A Checklist for Translating Restaurant Startup Costs into Success
When you’re opening a new restaurant, it may seem like there are a million things you need to think about and budget for. On the other hand, careful planning and organization will keep you from becoming overwhelmed and will prevent surprises later in the process. This list will help you anticipate the decisions you’ll need to make and the restaurant startup costs you’ll incur on the road to opening a successful business:
This is the overall “big picture” of your goals and how you intend to achieve them. The plan should include:
- Industry and competitive analysis of the existing restaurant scene and the need you intend to fill (what makes you different)
- The concept of your restaurant (menu, type of service, and main customer demographics)
- Your restaurant name and the logo (to go on your menu, website, and signage to establish your brand)
- Budget and timeline (see below)
- Marketing strategy (see below)
Budget and Timeline
These are two key aspects of your overall plan. To determine these, ask yourself the following questions:
- What are your projected estimates of startup costs, including location, labor, and supplies?
- How long will it take you to acquire and set up all of the necessary elements in this list?
- What are your preliminary revenue predictions?
- How long will it take you to see a return on your investment?
- Do you have money set aside in the event of a slow period?
An important question to address early is: where will the money come from to finance your restaurant startup costs? Are you using personal reserves? Applying for a business loan? Lining up investors? Some combination of these? Other financial steps to take include applying for a business credit card and setting up business bank accounts. Do note, an important piece of borrowing money is having enough collateral and a decent credit score to secure the debt allowance.
Besides designing your logo and brand, you’ll need to think about your primary target audience and how best to reach them. Allocate some of your budget to establishing an online presence, including a website and accounts on social media channels such as Instagram, Facebook, and Twitter. What other advertising paths will reach your audience—flyers, billboards? The trick is to know your demographic.
As any realtor will tell you, it’s all about location. Some things to consider when you’re scouting:
- Where does the majority of your target audience live and work?
- What competition is in the area?
- What kind of traffic flow (pedestrian and auto) does the area get?
- How much square footage will you need, including adequate parking?
- Are you leasing or buying? Is your building an existing structure or is it new construction?
Whether you’re adapting an existing building or constructing a new one, you’ll need to decide on the most effective front- and back-of-house floor plans, including:
- Waiting areas for to-go pickup or for seating
- Seating areas, including preferred spots such as by windows or a fireplace
- Salad bar or buffet tables, with best layout for traffic flow
- Bar area
- Outdoor seating areas
You’ll also need to plan your interior design, including color scheme, wall décor, and incorporation of your logo and branding elements.
Select dishes that are unique and based off of your initial restaurant concept. Will you have signature house items? Will you offer main dishes, appetizers, sides, desserts, and drinks? Prepared meals or buffets?
You also need to think about pricing for menu items as it relates to your target audience. Is the food cost effective and cheaply priced, or is it a more difficult process to procure ingredients and prepare the food? Will there be seasonal prices for certain meals or ingredients? You may realize that your prices are too high and need to decrease to attract your target demographic. Or, you may realize that you’re losing money because your prices are too low and need increased to be profitable.
As you’re deciding on your menu, identify available vendors who can supply what you need. Do they fit your budget? Are they close enough that you can restock quickly? How easy is it to reorder necessary ingredients? Is it a click of a button or is it a lengthy process?
Licenses, Permits, and Insurance
There are several operating permits you will need, including:
- Business license
- Employer identification number
- Food service license
- Building health permit
- Liquor license
- Restaurant insurance
Be sure to allow enough time for application processing so these are all in place when you’re ready to open.
Hiring the right people is crucial for success. Follow this basic process to find the right employees:
- Decide how many employees you will need in each key role (and how many you can afford)
- Write job descriptions detailing the duties of each position and post them on hiring sites and in local media
- Conduct the interview process
- Make final staffing decisions and set up the onboarding process including:
- Employee handbook detailing policies and procedures
- Training on kitchen or POS equipment
Having the correct supplies to run your restaurant efficiently is important. Be sure to budget for items such as:
- Receipt printers
- Table settings and glassware
- Napkins (cloth or paper)
- To-go supplies
- Everyday cleaning supplies
- Beverage dispensers
Give some thought to what you’ll need for security, not limited to: surveillance equipment, adequate exterior lighting for the building and parking lot, and an alarm system to keep valuable equipment safe. As some say, it is better to have more and not need it, than to have too little and need it most.
What you need here will depend on the type of restaurant you’re opening, as well as available space and budget. Besides basics, such as refrigerator/freezer, pantry shelves, stoves/ovens, grill, pots and pans, and other utensils, you may need special equipment like a smoker for barbequed meats or a chiller for meals meant to be consumed at a later time.
One of your most important restaurant startup costs will be your point of sale (POS) system, which will become the “command center” for your operations. Look for a knowledgeable, experienced, reliable POS provider who offers the ongoing support and service you will need, and who will help you choose the right solution for your restaurant. Choose a POS system that includes these industry must-haves:
- Customer loyalty program
- Table and menu management
- Inventory management
- Advanced reporting and data analytics
- Online and mobile ordering
- Integration capabilities
- No upfront costs and a predictable monthly fee
You’ll also need to find an experienced merchant services provider to handle your credit/debit card payment processing. Compare processing rates and fees, and select your tech.
Building Your Business
Opening a restaurant requires a lot of planning and strategizing. There are many different aspects that you will need to budget for. Much like the bricks that make up your physical location, all these details—equipment, labor, and inventory—are individual building blocks. Effective management is what will hold it all together. Also, don’t be afraid to plan for future expansion. Those that may want to invest in your company will want to know where you hope to be in three to five years.
The technology you choose to invest in will have a direct effect on how well you can manage your business, so it’s important to choose carefully. One of the most important steps you can take is to find a qualified technology provider who can help you assess your needs and make choices you feel confident about. HungerRush offers integrated, scalable POS solutions designed to help streamline restaurant operations and simplify business management. Our solutions are backed by 24/7/365 US-based customer support. to find out how you can take care of one of the biggest items on your restaurant startup costs checklist!