along with a fire suppression system in the kitchen, the building may require an entire sprinkler system.
As always, ask questions of your local municipality. Ask a lot of questions and do the research until you fully understand all of the requirements.
Assessing a Location
NBC Sewer connection permits: Link: https://narrabay.com/customer-service/permitting/sewer-connection-permits/
List of Licenses & Permits to Open a Restaurant
D. Make Decision
Taking the steps to Develop a Business Plan, Evaluate the Business Plan, and Evaluate Potential Locations, should allow you to make a decision whether to proceed with opening a restaurant.
Starting a restaurant is expensive, and can be a risky business venture. Utilizing a well-written business plan can help make your dream come true by convincing lenders or potential investors you’re on track to succeed.
At this point you have:
- Determined your business offering, concept, strategy, and competitive position
- Identified capital needs, financing resources and expected returns
- Decided on business structure and business type
- Identified and evaluated a location
- Potentially hired outside advisors that will be helpful throughout the process
If you have decided to open a restaurant, then let’s move on to the next step. If not, perhaps you need to modify your business plan or do more research to become more comfortable before moving forward. In any case, we recommend you review the following steps to become better equipped to achieve success.