How to start a Restaurant?

Published by MBA Skool Team, Published on January 06, 2016

The article covers steps on how to start a restaurant. Like any other business, restaurant is also like a company and requires lot of planning. The generation of today is characterized by rising disposable incomes, known for enjoying life to the fullest. And what is life without food right? Fun Fact: A lot of people are known to like or dislike a city based on the food available! And this trend is not hidden, more and more eating outlets are coming up every day. How does the idea of starting a restaurant of your own sound to you? Fun? Be your own boss! And be surrounded by everything you absolutely love. FOOD!

But starting a restaurant needs a lot of planning like any other venture. And there is a harsh reality that many more restaurants fail than those being successful. But of course, there are a lot of ways to reduce the risks of falling in the first category. So let us understand what all goes into planning to start a restaurant.


Steps to be considered while starting a restaurant :


Location is of utmost importance in a retail business. You might have everything in place: the right staff with the most amazing menu, but without the location being good, you are more than likely to fail. An entire article can be written on how to choose a good location. The factors to consider in a good location are visibility, accessibility, parking availability, competition, proximity to target market, population base around and the surrounding ambience suitability to your positioning.


No business can have a universal mass appeal ever. Many entrepreneurs have a trouble accepting this fact but this is the reality and your business cannot capture hundred percent of market share. As is said truly, if you try to impress everyone, you basically end up impressing no one. So have a pragmatic view and target the market share accordingly. A good market research can give you a close picture of what the true situation is like and what is the gap in the existing market that you can tap. This will help you evaluate the market share you are likely to garner with your restaurant.

Having said that, let us now evaluate WHO is the consumer at your restaurant:

a)    Millennial Generation: This generation also known as Gen Y is quite ethnically diverse, and it is more than three times in size that of Gen X. They have been the bull’s eye target of many food service outlets. This generation is known for its love for fast food and quick service restaurants.

b)    Gen X: Generation X are consumers roughly in the age of 45-65. This generation focuses more on their relationships and values, and a restaurant targeting this group should provide a comfortable ambience that focuses on comfort. This group favors quick service restaurants and those outlets that have mid-scale operations having buffets or salad bars where you can eat all that is there.

c)    Baby Boomers: Roughly in the age group of 65 and above, this group forms less percentage of population in India but quite prominent in the United States. They generally belong to the affluent class, and prefer fine dining i.e. restaurants provide up-scale and an experience of formal dining.


Every business has to identify the gap in the existing market setup. Once you have decided the location of your restaurant, you must do a thorough market research and analyze all the current offerings that are in place. Based on your skills and core competencies in terms of staff, training levels, funds- you have to identify what you can do well, and what can others not copy easily.

This niche would decide your offering and in fact everything about your restaurant. Your niche would decide the positioning of your restaurant based on which you decide the menu, the ambience, the layout, right communication channels etc. Based on your market research your offering could vary: it can be focused on seafood, or it could be a family style restaurant, casual style restaurant, an ethnic one, a pizzeria, a sandwich shop, or a coffeehouse or even a bakery.


The funds you need depends on the type of restaurant, the facility size, the equipments you are going to use, the inventory, your marketing and communication spends and of course the working capital. You can raise this money from your own savings, or family and friends. You can also get in partners for the necessary resources and that would enhance the skill set as well. Another option is to take a loan but be confident of paying back the loan and keep the securities accordingly.


Design plus layout are important contributors towards the success of a restaurant. For designing the layout, the important considerations are dining room, kitchen or cooking space, inventory and storage space and the office space. 50-65% of the space is generally allocated to the dining space since that is the major attraction of any restaurant, around 30% of the space is reserved for the kitchen and the rest is covered by storage and office area.


Keep all the factors in mind while creating the menu. You should know what consumers have with various foods. You can go with the regular booklet style if your target market finds that more comfortable. Or you can study consumer behavior while designing the menu; you can find supplementing food items and keep them together. Most of the customers don’t have set food items in mind before coming to a restaurant, or you can say they are open to giving in to their impulse cravings. You should use this to pitch in your best dishes. Some of the best dishes or seasonal offerings can be in the form of a small standee on table as well so as to capture more eye balls.

If you have a family restaurant, keep in mind all the members of the family, kids especially. The menu should not be too esoteric for your customers to understand. If you like to keep fancy names, a brief description would be helpful for the customers to better understand your offerings.

Though the varieties of menus have increased over time, the sizes of the menus are continuously decreasing. The consumers these days are busy and they don’t like to read a lengthy menu. Hence, keep the number of items on the menu in check and keep it simple and straight, but at the same time creative. Your menu can indicate those items which can be accustomed to particular nutritional requirements.


The realty of food business is that many aspects of food service operations are highly regulated and often subjected to inspection. The penalties can vary from fines to even shutting down the restaurant depending on the nature of deviations. Sanitation is a critical issue along with fire safety for your employees. You should consider all aspects of regulations concerning your restaurant and adhere to all requirements for a smooth functioning.


Finding the right labour for a restaurant is a challenging task. Your staff is the touch point with your end consumer and you would of course not want any aspect of that to go wrong. Finding the right chef who cooks finger licking food like how you claim it to be! And also the right on ground staff is crucial. A rude staff can easily turn away the customers.

Professional staffs like manager, back end operation head etc. can be recruited the right way by writing the correct job description and many campus recruitment opportunities are now available. These are some of the things you should consider for hiring: Hire right, create in depth job descriptions, understand the labour laws regarding wage laws, child labour laws, and report tips received and have a good training program in place.


You need to have a comprehensive marketing plan that encompasses your offering and clicks right with your target market. This requires a good communication plan on the right platforms. In the initial days of promotion, you can have offers to gain foot fall and induce trials for your restaurant. Needless to say, don’t forget Social Media.

So now we know that a lot more than impeccable food is needed to run a successful restaurant. One thing that is the toughest in this business is that you need to have a loyal customer base. So make sure you “serve” them right.

The article has been authored by Aastha Chawla, SIBM Pune.

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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