When you have an excellent idea for a new restaurant or catering business, the rest of the process can seem so easy.
After all, how hard can it be to open a new food business with a fresh idea? Unfortunately, it’s harder than you think.
You’ve probably heard statistics that restaurants fail at alarming rates. And maybe this feels like a true statistic in your neighborhood. You know, that one corner of commercial real estate that morphs into a new eatery every two years. Does this sound familiar?
But what about the mainstays? The bakeries and pizzerias that helped develop neighborhood and are passed down from generation to generation. You can probably think of a few businesses like this in your neck of the woods too. Peering through a more positive lens like this, you’ll be glad to hear that restaurant mortality rates don’t look much different than many other industries.
Here at ShopKeep, we love to see communities built on the latter scenario, which is why we’ve created this starting a food business checklist to ensure you get off to the right start.
Construct a Business Plan
The first and most important step to starting a food business is constructing a feasible business plan. A restaurant business plan should include the following:
- Decide on a business entity. Are you a sole proprietorship? A general partnership? Or possibly a Limited Liability Company (LLC)?
- Your food business concept. Are you going to be a quick-service restaurant? A full-service restaurant and bar (FSRB)? Or maybe even a food truck?
- Your marketing, logo, and name. How will you create a brand that your customers use to recognize your product?
- Your target market. Based on your concept and price point, what kind of patrons will be attracted to your business?
- Choose an ideal location. If you don’t already have a location for your food business, what neighborhood provides the best chance at a sustainable market share? What kind of competition will you face in a given area?
- A budget for expenses such as inventory (food and beverage), labor, rent, and utilities.
Your menu and price range. What dishes will your menu highlight, and at what prices will your meals be profitable?
- The structure of your business. How many employees can you afford to start with, and how will they be broken down into management, front-of-house, and back-of-house?
These are just a few of the questions you’ll have to ask yourself to construct a business plan in the early stages of planning. However, it should be noted that different restaurant concepts have unique needs and considerations. Here are some simple business plan templates that fit different options to get you started.
Acquire Your Equipment
When it comes to the cost of things, restaurant equipment is going to one of your most significant startup expenses. You can’t open a restaurant without the proper equipment to cook the food and serve it to your patrons. That means you have to buy or rent everything from ovens to flatware, to open your doors. Here are some of the necessary items you’ll need.
- Kitchen appliances like ovens, stoves, grills, fryers, and microwaves.
- Cold storage appliances such as ice machines and walk-in freezers and refrigerators.
- Work surfaces such as countertops, cutting boards, steam tables, and cold food tables.
- Smallwares like sauté and frying pans, sauce pots with lids and baking sheets.
- Utensils for the kitchen such as tongs, ladles, and a good knife set.
- Silverware for the front-of-house along with napkins, tablecloths, and placemats.
- Glassware and barware.
- Furnishings such as tables, chairs, booths, a host stand, and decor.
Remember, every food establishment is different. Therefore, no two restaurants will have the same exact equipment checklist, but this will put you in the right direction.
Assemble Your Team
Different food business concepts have different labor and staffing considerations. For example, if you run a food truck, it’s probably just you and maybe one or two other people depending on the size of your vehicle.
On the other hand, a full-service restaurant will need a handful of servers and bartenders (over the age of 18 if alcohol is served), plus a complete kitchen staff, a trio of hosts to greet the guests, and busboys to clean up after them.
It’s not uncommon for people in the food service industry to move around frequently, so job hopping isn’t always a bad sign. With that being said, when hiring an employee, interview everyone thoroughly and don’t just ask for references, make sure you call every one of them and confirm there are no major red flags.
Obtain Licenses and Permits
You might be surprised when you learn what it takes to be compliant with applicable health and safety codes, as well as other food service regulations. While all businesses require licenses and permits to operate, the food service industry is especially stringent because you’re dealing with products that people consume. Here are some of the documents you’ll need to conduct business.
- A Federal Employer Identification Number (EIN) for tax purposes.
- A business license from your city or state that enables you to conduct a business.
- A food service license from the state or town for any establishment that serves food.
- A Certificate of Occupancy (CO) deeming your restaurant safe for customers to occupy.
- A tavern license if you only want to sell beer and wine.
- A liquor license for those that want to serve hard liquor for cocktails.
- A cabaret license if you’re going to have an area for customers to dance.
Keep in mind that different restaurant concepts are subject to different regulations as well. For example, food trucks need a different food service license because of their mobility.
In all cases, you’ll be under the oversight of your local authority, so make sure to pay attention to (and train your employees to follow) food service health and safety practices.
Choose a Point of Sale (POS) System
The days of using a vintage cash register (other than for aesthetic appeal) and handwriting order tickets on a dup pad are long gone. If for nothing else, you need to have a good POS system so that communication between the front-of-house and back-of-house is seamless. Luckily for you, modern POS systems can do much more than this.
Depending on the type of food service you provide, you’ll want to opt for a restaurant POS solution that allows you to print kitchen orders, keep customer tabs open, split checks, customize table layouts and manage reservations.
In the back office, you’ll need the system to provide insightful analytics and reporting so that you can quickly identify trends, and therefore implement any changes that need be made regarding staffing or inventory.
Of course, POS systems, like everything on our checklist varies, based on the unique concept of your business. For example, a POS system for a quick-service restaurant will have different features and functionality than one for a full-service restaurant and bar. It’s up to you to do your research and find one that best fits your business model.
The Bottom Line
It’s clear that your starting a food business checklist will vary based on your concept, size, and of course menu. The point of using a list like this is, so you consider every aspect of opening a food and beverage business. It’s not a step that should be taken lightly, but with the right planning, you’ll have the tools you need to be successful.