Start a Restaurant

We have already gone over a lot of tips for starting a ghost kitchen which is a great way to start selling your food with little up front cost. If you would like to take that a step further and open a physical location that people can buy your food from this section will go over some of the things to keep in mind when opening a brick-and-mortar location.

Just like with the ghost kitchen option the first thing you will want to do before even looking for a place to run your restaurant is to create a brand and menu. Starting out I suggest you keep the menu simpler with just a few of your signature dishes so that you do not have to risk losing money on food that goes bad. Once you get to the point where you know how much food you can sell and the type of food your customers like then you can always expand your menu. You can go on Fiverr.com to get a logo made for your business and if you are having trouble with coming up with a name go on Chat GPT and ask it to give you some ideas for your type of restaurant. Also just like with any business you should start thinking of who your target customer is and where they spend time so you can get a good idea of where your location should be.

Once you have created your brand it is time to focus on finding a location for your restaurant. If you do not have a lot of money saved up to get started, you may want to consider opening up a food truck which can be just as profitable as a storefront if you run it well. You can find used food trucks on Facebook marketplace and Offer Up for around $15,000. You may even be able to get a loan to buy one from a credit union if your credit is in good shape. Keep in mind that if you go this route your main focuses will be making connections with businesses you can use the parking lots of to run your food truck operation and continuing to switch up locations until you find areas and a schedule that is most profitable. Also, you will need to call around to car wrap places to find a great deal for putting a nice wrap on your truck that shows off your restaurant’s feel.

Of course, the other option is to find a storefront commercial property that you can lease or buy. I would definitely recommend leasing a place to start out because it will cost you much less up front and you can always move locations easier if the spot is not profitable for you. The best way to find commercial properties for lease is by reaching out to a realtor in the area that you want to open in, searching around on places like Facebook groups, or looking on loopnet.com. Make sure that wherever you are opening your business it is clearly visible from the street and not hidden away from potential customers. Also, your business should preferably be in a place of high traffic that a lot of people pass each day. If it is an area that has high foot traffic, then that is even better for your business but typically these areas will cost much more to lease so you must keep that in mind. When you are looking at potential spots in your area check to see if you will be competing with another restaurant of the same niche close by. If you are opening a wing spot and there is already a well-established wing spot next door, then you should probably look somewhere else. Be sure to search for your type of restaurant nearby before signing a lease. If there is another one in the city that is fine and even if there is another restaurant in proximity that is also okay but you don’t want the same food place opened next to each other. The last thing to keep in mind when looking at properties is to envision how you will make your restaurant look inside. Does it have sufficient space for a counter to order at, a kitchen with the equipment you will need and space for your dining area or is it a bit too small or too big even for what you want to do. Once you have picked a place that works for you be sure to negotiate a bit. Commercial leases are not like house leases and typically are harder to find tenants for, so you should be able to get some money off your monthly costs.

After you find a potential spot for your restaurant you will want to break down all of the costs that it will take to run it each month and how much food you will need to sell to turn a profit. You should be adding up your lease payment, the amount in utilities including gas, electric, water and waste management. You should add your employee wages that you plan to pay, the maintenance costs for your kitchen equipment, your food inventory costs, your utensil and to go container costs and the cost of running your credit processing POS system. You will also have to add your marketing expenses to this as well which we will go over in a few paragraphs. Separately, you should also be adding up your cost to get started by both looking on Facebook marketplace as well as restaurant furniture and equipment wholesalers. If I was purchasing the equipment, I would try to find deals on places like Craigslist, Offer Up and Facebook when starting out and making sure that it is in good shape. Restaurants go out of business all the time, so it is easy to find equipment and dining furniture in good shape for great deals. You should also be adding up the cost to decorate your restaurant with lighting, pictures, plants, etc. This should include your supplies and food materials you will start with as well. When looking at the prices of your food you should call around to wholesalers like Sysco and U.S. Foods and negotiate on the prices of the foods you need.

After you understand the cost of startup and monthly maintenance for your business you must figure out how many customers you will need to break even and then turn a profit every month. This will give you an idea of how long it will take to start making money and how much marketing you will need to do. Keep in mind that it takes restaurants 2 years on average to become profitable so be ready to take on a lot of expenses starting out by having at least $150,000 saved up between the owners. If you do not have this much saved up, you may want to consider using the ghost kitchen or food truck model instead which can be started for much less. If you are ready with the capital you need, figure out what your average customer will spend on food and drinks based on your menu and divide your monthly expenses by this number to figure out how many customers you will need to turn a profit. Make sure that the number you are using for your food material and packaging costs matches up to the amount of food you are estimating to sell. Let’s say you added up all of the start up costs we mentioned and it comes out to $70,000 and your monthly expenses come out to $35,000. If you’re average customer will be spending $20 at your restaurant it will take 3,500 customers to recoup your startup cost and 1,750 customers to break even each month. If we break that down even further, it will take about 58 customers per day to break even and if we know the cost of our $20 in food we are selling to the average customer we can find out how many more customers we will need to have to reach our profit goals. If your food costs are 30% of your revenue, which is about average, then you will need an additional 30 customers to make $420 a day or around $150,000 per year in profit depending on how many days you will be closed.

After figuring out how your numbers break down and securing a spot to run your restaurant it is time to start marketing your business. We have already gone over a lot of ways to market a food business under our ghost kitchens section so be sure to check out the last few paragraphs of that section for a lot of great ideas. We will not be repeating all those marketing tactics here but rather going over a few other ways that you can grow your business in the food industry.

One of the best ways to get your business out there is to always carry around some coupons for your business maybe it is a coupon for 50% of their first meal. You can attend events in your area and hand out some coupons to people that you talk to. You can also spend a day dropping off coupons on peoples doors in the area around your business. People love getting a great deal. Even though you won’t make as much off these people, you can gain lifelong customers if you impress them with your food and atmosphere. Another way to get in front of people with your food is by holding events where you supply samples of your food so that people can get a taste for what you offer. We go over in detail how to do this in our ghost kitchen section.

Another way to get the word out about your restaurant is by posting on local Facebook groups about special deals you are having. You can even get your friends to post in local groups with pictures of your food announcing a great deal they got as a customer. I just recently saw a new business do this and they got hundreds of likes and customers just by what appeared to be someone posting on their behalf. You can also use social media to dm coupons and offers to people in your area. Just be sure to introduce yourself as a local new business owner to make your messages personable.

The last thing I want to go over that can save or grow restaurant businesses to massive profits is making use of delivery services and ghost kitchens inside your restaurant. You should set up your restaurant’s LLC for at least a couple of the major delivery services like Uber Eats, Grub Hub and Door Dash right from the start because it only costs money once you get an order. These delivery services will help you gain customers that you would not have had otherwise so there is really very little downside to offering it. Also, you can create multiple brands of restaurants that you can serve as delivery only out of your kitchen. You may be an American chicken spot but also be serving Chinese chicken and rice under a different restaurant on Door Dash. This is an amazing way to keep your employees busy and maximize profits. I would recommend starting 3 brands of restaurants on Door Dash fairly quickly so you can have the best opportunity to sell more food. Just be sure that your menus for these different brands have a lot of overlap so you are not dealing with losses on food waste if one is not performing as well. Be sure to read our entire section on ghost kitchens to gain an even better understanding of how you can use them with your business.

If you follow these steps and make use of some of these strategies, you will be on your way to building a successful food business. Be sure, just like with any business that you listen to your customers and adjust things as needed. If you stay busy and build a schedule based on repeating the marketing strategies that work for you, you will be successful as long as people enjoy your food. Just keep in mind that building a restaurant business is not passive income and it will take up a lot of your time and money especially starting out. If you have a passion for the restaurant industry though, and are willing to put in the work then you can make a great living in the food industry.