How to Open a New Restaurant: 4 Tips for Running a Restaurant

More than half of all new restaurants close within the first year of operation for various reasons. The most successful restaurant businesses, though, have the following:

1. 1. Business plan: The business plan for your restaurant should include information about your target customer, the type of restaurant you're opening, and potential locations. Writing the business plan will require extensive market research and can take years.
2. 2. Unique concept: Whether you're slinging fast food or opening a steakhouse, make sure your restaurant has a clear identity. Consider the restaurant menu items, service style, and the layout of the dining room, and make sure the concept is consistent throughout.
3. 3. Working capital: Profit margins are notoriously slim in the restaurant industry, in part due to high restaurant startup costs. Research potential investors or consider partnering with someone who has more experience and capital if you are unable to open a line of credit.
4. 4. Marketing plan: You’ll need a multi-pronged marketing strategy to reach your target market. Consult a marketing professional or interview successful restaurant owners to find out their marketing strategies. Ideally, you'll start marketing your business before it opens.

Every restaurant is different, but there are some general strategies that can help first-time restaurateurs launch a successful business:

1. 1. Start small with your eatery. Getting a small business off the ground can be a challenge without the support of wealthy investors. Start with a small venue, such as a food truck or pop-up restaurant, to help build your customer base and attract potential investors when your cash flow is limited. Location is key for building a strong customer base.
2. 2. Use the rule of quarters. To conceptualize costs, break down the restaurant expenses into four categories. Gordon Ramsay uses this strategy at his own restaurants, breaking down his expenses into four broad categories: labor, from executive chefs to dishwashers, bartenders, and general managers; purchasing, including food costs and restaurant equipment; rent; and the bottom line. If you translate this system to weeks in a month, your first week's earnings go toward the staff, while the earnings of the final week are profit.
3. 3. Focus on the guest experience. One of the best ways to attract new customers is to provide a positive dining experience for guests, who will talk about your restaurant to potential new patrons and become repeat customers. Ensure the members of your wait staff are well-trained and well-treated to build a positive atmosphere from the kitchen to the maitre d' stand.
4. 4. Find a partner or mentor. Owning a restaurant is a hands-on, labor-intensive effort, and most business owners need support. Talk to restaurateurs that you admire to learn about their process, and consider partnering with someone with more experience. You might also seek legal counsel to help navigate the application process for permits and licenses.

Become a better chef with the MasterClass Annual Membership. Gain access to exclusive video lessons taught by the world’s best, including Gordon Ramsay, Gabriela Cámara, Chef Thomas Keller, Dominique Ansel, Yotam Ottolenghi, Alice Waters, and more.