Launching a new restaurant requires a lot of planning. Oftentimes it could be very expensive too and requires business owners to use personal funds or raise more finance to get the business going.

However, this shouldn't deter hospitality operators from following their dreams of opening and running a restaurant. This simple guide details the duration, costs, and all the necessary steps to start a new venture.

Learn more: How to open a restaurant in Japan: A step-by-step guide

How long does it take to prepare for opening a restaurant?

The preparation time required to open a restaurant depends on the size and type of restaurant. However, it should include the following:

• Determining the concept of the restaurant

• Formulation of a business plan

• Searching for a property

• Exterior and interior construction

• Preparation of necessary equipment and utensils

• Obtaining qualifications and notifications

• Recruitment of staff

Finance 101

There are three main costs involved in opening a restaurant:

Property contract costs

Property contract costs are the costs of signing a property contract. It requires an advance payment of rent as a deposit, key money and agency fees, etc.

Shop investment costs

Shop investment costs are the costs required to operate a restaurant, such as costs for the exterior, interior, kitchen equipment, and labor costs. If a restaurateur rents an unfurnished property, it will cost money to add interiors, install and prepare kitchen equipment, lighting, etc. On the other hand, in the case of a vacant property where the interior and equipment of the previous tenant can be used as is, it is possible to open a business for less money.

Working capital

Working capital is the cost of actually running the shop. It's best to have this on hand in advance to provide cash flow until the business gets off the ground. Normally, 10% of the funds should be allocated for rent, 15% for employee salary, and 10% for other expenses for six months.

Opening a restaurant: 9 key steps

Opening a restaurant requires a lot of planning as well as ample resources. Here are the top 9 things to follow to not only start a successful restaurant but run a business that lasts.

1. Mastering the art of restaurant concept design

First, design a concept. Design in detail the type of business, target audience, price range, etc., and decide what kind of restaurant it will be. If the concept is unclear, it is difficult to differentiate it from the competition which may cause the hospitality operators headaches along the way.

In the concept design, consider the following items in detail:

• Purpose or goal of opening the restaurant

• Location

• Menu

• Price

• Targets

• Opening times and Opening hours

• Customer service, other services, and advertising methods

2. Preparing a comprehensive restaurant business plan

A business plan is a document that outlines the business and income and expenditure plan. By creating a business plan, hospitality owners can have better ideas on how to steer the future direction of the restaurant. This plan can also be used later on for managing the progress of the business or for marking smart decisions after the launch of the restaurant.

A business plan is also necessary if the restaurant owner needs to obtain a loan from a financial institution or when raising finance. The plan should include the following:

• Concept

• Business description

• Management strategy and points of differentiation from competitors

• Method of operation

3. Finding the perfect restaurant property

Once the concept design and business plan have been drawn up, it is time to search for a property in line with the concept and budget. The process for signing a property contract for a restaurant is normally the same as renting a house. Search for a property with a real estate agency, make a preliminary inspection and view the property, apply, and if the application passes the screening process, the hospitality operator can then sign the contract.

When searching for a property, it is best to choose a construction company in advance and have them view the property. There may be cases where the desired construction cannot be carried out due to the structure of the building, or where the planned number of tables and seats cannot be placed. If these are discovered after the contract has been signed, there is no going back. Remember to consider whether the desired exterior and interior work can be carried out, and select a property with the help of a professional.

Shop premises are broadly divided into the following three categories:

• Street-level shops: Shops facing the street and accessible from the street

• Underground shops: Shops located underground

• Aerial shops: Shops on the second or higher floors of a building

Each has its advantages and disadvantages. For example, underground shops are recommended if the objective is to keep costs down. However, underground shops normally have low visibility so they sometimes struggle to attract customers.

The right storefront should be aligned according to the restaurant's target audience and budget. Also, even if the property is for retail use, the hospitality operator should first check whether the city or district allows restaurants to operate in that venue.

Opening a hotel restaurant

Restaurants that are located in a hotel go through a different process. Sometimes an established restaurant brand approaches a hotel with a restaurant concept or the hotel itself sends out a request for a proposal to its network or restaurant groups. Other times the decision to open a certain restaurant has something to do with how strong the restaurant brand is and its potential to pull in the type of crowd that specific hotel caters to.

Learn more: How hotels are using TableCheck to maximize F&B revenue | Hospitality trends 2024: What’s next for restaurants and hotels

4. Raising finance to open a restaurant venture

It is necessary to have sufficient funds to be able to open a restaurant. Restaurant owners may use personal funds from the get-go to finance their venture but if it's not enough they need to raise more capital. They can do the following:

• Get a loan from a financial institution

• Use grants or subsidies

• Borrow from relatives or friends

• Use crowdfunding

During an application screening process for loans, banks normally take a look at the financial capacity (personal funds) or credit score of the hospitality operator. The basic rule is that 50% of the budget should be self-financed and the rest should be covered by getting more finance from other sources.

When raising funds, develop a clear repayment plan and an income and expenditure plan. Loans, grants, and subsidies may be subject to a lengthy screening process so fundraising should be done around six to eight months before opening for business.

5. Restaurant branding: Interior and exterior store design

Once the property has been finalized, interior and exterior work should be carried out according to the design which involves the following steps:

Step 1: Planning and basic design
Step 2: Estimate
Step 3: Contract and start of construction

Planning and basic design are particularly important to avoid mistakes in interior and exterior work. When meeting with contractors and designers, they must get an understanding of the restaurant's branding and image, target audience, and business strategy without any discrepancies.

Once the planning and basic design have been completed, there will be an estimate of the costs required for the construction. Estimates often take one to two weeks. The total cost is the cost of multiplying the unit price by the number of square meters, plus the cost of facilities such as electricity, gas, and utilities.

It is also important to check progress frequently after construction has started. Rather than leaving all the work to the contractor, who is mainly responsible for the build and development, the owner should actively visit the site themselves to monitor the progress.

6. Obtaining the right licenses and permits

To open a restaurant, you must obtain a business license, a food license from the public health office, a sign marketing license for the restaurant shop, and even a building health permit.

It is often mandatory to have at least one 'food hygiene manager. In Japan, for example, a 'fire prevention manager' is also required for restaurants with a size of 30 or more persons. Chefs normally do not need to have any license but it is an added plus to the restaurant's credibility.

For those serving alcoholic beverages after midnight, a 'Late-night alcoholic beverage serving restaurant business notification' is required.

7. Purchasing of equipment and facilities

Having a well-equipped kitchen is important for the success of restaurant operations.

It is essential to have the following equipment in the kitchen:

• Gas table

• Sinks

• Cooking tables

• Commercial refrigerators

• Ice machines

In particular, sinks must meet the standards for food-related business licenses. Equipment should be divided into those required for the kitchen and those required for seating, and the number and type of items required should be organized and provided.

Examples of equipment required in the kitchen:

• Cooking utensils (knives, chopping boards, pots, etc.)

• Electrical appliances (ovens, microwave ovens, etc.)

• Storage items (e.g. plastic wrap, Tupperware)

• Sanitary items (detergent, rubbish bags, etc.)

Examples of equipment required for seating:

• Desks and chairs

• Tableware and chopsticks

• Tabletop items (e.g. condiment containers, coasters)

• Toiletries (toilet paper, soap, etc.)

• Other office supplies (stationery, cash trays for cash registers, etc.)

Learn more: Ensuring food safety in your restaurant – Key strategies for success

8. Hiring staff and promoting the restaurant

Once all the necessary preparations for the restaurant opening have been made, it is time to promote it. Create a website and social networking account, or use flyers, and direct mail place adverts in food-related magazines to advertise the restaurant. Choose the appropriate advertising method according to the restaurant's target audience and area. Making leaflets and shop cards is also a more effective way to promote your business.

Recruiting staff is also important, as is advertising the shop. Use social networking sites, posters, and job boards to attract staff. It is highly recommended to start hiring staff one month before the opening in order to provide adequate training beforehand.

Learn more: Why restaurant branding is a game changer in hospitality | How to train staff to deliver an exceptional guest experience

9. Role-playing before the restaurant launch

Role-playing is training by taking turns acting out roles in all possible situations that may arise in the workplace.

In restaurant role-playing, staff should take turns playing the roles of hall staff and guests, to improve their customer service skills. It is crucial to think about the small details to level up customer service and guest experience.

Learning from restaurant entrepreneurs

While the guide above is a great starting point, learning from other restaurant entrepreneurs will provide new restaurant owners with valuable insights into steering a successful restaurant venture. They need to look at restaurants that have similar concepts and do a SWOT analysis to find out their strengths, weaknesses, and opportunities to become competitive in the market.

Read how these restaurant owners established their businesses:

• Mamta Reid of Tudore Tranquility: Plant-based cuisine is the future

• Luke Clayton: The endless pursuit of maximizing guest satisfaction

• Grit, thirst for learning are Chef Mateu Villaret's keys to success

TableCheck helps restaurants maximize online reservations, optimize outlet operations, and elevate guest hospitality and loyalty through features like TableCheck EDM, Customer Survey, and TableCheck Insight.

This article was first published in October 2022 and updated in April 2024.