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Running a restaurant requires a lot of hard work and dedication. You have to balance your guests' needs, market your restaurant, stay on top of inventory, and make delicious food that keeps people coming back for more.
Let’s dive into our step-by-step guide on how to run a restaurant. But first, we’ll take a look at the costs and time commitment required to get started.
- Running a restaurant is an expensive, time-consuming business, but it’s a business anyone with a willingness to learn and a good idea can potentially open.
- Being consistent with your food, properly training your employees, and understanding the changing industry can help you successfully run a restaurant.
- The restaurant space itself is just as important as the food you're serving; make sure you have creative ideas for both.
Understanding How to Run a Restaurant
Developing a mouth-watering menu is just the beginning of opening a restaurant. The actual business side of things requires some serious know-how and involves, among other things, a profound dedication. When you run a restaurant, you’ll be responsible for:
- Creating dishes.
- Designing the restaurant space.
- Hiring, firing, and training staff.
- Attracting customers.
- Finding funding.
And about 50 other things. In other words, it’s a lot of work.
How Much Does It Cost to Run a Restaurant?
Running a restaurant is not cheap. According to Restaurant Owner, restaurant startup costs can range from $175,500 on the lower end to $750,500 on the high end. Why such a high price tag? Well, a lot is included in those numbers. Startup costs consist of:
- Commercial space.
- Kitchen equipment.
- Licenses and permits.
- Monthly running costs. This includes utilities, inventory,
- Employee costs.
How Do You Manage Restaurant Finances?
When you own and run a restaurant, you’ll have quite a few things you’ll need to pay for. It’s vital that you work with a good accountant or have accounting know-how yourself. In order to manage your restaurant’s finances, make sure to do the following:
- Have a clear financial budget. Budgets aren’t just for personal use. A business budget will help you keep track of expenses and revenue and make sure your restaurant is financially on track.
- Control food costs. Food is likely going to be one of your largest expenses, especially if you run a large restaurant. Make sure to track the cost of ingredients relative to sales in order to ensure you’re not spending too much on food and that your menu is priced correctly.
- Monitor labor costs. Finding the right balance of staff can be tricky. In the beginning, you may have to settle for fewer people willing to work more hours, but as your business grows, your staff should continue to grow with it to ensure you’re not overworking your employees.
- Manage discretionary spending. It’s important not to let small expenditures fall through the cracks. Keep receipts for everything so you can get a true sense of where the business’s money is going.
- Audit regularly. Have a set time or times throughout the year to thoroughly go through your financial statements and double-check your records. This is where having an accountant is going to be especially helpful.
- Stay up-to-date on all tax laws. Keeping up with changes to tax laws and regulations will help you avoid any unpleasant surprises in terms of necessary licenses and sanitary practices.
- Use loans only when necessary. Businesses occasionally go through slumps or run into financial issues like broken equipment. When this happens, it’s vital that you choose the right kind of loan. Restaurant loans come in all shapes and sizes.
Can You Successfully Run a Restaurant with No Experience?
Running a restaurant is a challenging and rewarding endeavor, regardless of whether or not you have previous experience. However, there are certain advantages to having the right background and understanding of the industry.
That said, no matter your background, if you have the right amount of passion and a willingness to invest the necessary time, energy, and resources into learning the foundations of running a restaurant, you can be successful without traditional experience.
In fact, many of the most well-known restaurant owners and chefs didn’t come from the restaurant industry. For example, Ina Garten, host of the Food Network program Barefoot Contessa, worked for the White House long before turning to cooking.
For those interested in running a restaurant with no experience, there are a few steps that you can take.
- Find a mentor to guide you. This could be a seasoned veteran of the industry or a successful entrepreneur who is willing to share their know-how. Or turn to people on the internet. Many chefs have shows that teach you how to cook. TikTok is (surprisingly) a great place to find like-minded folks willing to share their knowledge.
- Familiarize yourself with the restaurant industry. This can be done by researching the latest business trends, reading up on the best practices, and analyzing how other restaurateurs have made their mark. Spend some time with Google and do a lot of research.
- Work for other businesses first. Nothing beats first-hand experience. While you’re planning your own restaurant, work for other restaurant owners first. That way you have a paycheck coming in, too.
- Develop a well-thought-out business plan. You’ll never get investors without a thorough business plan. Your plan should account for the daily operations, marketing strategies, staffing models, and any other financials specific to running your restaurant.
How Do Experienced Restaurateurs Run Their Restaurants?
Running a restaurant takes a lot of hard work and dedication, and experienced restaurateurs know how to run a restaurant kitchen efficiently. These restaurateurs take pride in their business and they pay close attention to detail. They understand the importance of food quality and customer service, and they prioritize these parts of their restaurant above all else.
Here are some of the best practices of experienced restaurateurs. Many of these pieces of advice come from my personal favorite chef, and owner of a whopping 58 restaurants and counting, Gordon Ramsay.
- Pay attention to the details. Don’t just focus on big-picture items. Consider every aspect of your restaurant from the food to the employees to the actual space itself.
- Remember who your customer is. Without customers, you don’t have much of a restaurant. You’ll want to pay attention to the locals and other restaurants in the area. Who does well? Why do they do well?
- Be consistent. Customers appreciate consistency. Making sure that your food is always perfect, your waitstaff is always polite, and the atmosphere is inviting can ensure that you keep your doors open.
- Train employees properly. When you take the time to train your employees, you not only retain them longer, but you help to ensure a consistent standard of service and quality of the food.
How to Run a Restaurant Successfully: 15 Essential Tips
Running a restaurant successfully is a balancing act. You have to manage what can seem like a million different things just to open your doors every night. If you can master the following, you’ll be able to finally follow your dreams and open that restaurant you always wanted to.
1. Create a Unique Restaurant Brand
Creating a unique restaurant brand is what’s going to help you stand out. Consider your restaurant's location, target demographic, and overall atmosphere. What are you looking to have your restaurant represent? As the kids would say, what vibe are you going for?
If you’re not sure where to start, release a customer poll. On social media, to your family and friends, or hand out fliers with the poll link in your local area. Consider any existing customer feedback when creating your brand.
2. Serve Only High-Quality Food
When running a restaurant, it is essential to serve only high-quality food. Customers will be more likely to return and recommend your restaurant if the food that you serve is delicious and fresh. Consider using local and organic produce, as many restaurants are going this route. Focus on creating unique recipes and dishes that will make your restaurant stand out from the rest.
3. Design an Inviting Dining Atmosphere
Your restaurant's atmosphere is just as important as the food that you serve. It helps accentuate the food and create a lively space that customers want to come back to. So make sure you’re designing a space that’s inviting and comfortable for your customers.
Consider your restaurant's layout, decorations, furniture, and lighting. You should also consider any amenities you may want to provide, such as music, Wi-Fi, or entertainment.
4. Provide a Seamless Guest Experience
A restaurant’s success lies in its ability to provide a seamless guest experience. Take care to create an inviting atmosphere, provide professional and friendly service, and offer quality food that meets customers' expectations.
5. Take Care of Your Staff
Your staff is the face of your restaurant, and it’s essential to ensure they feel appreciated. Part of starting a restaurant is understanding how to offer competitive compensation and benefits. Research what restaurants similar to yours offer for pay in the area. If you can offer a small bump up in pay, you’re likely to attract employees who want to stick around longer.
6. Invest in Good-Quality Equipment and Technology
Investing in good-quality equipment and technology is essential for a restaurant to continue running smoothly. Keep up-to-date with advancements in the industry, and consider which type of technology and equipment best suits your restaurant’s needs.
7. Be Mindful of Your Overhead Costs
Running any business can be expensive and running a restaurant is certainly no exception. As the owner, you’ll need to be responsible for keeping a close eye on your overhead costs. Consider expenses such as rent, utilities, taxes, and insurance, and be sure to research the costs associated with each before signing any contracts.
8. Budget for Increasing Labor Costs
The staff at a restaurant plays a key role in its success. As your business grows, you’ll need to hire extra hands. Or, as minimum wage requirements creep up, you’ll need to offer more money to your current employees and new hires to stay competitive. The industry changes quickly, so have an ongoing budget line for these increased costs.
9. Maintain the Necessary Licenses and Permits
Having the correct paperwork and licenses in order is a crucial part of running a successful restaurant. In fact, legally as a restaurant, you need most of these permits. You’ll need the appropriate license for the sale of alcohol, food safety, and any other permits or licenses required by your state. Ensure that all of your paperwork is kept up to date so that you always remain in compliance with local regulations.
10. Routinely Evaluate Food Costs
Keeping your food costs under control allows you to adjust the price of your dishes while still providing great value to your customers. Make sure to look at the cost of the ingredients you’re sourcing on a regular basis and adjust your menu accordingly.
11. Continuously Market Your Restaurant
A small restaurant needs to continually market itself in order to thrive. Whether it’s through local newspaper advertisements, radio spots, or social media campaigns, it’s important to make sure that people in the local area know about your business. By staying active in the community, you can attract new customers and build loyalty with existing ones.
12. Run an Efficient Kitchen
To earn rave reviews for your restaurant, you’ll need to provide quality meals in a short amount of time. Having an effective kitchen staff is how you’ll stay efficient. You should invest in proper training and equipment for your staff, so that they can produce meals quickly and accurately. This will improve customer satisfaction and create a positive reputation for your restaurant.
13. Focus on Consistency
Consistency is one of the most important factors in running a successful restaurant. Maintaining high quality standards for food, customer service, and the overall atmosphere of your restaurant is the key to creating a positive reputation.
14. Remain Competitive
Continuing to stay popular with your customers means staying ahead of the competition and creating new dishes and experiences. Take the time to research your competition. Also periodically assess your business strategy and adjust as needed to remain competitive.
15. Remember That This Is a Business
Although the goal of running a restaurant is the same as any other business—to make money—it is essential to remember that it’s also an art form. Investing your time and energy in fostering an enjoyable dining experience can earn you repeat customers. At the same time, understand that there are times when you’ll have to separate your personal passion from the needs of the business in order to make tough decisions.
Business Mentoring Organizations That Could Help
Potential restaurant owners don’t have to go it alone. There are plenty of reputable organizations dedicated to helping entrepreneurs get their businesses up and running and keep them up and running. Here are a few stand-out companies to look to for guidance:
- Small Business Administration. The SBA provides free and low-cost business counseling and training programs, as well as access to a variety of low-interest loans.
- SCORE. This is a nonprofit organization of volunteer business counselors providing free mentoring services and low-cost workshops for entrepreneurs.
- National Restaurant Association. This organization provides business mentoring and resources to help restaurant owners launch, develop, and grow their businesses.
- National Conference for Women Entrepreneurs. This annual conference is dedicated to helping women-owned businesses grow by providing mentorship and resources. The conference offers networking, panels, and other learning activities.
Ultimately, running a successful restaurant requires commitment, hard work, and a lot of learning. You’ll have to plan carefully, get experience in the food industry, and develop problem-solving skills in order to be successful.
If you’re interested in taking on the challenge and are wondering how to open a restaurant, start doing research on the laws and regulations in your state and city, create a business plan, and start looking for the right location. You’ll also need money, and lots of it before you get started. Plus, you’ll need to invest in the right equipment, hire skilled staff and develop a menu that will appeal to your customers.