How to start a restaurant: 8 step guide to success

Do you spend many nights dreaming about your ideal restaurant, from the great food and the friendly staff to its perfect location and extraordinary ambience. Perhaps you have worked for years in the restaurant business, learning the many nuances of the industry. Regardless of how you got there, it’s time to make your dream a reality.

The restaurant industry is an exciting, fast-paced, and vibrant place to start a business. So it is not surprising that many entrepreneurs and foodies dream of opening their own restaurant. While you might first choose to start a food business from home, in time you may consider opening your own restaurant.

Opening a restaurant can be hard work, but it can also be lucrative if your restaurant takes off. The Australian restaurant industry is valued at $14.1 billion in 2023, with a projected growth rate of 1.2 per cent. A highly competitive market, high operating costs, and often thin margins mean that restaurant owners can benefit by having a strategic plan to achieve success in the restaurant industry.

To help make the journey a little easier, this comprehensive guide answers five of the most common questions that aspiring restaurateurs have about opening a restaurant.

1. Refine your business plan and concept

There are several important requirements of a restaurant, which means a carefully considered restaurant business plan and restaurant concept will help you to build your restaurant business and guide your daily operations. Without a clear business plan it can be difficult to see your overall goals and objectives and how you will achieve them. A business plan will make it easier to make informed decisions, and to determine your start-up costs.

In the competitive hospitality scene you will benefit from having a compelling restaurant concept that makes your guests feel special and that sets your restaurant apart from competitors in the market.

There are many different types of restaurants you may open, with each offering a different types of cuisine and service styles. It can be important to choose a unique angle or twist that can make your restaurant stand out from the competition.

What is a good way to get people to come through your door? How will they remember you? And what will keep them coming back for more? Will you use only locally sourced ingredients? Or offer wine pairings with each course? Are you envisioning a lively burger restaurant, a casual pizza place, a cozy pub, or an upscale seafood restaurant?

Remember to think about your ideal customer. Who are they? What traits and features do they have? You can tailor everything to your ideal customer, from your menu to your marketing strategy and your service style. But you first have to take the time to understand who your ideal customer is and map out your restaurant concept.

Your restaurant’s success is dependent on a detailed business plan. Your business plan outlines your vision and describes how you want your business to operate. Writing a restaurant business plan will help you to identify any challenges you may face during the opening of your restaurant. These obstacles can be avoided by understanding them before they happen. A restaurant business plan will include these six sections:

  • executive summary
  • company overview
  • marketanalysis
  • marketing plan
  • operations plan and
  • projections and analysis of financial results.

2. The cost of opening a restaurant in Australia and financing options

Although every restaurant is different, they all generally require no small amount of capital to get up and running, and this investment needs to be planned and budgeted for before opening your doors to customers. Costs involved in opening a restaurant may include:

  • leasing a business premises
  • fit out and refurbishment costs
  • licence fees
  • business insurance
  • furniture and equipment
  • lighting and plumbing and
  • marketing and promotional costs

For small business owners launching their own restaurant, bank loans are a popular source of funding. Many banks offer small business loans to help new business owners establish their small business.

There are also several other options that can help new business owners manage the cost of launching their restaurant business, including federal and state government financial assistance packages and financial assistance programs and initiatives to assist new businesses. These include:

  • instant asset write-offs
  • equipment rebates
  • Aboriginal business development funding
  • mentoring and new business advice
  • assistance in hiring unemployed workers or apprentices and
  • subventions for energy-efficient lighting

Business.gov.au has a handy free tool for calculating start-up costs for your restaurant business.

3. Location, location, and venue

It can be vital that your new restaurant business secures a favourable location, which can require some thorough research in the surrounding areas where you want to base your restaurant. Look for a venue that is both easy to find and easy to access, and, if possible, with parking available nearby.

To understand the local community, take the time to walk around the chosen area for your restaurant. Does your concept match the lifestyle of the residents? How often do they visit restaurants in the area? You may also want to evaluate the accessibility of parking and public transport. These factors could be crucial for the success of your restaurant.

Before you commit to a lease or a venue, visit your chosen location at different times during the day (weekdays and weekends) to see when it is busiest and when it is most quiet. This can help you to determine if is worth opening your restaurant  for breakfast, lunch, and dinner each day, or if closing during quieter times is the more economical option.

Leasing versus buying

After you have chosen a location for your restaurant, it is time to find a commercial space that will allow your restaurant to flourish. There are usually two options: either leasing and fitting out a venue or purchasing an existing restaurant.

Commercial leases are typically long-term and you will likely be asked to commit to at least a five-year lease. If renting, you may be required to have funds available to cover rent for your first three months or six months up front. Leasing a property will most likely be the single largest expense for your new restaurant.

You can also purchase commercial space that has been converted. This will help you save time and money over the long-term because many of the expensive aspects of opening a restaurant, such as installing running water and toilets, will already be taken care of.

Renovations and decor

After you have secured the space you want for your restaurant, you may want to renovate it. A cosmetic makeover might be sufficient to transform an existing restaurant. However in some instances your new venue may need to be completely remodeled, which could involve structural renovations, installation of kitchen and toilets, and interior design changes. To keep your costs down, you may consider avoiding properties that will require significant renovations.

4. Apply for hospitality insurance, certificates, and licences

To legally open your restaurant doors to paying customers, there are certain licences and certificates you will be required to hold. The licences and certificates that you will need will depend on the size of your venue and the regulations of your state government. Applying and getting approved can take some time, so it can be in your interest to start the application process early.

Some of the certificates and licences you may be required to hold for your restaurant business may include:

  • Council certificates: You may be required to apply for multiple certificates from your local council, including zoning, fire safety, and occupation certificates.
  • Liquor licence: Any venue selling alcohol must obtain a liquor permit from the appropriate territory or state government. The type of licence that you are required to hold will depend on your business operations.
  • Food licence: To legally sell food in your restaurant, you are required to hold a food licence. Food licence requirements vary depending on the state you live in and the size of your restaurant.
  • Music licence: If you intend to play music in your restaurant’s kitchen, you will need a music licence to cover copyright issues.
  • Business insurance: You may benefit from having several types of business insurance (including hospitality insurance) in place to reduce the risks to your restaurant and protect your business from potential losses. Common types of business insurance for restaurants include Public Liability insurance; Business Insurance; Management Liability insurance; Tax Audit insurance; and Cyber Liability insurance.

Keep in mind that depending on your operation requirements, you may be required to hold multiple licences or certificates, even if your restaurant is a fast food restaurant. It is important to check with your local council before opening, and if in doubt refer to the Australian Business License and Information Service Website.

5. Create your menu

Your restaurant’s success is heavily dependent on your menu. It should excite your guests and keep them coming back time after time. It can be helpful to research your market before you create your menu to ensure that your dishes will appeal to customers while also filling a niche in local restaurant market. So carefully consider how you will create your perfect menu.

Discuss your menu with your bar manager and chefs. What will be the scope of your food offering? Will you use local ingredients? How about your beverages? What will your wine pairings look like? Remember that a great restaurant menu effectively maintains customers’ focus, decreases decision time, and, most importantly, drives sales.

6. Restaurant equipment

Equipment costs for restaurants can vary, so it is important to fully understand your operation and what equipment your business will require before you invest in equipment. Restaurant equipment is grouped as follows:

  • Kitchen equipment: Ovens, fridges, toasters, microwaves.
  • Bar equipment: Cocktail shakers, spirit measurements, blenders.
  • Workspaces: Preparation tables, countertops.
  • Service equipment: Trays, glassware, crockery, utensils, takeaway containers.
  • Storage: Shelving, display cabinets, and containers.
  • Inventory: All food products (including fresh produce and beverages) that you use in your restaurant.

7. Restaurant staffing

Your restaurant’s success will depend on the quality of your team, so carefully select competent staff before opening your doors. Avoid rushing the recruitment process and remember to constantly mentor your staff so they can improve their service skills.

8. Marketing your new restaurant

A key part of growing a business is marketing. It’s crucial to make sure your restaurant is visible and easily accessible on all digital platforms. To do so, invest in the following restaurant marketing assets:

  • an engaging website
  • an active presence on social media
  • list your restaurant business in online business directories and review sites such as TripAdvisor
  • set up your Google My Business listing and
  • offer special deals throughout your first month in business

Choose BizCover for hospitality insurance made easy

At BizCover we make it easier than ever for restaurant business owners to reduce their risk via business insurance that specifically addresses the risks facing business owners in the hospitality industry.

This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
© 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769ABN 68 127 707 975; AFSL 501769

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