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Opening a Restaurant Checklist

opening a restaurant checklistI am certain this is the most complete, comprehensive opening a restaurant checklist you can find anywhere but if you think of something we missed let us know and we can add it. I’ve broken it into sections to make it easier to digest.

It is of course included as part of our Restaurant Success Kit but in the kit we go into a lot more detail on completing all the checklist items plus of course the software handles all the financial work and the business plan section guides you through a plan in record time. If you want to open a restaurant, this is the checklist to use!

Opening a Restaurant Checklist: Market Research

Before you can really start working on your plan you need to have an idea of what you want to do and cover some basic market research to make sure there is a sufficiently large market to support your business:

  • Define your general concept
  • Define your approximate area of operation
  • Gather demographic data for the area
  • Sort data for your assumed customer profile
  • Visit/survey competition in area for:
    • volume of business
    • similarity of concepts
    • price points
    • areas for improvement/gaps in offerings and services
    • gaps in service by location
    • density of competition in area
  • Identify best areas to locate business based on:
    • foot traffic
    • car traffic
    • proximity to complimentary businesses
    • available space for lease
    • leasing cost
  • Test demand for concept:
    • in person survey at location
    • offer menu items at nearest farmer’s market, food fair, etc. if applicable
    • email/mail survey of representative customer sample via facebook, etc.
  • Adjust concept based on feedback as required
  • Adjust menu based on feedback as required
  • Adjust prices/other variables as needed based on competition/feedback

Opening a Restaurant Checklist: Business Plan

If you plan to raise money to start your restaurant you will absolutely need a business plan as the first step in getting funded. Even if you are independently wealthy and will use your own money, having a business plan will reduce your cost to start a restaurant and increase the profitability and time to reach break even.

  • Write a Restaurant Mission Statement
    • must be able to clearly define what makes your restaurant concept unique
    • until you can complete this part there is no point to keep working on the rest
    • should be one sentence
    • test it out on friends, family, strangers, etc. to make sure they “get” it so you know you are being clear enough
  • Complete the Business Information Section
    • if you haven’t settled on a name for the restaurant yet now is the time
    • decide on hours of operation- you need this to determine menu and staffing
    • use neighborhood if you don’t have an exact address yet
  • Complete the Competition Section
    • must be able to define who your real competition is
    • per the mission statement, define how you are different/superior to the competition
    • if you can’t distinguish yourself, go back and work on the idea some more
  • Complete the Management Section
    • who are the people behind the idea
    • if you don’t have restaurant experience, now is the time to start recruiting experienced advisers
  • Complete Marketing Section
  • Complete Concept Section
    • Explain your menu
    • Explain your atmosphere
    • Explain your signature/most popular items
    • Explain what makes you unique (more detailed than mission statement)
    • Explain your price points
  • Complete Executive Summary
    • Summarize into one paragraph each of the previous sections
    • Rewrite until summary is one page and very clear explanation of overall business
    • Have people read it and then explain concept back to you- if they get it you are done
  • Financials Section
    • Once financial projections are done, add financials section
    • Add summary financial info to bottom of executive summary

Opening a Restaurant Checklist: Financial Projections

Without the numbers, the written business plan by itself isn’t going to do anything for you. The idea may sound great but does it make money? How much will it cost to start? How long until it breaks even? All these are things that restaurant financial software can answer for you in a snap even without any restaurant or accounting experience but doing it by hand or messing with Excel is way, way more difficult.

  • Create realistic sales projections based on survey of competition, market research, price points, etc.
  • Estimate accurate food costs for meals, beverages, bar items
  • Estimate labor costs, adjust as percentage based on business volume by day, week, month
  • Insert facility costs, including utilities, CAM charges, cleaning, disposal fees, etc.
  • Include marketing costs both for opening and ongoing expenses
  • Add in equipment purchase costs, include leased items
  • Include misc. costs including credit card fees, payroll processing, supplies costs, etc.
  • Adjust for vendor terms, accounts payable invoicing vs. COD, etc.
  • Include all loan payments with principal and interest payments
  • Estimate starting inventory costs
  • Include all costs for permits, licenses, etc.
  • Location expenses:
    • Add in buildout and tenant improvement costs for leased spaces
    • Add in construction costs plus purchase costs for owned spaces
  • Include depreciation costs and taxes
  • Create a comprehensive restaurant startup costs worksheet
  • Create an income statement, monthly for first year and quarterly for three years
  • Create a balance sheet, monthly for first year and quarterly for three years
  • Create a cash flow statement, monthly for first year and quarterly for three years
  • Create a sources and uses worksheet, insert info into business plan
  • After first version, adjust numbers for different scenarios to fine tune results for most accurate final version

Once the business plan and financials are done and you have created a complete funding package now is the stage where you can begin to raise money to continue the rest of the process. Until this happens usually no more progress is made and the money raising make take weeks or months depending on what your personal situation is and how well the above has been completed.

Opening a Restaurant Checklist: Location

Your location is one of your most important and most expensive assets in the whole process of starting your restaurant. Here are the things you want to cover thoroughly before finalizing this decision since once a lease is signed or property bought it is very difficult to undo the decision.

  • Scout available locations in your chosen area
  • Survey other local business owners and real estate brokers to find out the going cost per square foot in the area
  • Visit any locations that look viable
  • Interview and check references to find a contractor who is experienced in restaurant work
  • Bring contractor to preferred locations to get an accurate estimate of what work needs to be done and costs
  • Have contractor check adequacy of plumbing, electrical, venting, sewage, etc. prior to lease negotiation (particularly for a space which was not previously a restaurant)
  • Interview and check references to find a commercial real estate attorney to help you negotiate a fair lease for property you are interested in acquiring
  • Negotiate with landlord or property manager for lease, tenant improvement allowance, rent holiday until open and any other possible concessions
  • Plan work timeline with contractor
  • Carefully and frequently check on work progress and manage contractor
    • make sure they are hitting milestones
    • make sure they are getting the needed permits for work
    • make sure they are managing subcontractors sufficiently
  • Purchase required equipment and building systems for installation
  • Purchase outdoor signage and have installed
  • Purchase required furniture and decor and have set up

Opening a Restaurant Checklist: Menu Plan

The food you serve is obviously at the core of your business. Start with your general ideas and refine them based on what your market is most interested in and what makes sense from a profit and food cost perspective. People tend to get distracted here based on what they want and like but remember the business decisions should be based on the overall appeal and what is going to work financially if you want to achieve long term success and profitability.

  • Create a list of basic menu items for each service time (if applicable, ie breakfast, lunch, dinner)
  • Create an ingredients list for each menu item
  • Adjust to maximize cross use of ingredients to increase inventory efficiency
  • Test make each item to check for timing, adjust as necessary for items that take too long
  • Price menu item food cost vs. menu price and adjust ingredients/portion size/price until correct mix is achieved
  • Adjust item mix to create more value with pre-designed combo meals
  • Reduce list of menu items to the ones most likely to stand out and be amazing- smaller menus are generally better
  • Design print menu using sound menu engineering principles to increase profits and sales
  • Show menu samples to potential customers for feedback, ideas
  • Adjust as necessary
  • Interview food vendors who can supply you with the ingredients you need and select one or more to work with
    • compare prices
    • compare delivery schedules/terms
    • compare invoicing options/flexibility
    • ask about hidden vendor charges such as fuel surcharges, etc
    • ask about online ordering/integrated ordering with your POS system

Opening a Restaurant Checklist: Permits and Licenses

This is often a part of the process people complain about but it really isn’t a big deal if you just use the phone and take a smart approach- such as using a good checklist. 🙂 Start asking questions early and often and ask more than once and more than one person about this.

The common mistake it to take one person’s word on something only to find out later they were wrong or only partially right. These things can take a long time to deal with so at every turn ask everyone what you will need and keep a detailed checklist for what you have and what you are still waiting on. Skipping something can delay your opening and that costs money which is always a very precious resource.

  • Consult with your restaurant advisers to get a list of all the necessary permits you will need
  • Consult with your contractor to get a list of all necessary permits/code allowances/building inspections you will need
  • Consult with your local government agency on business permits required
  • Consult with the health department on permit requirements
  • Consult with the local fire department on permit requirements
  • Consult with the landlord on permits and requirements needed
  • Consult with the ABC or other local liquor licensing agency on getting a permit to serve alcohol if applicable
  • Get a sales tax permit if your state or area charges sales tax
  • I strongly suggest forming an LLC or S-Corp (in the US) to limit your liability as a business owner

Opening a Restaurant Checklist: Business Setup Tasks

These are all the things you have to do to set up any business, not just a restaurant. Most of them don’t take much time but they all need to get done and some require some lead time to accomplish so start early and knock them out one by one.

  • Get the required restaurant insurance policies in place
  • Interview and hire a bookkeeper, ideally one with a relationship with a good accountant for tax time
  • Decide on and purchase a restaurant point of sale system, get it set up and tested
  • Get a payroll service set up, ideally tied in with your POS system for clocking in and out and tracking employee time worked
  • Get a business bank account
    • Make sure there is a branch location that is convenient for buying change and dropping deposits
    • Make sure the fees are zero or very low since your business will be big enough to not have to pay fees
  • Get a merchant account so you can accept credit cards
    • shop around, your bank probably will NOT offer the best deal
    • you should not have to lease a machine- buying one is much cheaper or have it included in your POS system
    • check Costco for rates- they have been very competitive for merchant accounts
  • Get a business credit card for non delivery purchases
  • Get a phone system set up
  • Get an internet connection set up
  • Purchase uniforms unless you are going to be renting
  • Interview and hire a linen service if applicable
  • Interview and check references on a reliable repair company for refrigeration and plumbing
    • Trying to find one when you have an emergency is much worse, more expensive and less likely you end up with a good one
  • Find and retain a grease trap cleaning service unless you are going to do it yourself

Opening a Restaurant Checklist: Hiring and Training

Your staff is one of the most important parts of your business and you need to find, hire and train a starting crew well before you open your doors.

  • Write thorough job descriptions for each position in your restaurant
    • this will aid you in creating a training program
    • once in action you may see overlap or gaps you can correct
    • without a description it will be hard to find the right people for the right jobs
  • Post classifieds for the positions, sort responses first on the phone, then schedule interview times in a cluster to save time
  • Give each potential candidate the same questions and screening to be fair and legal
  • Start cook training at least two weeks before soft opening, server training at least one week before
  • Create a training program as you go, filling in areas where they need more work, etc.
  • Keep the best candidates, eliminate the questionable ones if you over-hired
  • Run through practice problems with servers and cooks to ensure no problems at opening
  • Use soft opening to further weed out problem staff and add additional people as needed prior to official opening

Opening a Restaurant Checklist: Marketing

You must start marketing your new restaurant as early as possible and be sure to collect names and email addresses so you can keep them up to date on your progress as you get closer to opening. Be selective in who you invite to your soft opening since you want practice and to have as little negative feedback as possible at the same time.

Once you are ready, launch far and wide through as many channels as possible to reach your potential customers and don’t stop once you start to get busy- keep it up. The most valuable resource for marketing once you are open is a loyalty marketing program so start building that right from the beginning.

  • Have a website built
    • shouldn’t cost a ton- well under $1,000
    • don’t let them use flash- bad for search engines and user experience
    • must be able to collect email addresses and build an email list
    • consider having a mobile version as well
    • get listed in all local review sites and directories
    • put your URL (www.yourname.com) on all your ad materials
    • having a website can happen even before you have raised money as it builds credibility
  • Get a Facebook fan page and link to your website
  • Get a Twitter account
  • Price the most popular coupon mailers in your area
  • Consider online ads on facebook
  • Create a loyalty marketing program using your own email list or a third party system
  • Get signs/banners made for grand opening announcement
  • Consider partnering with other businesses to promote yours
  • Plan a PR push, contact local media for coverage, interviews, etc.

Whew- sound like a lot? It is and it isn’t. If you break it down into steps and knock off one at a time it is very doable. If you just read the whole list and let it overwhelm you it will be a challenge.

Our list covers the vast majority of what will need to be done. Of course the details will vary depending on the specifics of your restaurant but once you have completed them all then you can work on your soft opening that will lead to your grand opening and then the fun really starts!

 

 

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