How to Start a Small Restaurant Business

By Ann Johnson

  • Overview

    In the early stages of starting a restaurant business, it is a good idea to establish a relationship with a qualified business accountant and to meet with an attorney. The attorney might advise establishing a corporation, or LLC, to protect the business owner's personal assets. Yet, that is just the beginning. There are many other tasks that must be completed before opening the doors for business.
    A. Johnson
    • Step 1

      Develop a business plan. You must decide what type of menu will be offered and the overall theme of the restaurant, along with the target location for the site. Short-term and long-term goals should be established.
  • Step 2

    Perform a feasibility study. Market studies need to be made to determine if there is enough demand for the intended restaurant in the target location.
  • Step 3

    Secure financing. Financing restaurants are difficult and typically require the borrower have extensive restaurant and business experience along with good credit. Investigate Small Business Administration (SBA) loans through local banks and talk to private financers. An extensive business plan will be needed for lenders.
  • Step 4

    Locate a building. Look for a commercial building in a visible location with traffic. The ideal commercial building is one that was previously a restaurant and will require less remodeling. Check with the city to verify the building can be used as a restaurant. Investigate building codes and discover what upgrades will be required. Make sure you have sufficient parking.
  • Step 5

    Hire a contractor to make the necessary upgrades to the building. There will be building codes, health codes and handicap access requirements to implement. Order a sign for the front of the building. Choose lettering that is legible and easy to read during the day and night.


  • Step 6

    Get a business license. Purchase one from the city. If a liquor license is needed, that will typically be issued by the state. Investigate liquor license requirements before deciding on a building as certain restrictions may apply. For example, in some states a restaurant cannot obtain a liquor license if it is too close to a school or church.
  • Step 7

    Contact the local health department. A health permit is typically required and some states require all restaurant employees take food handlers courses for certification through the health department before working in a restaurant.
  • Step 8

    Purchase restaurant equipment. Used restaurant equipment is often half the price of new restaurant equipment. Shop in restaurant supply stores and investigate auctions
  • Step 9

    Purchase workers' compensation insurance. A business must have workers' compensation insurance for the employees. Investigating a payroll company is also advised to prepare the paychecks and payroll taxes.
  • Step 10

    Purchase business insurance. Meet with a commercial insurance broker to obtain bids on liability insurance. Boiler insurance should also be explored to protect the business in the case of damaged equipment and losses.
  • Step 11

    Contact vendors. Establish a relationship with the local restaurant vendors and apply for credit. Request price sheets on the items you will be ordering to help you price the menu items.
  • Step 12

    Design a menu and calculate food costs to properly price the menu items.
  • Step 13

    Hire employees. Employees must be hired and trained. Decisions must be made on uniforms and employee policies.
    • Skill: Moderately Challenging
    • Tip: Attend a restaurant industry convention.

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