How to Start a Restaurant
It’s the best time in history to be an innovative chef or restauranteur!
People are eating at restaurants more than ever and chefs are the new rockstars. This is the best time to open that restaurant you’ve been dreaming about!
But the restaurant industry is heavily regulated so you’ll need to follow the law closely. Here’s what you need to know…
1. Start your company
If you’re operating a business without registering as an LLC or Corporation, you’re taking a big risk. Your personal assets can be taken to pay your business debts. That means you can lose your car, house, and bank account on a product injury, a bad business deal, or a freak accident. Is it likely? Probably not. Is it worth all that risk to save a few hundred bucks on registering? Definitely not. Register your company with the state and follow certain formalities, so only your company assets are at risk.
This is so important for restaurants because you never know how your menu items will react to customers allergy or nutrition needs. If someone develops a reaction to your food or is injured at your restaurant, you can be sued for damages.
Youʼll start by completing the state paperwork to register your entity. First, you'll need to decide what kind of entity is the best fit for you. If you haven't decided yet, check out our guides to Sole Proprietorship, Partnerships, LLCs, C Corporations, and S Corporations.
Now you're ready to register. If you are registering an LLC, the form is usually called Articles of Organization. If youʼre forming a Corporation, the form is called Articles of Incorporation. You can find these on your stateʼs corporation agency website. Youʼll also need to choose a registered agent, principal place of business, and business purpose. Keep in mind that all of this information, including your address, will be public.
You’ll also need to check out permits for restaurants, pass food inspections, receive food handlers certificates, and register for sales taxes.
Tip: Call in your business attorney if you need help navigating this step.
2. Lock down your brand
A trademark allows you to own your brand. It means you're the only company who can use your company name, logo, slogan, domain name, personal name, product name, or hashtags. Here's why it's key: without it, you can be sued, forced to rebrand, or have your customers stolen by copycats.
Trademarks give you the exclusive rights to use the name nationally. So if someone else registers your trademark, they’ll own the rights to your name nationally. You'll only be able to use it in your geographic region (typically your city). That's not ideal!
Think about how many brand pieces feature your company name: your website, social media, business cards, products, marketing materials, press links, inventory, etc. If you want to operate nationally, you'll need to change all of that + pull back all inventory with the brand on it, or possibly pay monetary damages. You'll lose customers, money, and valuable momentum.
Bottom line: if you’re building a brand, you need to own your trademark.
3. Create your menu
If you’ve read our popular blog post, How to Start a Business, you have a plan for what you’ll sell. Let’s take it a step further. Ask yourself:
What menu items will you include?
What supplies or ingredients do you need?
How much does it cost to make the items?
Where will you buy the supplies?
At what price will you buy the supplies?
At what price will you sell the menu items?
Make sure the numbers add up before you commit to your products and supply system.
4. Find a location
You need a great location. There are many websites where you can find commercial leasing space, like Craigslist and LoopNet. You can also find popup space for rent at StoreFront.
Visit the space first to check out the area and the traffic. Check out the demographics of the traffic to make sure they're your target customers. You can also check out area statistics like income and crime numbers.
Once you contact the landlord and visit the space, it's time to sign your lease. Commercial leases are different than residential leases like apartments. They're typically for longer terms and are priced by square foot. They don't always include utilities like electric and water. For these reasons, it's so important to negotiate your commercial lease or popup contracts to make sure you understand the contract and that you’re getting the best deal.
5. Hire employees
Hiring employees is one of the most confusing parts of running a business. There are serious local, state, and federal laws about being an employer. There are payroll responsibilities and employer taxes. And then there are employment contracts. You'll want to have all the legal paperwork in order so your employees can do their jobs well.
If you're hiring independent contractors, you'll need to have a contract in place that clarifies their contractor status, your intellectual property rights, and their tax responsibilities.
6. Promote your restaurant
There are so many ways you can market your brand. You can use instagram, Facebook, Snapchat, Twitter, YouTube, email newsletters, and influencers to promote your brand online. Find out where your customers are online and join them!
You can also check out tradeshows and trade organizations for restaurants like Expo West or Food + Wine Festival.