How to Start
a Restaurant Business
in 8 Steps

Owning and running your own restaurant business is many people’s dream; playing host for a living, being on the cutting-edge of food trends, and living a life of creativity and excitement.

It can be done – and in the case of many Le Cordon Bleu alumni, it has: Dhruv Mittal, Alexei Zimin and Chris Hammett (among many others) have all become successful restaurateurs. And they all did so with their own styles and visions – whether it’s Dhruv’s DUM Biryani House and Lucknow 49 restaurants in London, Alexei’s numerous restaurant chains in Russia or Chris’s chain in Malta.

But whether it’s opening up a restaurant franchise or a single eatery, it’s a daunting task, so much so that it’s tricky to even know where to start.

Will it be a lot of work? Yes, but the the right planning and execution, you can start a successful restaurant business too. To help you get started, we have put together the following guide to answer the most common questions asked on how to start a restaurant business.

This is a chronological, step-by-step guide. It starts with education, then looks at securing finance, writing a business plan, what to serve, how to market research and finally tips on choosing a premises.

 

Not necessarily, but training will help. Owning and/or managing a restaurant is an unusual career, in that it doesn’t always have the same route: Some work their way up from entry-level positions to become sous chefs, head chefs and then owner/managers. Others enter their career at chef level. While others again aim to become owner/managers as soon as possible after graduation.

As for educaton, you might take the route via culinary courses or by gaining a management qualification.
Also, unlike some other careers (like medicine, accountancy or law, for instance), you’re not legally
required to hold any specific degree, which partly explains why the routes vary so much.

Le Cordon Bleu has been the launch pad for numerous thrilling careers, including those of hugely successful restaurant owners. Some (like Adria Wu and Ronnie Killen) studied our famous Diplôme de Cuisine. This course teaches the fundamentals in French culinary techniques, which includes a broad range of transferable skills and international cooking styles.

Other successful alumni, like New York restaurateur Brad Farmerie and Radu Ionescu, owner of ΚΛΙΛΜO̲ in Bucharest, studied our Grand Diplôme (Professional Chef Diploma), which combines culinary and pastry techniques.

And, of course, a knowledge of the nuts and bolts of running a hospitality business is a huge plus. So
some restaurateurs get started with a hotel and restaurant management course.

Like any creative project (from writing a book to opening a restaurant), artistic decisions are often a combination of instinct and examining the market. For the most part, you should follow your passion. The food you love to make will be the food that people love to eat. And your enthusiasm will become expertise in time.

If the market is saturated, especially in the area where you want to open the restaurant, you should strive to make it special and distinctive. Or offer something that uses some of the same ingredients and appeal, but in a relatively fresh setting; Cuban food instead of Mexican, for example; or stews instead of soups.

You might think you can make certain cuisine better than a local restaurant – and there’s every chance you can. But it’s also wise to be aware that the more established restaurant has built up a customer base and a formula that works for them – even if you might not approve of their menu or serving style!

It’s good business to keep an eye on trends, as long as you don’t follow them too slavishly. Just because people want to eat (for example) gourmet burgers now, doesn’t mean that they will in five years.

Your favourite restaurants have a “voice” – a philosophy to dining that’s reflected in the restaurant’s appearance, menu, staff and management. Consider each of those things and find your voice. Take your time, follow your passion, research emerging trends and use your imagination. You are unique, so your vision should be too.

More and more frequesntly you see many successful businesses begin as lower (financial) risk ventures such as food trucks, street food stalls or residencies in already established bars and pubs. If you aren't 100% sure on your concept but want to test it out on a portion of your market, why not look at lower entry options to test the water with first? You never know how quickly this kind of venture can escalate into one of London's hottest restaurants, such was the case for Som Saa, which started as a pop-up in Peckham before a 1-year residency at Climpson's Arch garnered it enough notoriety that they launched their permanent site in Spitalfields in 2016.

As with most new restaurant openings, a soft-launch is always advisable. This is not only a way to test out the kitchen and the operational mechanics behind a dinner service, but it also acts as a great way to get customer feedback on what worked and, more importantly, what didn't.

 

Market research takes many forms, from informal chats to interviews to online surveys.

The simplest market research is also the most daunting: grabbing a pen and clipboard and going to the area where you want to open the restaurant. Print as many pages as possible and then spend a busy Saturday on the street asking people:

- How often do you go out for dinner on this street?
- Would you like a restaurant that serves this kind of food?
- What’s your dining budget? (Give them multiple choice)
- What kind of restaurant is missing in this area?

If possible, try to get a friend to help you with this. It’ll make that tough Saturday go by faster.

It’s intimidating, but a  terrific source of information straight from the horse’s mouth. And it’s much more valuable than surveys from other areas: Just because the residents of Edinburgh want a new steakhouse, doesn’t mean that the people of Chester do. Chances are, there isn’t specific research available about the dining habits of people who pass by your new restaurant. And if there is, it might be commissioned by a competitor!

Another option is to assemble a focus group to ask more in-depth questions. This would involve talking to fewer  people, but getting richer, more detailed answers. Source 10 people from the desired demographic (they can be family or friends) and spend a few hours asking them frank questions about what they look for in a restaurant. Try to avoid simple yes or no questions.

As for online options, you could go with:

Survey Monkey

Survey Monkey carries out online surveys that you can craft yourself, whether you want multiple choice, more in-depth answers or a mix of both. The advantage is that it’s a simple, easy way to cast a wide net quickly. A disadvantage for a restaurant business is that it might not be suited to precise, neighbourhood surveys. Still, this is a handy resource for an overview of an industry.

Fieldbloom

Fieldbloom is a resource-building tool, which means that you can use it to build up contacts and market research leads. It’s quite fun and user-friendly for survey participants, but again, is best suited to big picture information.

AYTM

AYTM is handy for in-depth figures and market research. They can also help pinpoint demographics to talk to. If the survey is carried out with care, there should be data that would be useful to bring to potential lenders or investors.

You can also hire a third-party market research company to carry out some of this work. However, when doing this, make sure you’re clear about the information you need before meeting any market researcher.

 

Be prepared to hear some things you don’t want to hear. Some answers might be disappointing, but you’re better off finding out what the public thinks at this stage than after you’ve invested too much time and money into your project.

Market research is not only useful for your own information, but it comes in very handy in the financing stage. Being able to tell a lender that (say) 80% of people surveyed in the area want a restaurant of this type is very compelling.

Once you’ve got the know-how, you’ll need the startup capital…

It’s no secret that you’ll need capital to start your new restaurant business (more on that later), but
who will finance your dream?

For Le Cordon Bleu graduates who wish to open their own restaurant, London is a common location.
And thankfully, there are finance options for those who want to open a restaurant in the UK.

Going the conventional route, many major businesses have gotten started with a small loan. Take your time before setting a meeting, and take this time to accumulate as much information as possible, including:

- Projected costs
- Expected revenue
- Market research
- Existing resources
- A glowing biography of yourself!

Most of this information will be in good business plan, which we’ll discuss later.

Beyond banks, there are publicly funded websites offering advice on how to acquire funding, and help goes further than finance: The UK’s start-up loan scheme, for example, provides loans as well as mentoring and support for those starting out. There are hundreds of schemes – some specific to regions, others to industry – available now, offering everything from information to cash. And for those who are struggling to acquire funding through conventional bank loans, there are government-backed alterntives.

If you think your idea is especially exciting, and you have access to the eyes and ears of a lot of people (a good social media following, for example), maybe crowdfunding is an option? This isn’t as wild as it sounds: numerous restaurants and bars, from Chester’s Burnt Truffle to Dublin’s bar/restaurant/arcade Token have gotten some cash inflow from crowdfunding.

Online personal lenders are also becoming increasingly popular, as more and more banking is done online. They follow many of the same requirements as traditional banks. And credit unions, which often offer low interest loan rates, are going through a renaissance.

Another option is personal loans from friends and family. This is often fraught – do you really want to be discussing your loans with family members at weddings and birthdays? However, it can work. A good rule of thumb is to only borrow what the lender can very, very easily afford to provide!

Whichever path you choose, it’s imperative that you shop around: find the interest rates, conditions and track record that suit your needs.

Once you’ve decided on where to get that capital, you’ll need to know how much you need.

Read more about restaurant financing options.

This is a broad question, but knowledge and research on the kind of restaurant you want will provide answers.

For example, if you want to open an eatery in London, rents would be higher than in, say, Edinburgh or Madrid. And naturally, a food truck is cheaper than a bricks and mortar premises.

Going with renting in Suburban London, expect to pay somewhere in the neighbourhood of £10-20 per square foot per month in rent (according to Bright Ideas Trust). That might not sound like much, but 200 square feet is about the size of a one-car garage! Or, to put it another way, a fine dining restaurant would need about 20 feet per person while a more casual restaurant would require about 10.

You would also need to allow about 40% of that space for the kitchen, storage and bathrooms and the remaining 60 for dining space.

 

So that’s – conservatively - £4,000 per month for a small London suburban space. London business rental space is notoriously expensive, though, so you can lop that price if you’re setting up your restaurant in Amsterdam or Prague, where rents can be less than half what they are in London.

Across the Pond, Oklahoma recently topped a survey for the best place in America to open a
restaurant.

 

Other costs include staff, equipment, licenses and permits, supplies (uniforms, janitorial and ingredients), utility bills and possibly renovation.

Prices vary according to food type, restaurant size and location (among other factors), but all told,the establishing costs run from the early thousands (say for a food stall or food truck) to a six-figure sum.

This becomes clearer the more research you put into your business plan.

A good restaurant business plan combines your burning passion for the project with solid research. You want readers of this business plan to become just as excited about your restaurant as you are. And, of course, it will help you to understand what you need to get started.

Here’s what to include:

Show the name of the eatery in the font and style that you intend.

What kind of restaurant is it? Why this particular food? Why now? What inspired you to do this? What sets the restaurant apart?

Not only will this paint a clear picture of the restaurant, but it will spark the imagination of the reader. Also, importantly, it will give an outline of the prices charged and whether it’s a high-end or casual experience. Finally, the language should convey what’s special about the dishes.

This is an opportunity to convey your views on service – how you’ll run an efficient business and how you’ll keep the customers coming back for more. For instance, is speed of service more important to you than a gentler, sit-down experience? Will dishes be presented by the cook in a window, or will waiting staff enter and exit the kitchen? Will you have a host? Or a sommelier?

Who’ll be working there? Does your chef or manager have form in working in successful restaurants? Don’t be afraid to brag.

This could be a mood board or sample stock photos, intended to give an image of what the restaurant and meals will look like.

Who do you hope will be eating in your restaurant? Young professionals? Seasoned diners? Early adopters of chic new dining trends? Do some research on who your intended audience is.

You may not know quite where the address is yet, but you should know the neighbourhood or at least the kind of neighbourhood it will be in. Also, potential investors may not know much about this area, so tell them: Describe other businesses in the area, the kind of demographics who live there (Professionals? Families? Young couples?) and the football: For example, is it right next to a busy train station? Is it becoming known as a restaurant hub? Is it the kind of place people go for breakfast, dinner or lunch?

Explain why your restaurant is filling a gap in the market. Is it fulfilling a need? Is it on the crest of a trend? If it’s a busy market, acknowledge that and explain why your restaurant is special. Don’t fudge on it: if you’re confident in your restaurant you should be excited to talk about what makes it unique.

Tell how you’ll spread the word (and if you already have). This might be local advertising, a PR team, a press release, a launch, social media or something more innovative. If you have an intended marketing budget and you know how to spend it, this is the time to bring it up.

Arguably the most challenging part of this document, take the time to talk to an accountant who’s experienced in the restaurant business while drawing up the financials. You should have an outline of staff costs, rent, utilities, one-off costs (like equipment), and supply costs. Also look at incoming – expected average bill from a diner, restaurant capacity, expected peak times, whether you’ll partner with a food delivery company, and margins on food, coffee and wines. These numbers are not only essential for securing financing: They’ll also keep you in check and warn you of potetial pitfalls in the future. At this stage, you might want to start looking into paperwork and permits.

Paperwork is an inevitable part of business life, and this is especially the case when it comes to opening a restaurant. After all, isn’t it reassuring to know that your favourite eatery is compliant with legal, hygiene and public noise rules?

These are UK-specific, but many of the following will have an equivalent in every territory (you will need licenses and insurance regardless of where in the world you open!).

You will need:

This is important not only for opening your restaurant, but for keeping it open! Inspectors can visit unannounced to ensure that your health, safety and hygiene are up to scratch. And if the inspector is not satisfied that your restaurant business is adhering to the official food safety regulations, they have the power to shut you down.

Legally, you’re obligated to have “adequate procedures” for pest control in place. They are also included in the hygiene regulations link above.

This is a requirement for any restaurant handling meat, fish or dairy. (So, in other words, essential unless you’re a strict vegan operation.) Find out more about food premises approval applications.

This would be public liability insurance. It’s a legal requirement, but you’ll be grateful for this if anyone (for example) takes a fall in your restaurant.

You can apply for a license for your local area. Obviously, this isn’t necessary if you don’t serve any alcohol.

Even if you move straight into a restaurant without making any renovations, you might need a building permit for alterations in the future.

This doesn’t just apply to building a place from scratch. If you’re changing the use of a building (i.e. if it wasn’t a restaurant when you rented it), you’ll need to make sure that you’re allowed to use it to make and serve food. Here’s a link to the planning permission paperwork.

A restaurant’s location is a balancing act – enjoying the maximum football possible at an affordable
price.

By all means, if you can afford to open in a busy thoroughfare, you should. But also keep an eye out for places with potential; quirky or distinctive entrepreneurs and restaurateurs priced out of desirable areas often move into more affordable ones, creating new restaurant districts. Classic examples include New York’s Brooklyn, London’s Camden or Dublin’s Stoneybatter.

Parking is undeniably a plus, but not necessarily essential if the restaurant has good public transport
links or if it’s in close walking distance to a large target market.

Another consideration is clear gaps in the market: Examples might be a busy shopping area with nowhere for brunch; a street full of restaurants with limited vegan or vegetarian options; or an office district with nowhere for tasty, fast lunches.

When it comes to the premises itself, yes, converted spaces are a possibility and they can have great character. But in general, you’re better off using a space that’s previously been used as a restaurant: It will have a built-in infrastructure and appropriate layout.

Consider natural light, ventilation, how many people can comfortably dine and work there (in winter and summer!). It should have space for waiting staff to work and manoeuvre between tables, and then cooking and prep space. What looks enormous on first glance might quickly shrink once you add tables, a bar, a host’s station, a coffee dock and other equipment. Don’t forget how many diners your business plan says you need.

This applies to back of house too – where a full, stocked kitchen; staff; a large fridge (likely walk-in
size) and storage will be.

And finally, it’s recommended – if not essenitial – to bring someone with restaurant experience with you to check out any potential location. They will see potential advantages or problems that might not be obvious to a newcomer.

There’s a lot to consider before opening night of your new restaurant, but as many of our graduates have proven, it can be done. The longest journey starts with a single step. Whether that step involves creating a perfect main course, seeing a gap in the market or something else, is up to you – the person with the vision.

We have a range of professional cookery courses and available at Le Cordon Bleu, for every stage and
direction of a hospitality career.