How to Start a Restaurant in 10 Steps

You know your concept would work. You've imagined the menu, the vibe, the regulars who'll become family. But when you sit down to actually figure out how to start a restaurant, the questions hit you all at once.

How much money do you really need? Where do you even begin with permits and licenses? How do you hire a team that actually shows up? What if you spend everything you have and still fail in the first year?

Learning how to start a restaurant isn't just about great food and a dream location. It's about having a clear plan that covers the money, the legalities, the team management, and the daily operations that separate thriving restaurants from the ones that close after six months.

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TL;DR: How to start a restaurant in 10 steps

Opening a restaurant means juggling restaurant startup costs, navigating permits and licenses, building your team, and creating systems that actually work. Here's your roadmap—from choosing your restaurant concept to launch day and beyond.

Planning & Money

1. Choose your concept and restaurant type

2. Build a restaurant business plan

3. Estimate your startup costs

4. Secure funding (even if you want to start a restaurant with no money)

Legal & Setup 

5. Get restaurant licenses, permits, and business structure 

6. Plan your layout and buy equipment

Team & Operations 

7. Hire and schedule your team (this is the make-or-break piece)

Launch & Growth 

8. Design your menu and pricing 

9. Market your restaurant and launch 

10. Learn how to run a restaurant efficiently

The key? Don't skip team management. Restaurant staffing chaos—endless schedule changes, no-shows, labor cost surprises—burns out more owners than bad food ever will.

Step 1: Choose your concept and restaurant type

Your restaurant concept isn't just about the food you'll serve—it's the foundation that determines your startup costs, staffing needs, and honestly, your odds of making it past year one.

What type of restaurant is best to start?

There's no single "best" type—but there's definitely a best type for you based on your budget, experience, and what your neighborhood actually needs (not what you wish it needed).

Fast-casual: Counter service with quality ingredients. People want good food without the wait or formal service. You'll need less staff than full-service but can still charge decent prices.

Ghost kitchen: Delivery-only, no dining room overhead. Perfect for testing your concept while starting lean—no tables, no servers, no dining room buildout.

Food truck: Mobile flexibility, lower rent. Build a following before committing to brick-and-mortar. Test different neighborhoods and adjust based on real feedback.

Full-service restaurant: Table service, broader menus. Better margins are possible, but you're signing up for higher complexity, more staff management, and costs that don't stop.

Here's the thing: Don't pick what you love to eat. Pick what your market needs and what you can execute consistently when you're running on five hours of sleep and two people called out.

Step 2: Build your restaurant business plan

Your restaurant business plan isn't just something you write to impress investors—it's the document that keeps you sane when you're three months in, cash is tighter than expected, and you're questioning every decision you've made.

What belongs in a restaurant business plan

Most restaurant business plans collect dust in a drawer. Don't write that kind. Write the kind you'll actually open when you need to remember why you're doing this and whether you're still on track.

Executive summary: Your concept, target market, and why you'll succeed in one page.

Market analysis: Who you're serving, what gap you're filling, and why competitors aren't doing it. Visit every restaurant within five miles.

Sample menu with pricing: Prove you understand food costs (target 28-35%) and profit margins.

Restaurant staffing plan: How many people, what roles, realistic labor costs (30-35% of revenue). Be specific.

Financial projections: Startup costs, monthly burn rate, when you'll break even. Be honest, not optimistic.

Marketing approach: How you'll get your first 100 customers, then the next 1,000.

Restaurant business plan essentials: The numbers that matter most

When you're lying awake at 2 AM wondering if you made a huge mistake, these numbers tell you whether you're on track or need to pivot:

• Your break-even point (how many customers daily at what average check size)
• Monthly operating costs broken down by category
• Realistic timeline to profitability (usually 12-18 months, not 6)

Step 3: Understand your restaurant startup costs

Opening a restaurant costs serious money. Not "I'll figure it out as I go" money—actual calculated, budgeted, backed-by-real-numbers money. The question isn't whether you can afford it, but whether you've budgeted for everything that'll actually cost you money.

How much does it cost to start a restaurant?

The honest answer depends on what you're opening and where. A food truck in a mid-sized city runs completely different numbers than a full-service restaurant in a major metro. Here's what you're actually looking at:

Small takeout or counter service: $175,000-$375,000

This is your most accessible entry point for brick-and-mortar. You're looking at:

• Lease deposit and rent: $15,000-$50,000
• Kitchen equipment: $75,000-$150,000
• Furniture and serviceware: $10,000-$25,000
• Licenses and permits: $5,000-$15,000
• Initial inventory: $8,000-$15,000
• Working capital buffer: $50,000-$100,000

Food truck or ghost kitchen: $50,000-$200,000

The lowest barrier to entry, but don't confuse "lower cost" with "easy." Your breakdown:

• Truck purchase or kitchen lease: $40,000-$100,000
• Equipment and outfitting: $20,000-$60,000
• Permits and insurance: $5,000-$15,000
• Working capital: $20,000-$40,000

Full-service restaurant: $500,000-$2,500,000

This is the big leagues. You're committing to:

• Lease and buildout: $200,000-$1,000,000
• Commercial kitchen equipment: $150,000-$400,000
• Furniture, décor, bar setup: $75,000-$200,000
• POS and tech systems: $15,000-$40,000
• Pre-opening expenses (training, soft opening): $30,000-$75,000
• Working capital for 6+ months: $150,000-$500,000

What stops most first-time restaurant owners

Not the equipment costs you can see—it's the working capital you didn't budget for. Your first three months might have weak sales while you're paying full rent, utilities, insurance, and payroll.

Smart restaurant owners use scheduling and time tracking from day one to control these costs, avoid overstaffing during slow periods, and prevent the kind of labor cost creep that kills tight margins before you're even profitable.

Restaurant profit margins: The 30/30/30/10 rule

Here's the math that explains why restaurant ownership is hard:

• 30% food costs
• 30% labor costs
• 30% operating expenses (rent, utilities, insurance, marketing)
• 10% profit (if you're lucky and disciplined)

These percentages explain why restaurant margins are brutal and why controlling labor costs from day one isn't optional. If your labor creeps to 35% and food costs hit 33%, your profit disappears entirely. You're working 80-hour weeks for nothing.

Track these percentages daily, not monthly. When you see costs drifting, adjust before small problems become fatal.

Step 4: Secure your funding

You've seen the numbers. Now you need the money. Each funding source comes with tradeoffs—pick the one you can actually live with.

Your realistic funding options

Self-funding: Fastest path but riskiest. You skip loan applications and months of waiting, but you're betting your savings on a business where 60% fail in year one. Only self-fund what you can afford to lose entirely.

SBA loans: The best terms of small business loans typically start at 10-13% interest, but are hardest to qualify for. You'll need strong personal credit (680+), a detailed business plan, often personal collateral, and 60-90 days for processing. 

The paperwork is extensive, but these are the most affordable restaurant financing available.

The paperwork is extensive. But if you qualify, these are some of the most affordable restaurant financing available. Learn more about SBA 7(a) loans and SBA loan requirements.

How to start a restaurant with no money

The honest answer: You can't start with literally zero. But you can start lean:

Shared commercial kitchens: Rent by the hour ($20-50/hour) instead of signing a 5-year lease. Test your concept, build revenue, and prove demand before committing major capital.

Pop-up trials: Test at farmers markets or during other restaurants' off-hours. Get immediate customer feedback, revenue while you plan, and proof of concept before major investment.

Catering first: Build revenue and reputation before opening a physical location. Lower overhead than a restaurant, tests your operations under pressure, and generates cash flow you can reinvest.

Crowdfunding: Local food concepts with strong community support can raise $20,000-$75,000 through Kickstarter or Indiegogo. Works best when you already have neighborhood connections and a compelling story.

The bottom line: Start smaller and scale up beats starting big and failing fast. A food truck that succeeds can become a restaurant. A failed full-service restaurant just becomes debt.

Step 5: Register your business and get licenses

The paperwork isn't sexy, but skip it and you'll face fines, shutdowns, or worse.

What do you need to open a restaurant?

Opening a restaurant requires specific legal structures, licenses, and permits before you can serve your first customer. The exact requirements for starting a restaurant vary by location, but every restaurant needs a business entity, food service permits, and employee certifications at minimum.

Business structure (pick one):

LLC (recommended): Protects your personal assets from business debts, offers flexible tax options, and makes it easier to access business financing. Best choice for most restaurant startups.

Sole proprietorship: Simplest setup but zero liability protection. Only works for very small operations like food trucks, and even then it's risky.

Corporation: Complex, best for larger operations seeking investors. More paperwork, more compliance, not worth it for most small restaurants.

Licenses and permits you absolutely need:

Business license: Legitimizes your restaurant as a legal entity. Required everywhere. Costs and processing times vary by city.

Food service license: Issued by your health department after they inspect your kitchen. Costs $100-$1,000 depending on location. Requires passing food safety standards.

Food handler's permits: Required for every employee who touches food. Must be obtained within 30 days of hiring in most states. Covers chefs, cooks, servers, even baristas. Costs typically range from $10-$20 per employee.

Seller's permit: Allows you to collect sales tax. Usually no application fee, but some states require a small security deposit.

Additional permits (if applicable): liquor license, signage permit, outdoor seating permit, live entertainment license.

Timeline reality

Start permit applications immediately after signing your lease. Some take 2-4 months to process, with liquor licenses potentially taking up to a year. You can't open without them, so don't let permits become your bottleneck.

Step 6: Plan your restaurant layout and buy equipment

Bad layout means your team bumps into each other during rushes. Missing restaurant equipment means you can't cook half your dishes. Both kill your opening timeline.

Restaurant space allocation that actually works

When planning your small restaurant layout, follow the 60/40 rule: 60% dining area, 40% kitchen/prep/storage. This maximizes revenue while giving your kitchen team room to work.

The standard is 5 square feet of kitchen space per dining seat. Planning 50 seats? You need roughly 250 square feet of kitchen.

Organize your space so ingredients flow logically: receiving → storage → prep → cooking → plating → service. Your team shouldn't cross paths constantly or walk 30 feet for a spatula during dinner rush.

Restaurant equipment list: essentials for opening day

Every restaurant needs these basics:

• Commercial refrigeration and freezers (walk-in or reach-in)
• Cooking equipment (range, oven, grill, fryer)
• Prep tables and shelving
• Dishwashing station (3-compartment sink minimum)
• Smallwares (pots, pans, utensils, containers)

Full-service restaurants also need plateware, glassware, bar equipment, and a POS system.

What you'll actually spend on restaurant equipment

Budget $40,000-$150,000 for small restaurants, $150,000-$400,000 for full-service. Used equipment cuts costs 30-60% but comes with breakdown risks and no warranty.

Don't cheap out on refrigeration. A failing walk-in costs thousands in spoiled inventory plus lost revenue when you can't serve half your menu.

Step 7: Hire and schedule your restaurant team

This is where restaurant dreams die or thrive. Perfect food and a great location mean nothing if your team doesn't show up.

Restaurant hiring essentials

Start with your core team: a kitchen manager or head chef, experienced servers for full-service, and reliable opening/closing staff. Build your core, train them well, then add more.

Hire for attitude over experience. You can teach someone to make a latte. You can't teach them to care or show up consistently.

Restaurant turnover averages 75-80% annually. Three out of four positions turn over every year. Always be recruiting.

The restaurant scheduling nightmare

Sunday night: building schedules. Tuesday: someone calls out. Wednesday: shift trade requests. Saturday: your closer no-shows and you're covering.

Then repeat next week until you're burned out.

Smart restaurant owners use scheduling tools from day one to create schedules in minutes, publish with instant notifications, coordinate shift trades, and post open shifts instead of desperate phone calls.

Restaurant labor cost control

Restaurant profit margins run 3-5% for full-service, 6-9% for fast-casual. With margins this thin, labor cost creep kills profits fast.

Track labor costs daily. When costs drift, adjust schedules before they impact your margins.

Daily restaurant operations basics

Create opening and closing checklists. Track sales, food costs, labor hours, and customer counts daily. You need real-time visibility, not month-end surprises when it's too late to fix problems.

Step 8: Create your restaurant menu and pricing strategy

Your menu is your profit engine. Get pricing wrong and you'll work 80-hour weeks for nothing. Get it right and you'll actually make money.

Start simple with your restaurant menu

Pick 15-20 items you can execute perfectly during your busiest rush. Long menus mean more inventory, more waste, and more mistakes when you're slammed.

Cost every single dish. Target 28-35% food costs. List every ingredient, price it accurately, and account for waste. Don't lose money on your signature dish because you forgot the garnish costs money.

Test pricing against competitors, then price based on your actual costs. Test everything multiple times during busy periods—can your kitchen actually handle it when you're seating 50 people at once?

Place high-profit items in the top-right corner where eyes go first. Use seasonal ingredients to keep costs down and quality up.

Step 9: Market your restaurant and plan your launch

You've built it. Now you need people to actually show up on opening day—and keep showing up after that.

Build buzz before you open your restaurant

Start social media 2-3 months before opening. Post behind-the-scenes content, introduce your team, show the space coming together. People support businesses they feel connected to.

Target your immediate neighborhood: local Facebook groups, Nextdoor, nearby businesses, community events. The customers within a mile will make or break your first year.

Collect emails from day one. Send updates about your opening date, menu previews, and special offers.

Grand opening tactics that work

Soft opening first: Run limited hours with friends and family before your official launch. Work out the kinks when stakes are lower—discover that your ticket printer jams or your pasta takes too long before it's a public disaster.

Invite local food bloggers and neighborhood media. Local press reaches exactly who you need—people nearby who'll actually visit.

Focus on consistency over flash. Better to serve 50 customers exceptionally than disappoint 150 with chaos and long waits.

Step 10: Run your restaurant efficiently

Opening is the beginning, not the finish line. Here's how to run your small restaurant day to day without burning out.

What it takes to run a small restaurant day to day

Track these restaurant metrics daily: 

• Total sales
• Food cost percentage (28-35%)
• Labor cost percentage (25-35%)
• Customer counts
• Prime cost (food + labor under 60-65%)

When numbers drift, you need to know immediately—not at month-end when you've already bled thousands.

Build restaurant systems that don't depend on you

Create detailed opening and closing checklists. Conduct weekly inventory counts. Mystery shop your own restaurant monthly.

The restaurants that survive year five aren't the ones with the best food. They're the ones with the best systems.

Start your restaurant strong with the right tools

You didn't open a restaurant to spend Sunday nights rebuilding schedules or chasing no-shows. You opened it to serve great food and build something you're proud of.

Homebase gives you the team management tools you need from day one:

• Scheduling that actually works: Build schedules in minutes. Let your team swap shifts themselves. Stop being the middleman.
• Labor costs you can see: Track spending in real time. Get overtime alerts before employees hit thresholds. No restaurant payroll surprises.
• Team communication that's simple: Reach your entire team instantly when someone calls out.
• Compliance built in: Automatic break reminders for your state. Time card storage. Overtime tracking. Stay compliant without becoming a labor law expert.
• Payroll that connects: Your time tracking feeds directly into payroll. No manual entry, no math mistakes.

Try Homebase free and get your team running smoothly before your first customer walks in.

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Frequently asked questions about starting a restaurant

How much money would I need to open a restaurant?

Small restaurants need $175,000-$375,000 covering lease deposits, equipment, inventory, licenses, and working capital. Full-service restaurants require $500,000-$2.5 million.

The biggest mistake? Underestimating working capital. Your first 3-6 months will have weak sales while you're paying full rent and payroll. Budget at least 3-6 months of operating expenses as a buffer or you'll run out of money just as customers start discovering you.

What is the 30/30/30/10 rule in restaurants?

The 30/30/30/10 rule shows how revenue should break down: 30% food costs, 30% labor costs, 30% operating expenses (rent, utilities, insurance), and 10% profit.

This explains why controlling labor costs isn't optional. If labor creeps to 35% and food costs hit 33%, your profit disappears entirely. Track these percentages daily so you can adjust before small problems become fatal.

What do I need to open a restaurant with no experience?

Work in restaurants first for 3-6 months to understand daily operations—seriously, do this before spending your life savings. Take culinary or management courses. Find a mentor or partner with someone experienced.

Focus on building systems from day one: scheduling tools, time tracking, checklists, inventory management. Strong systems compensate for lack of intuition. Hire at least one experienced kitchen manager or GM.

How long does it take to open a restaurant?

Plan for 6-12 months from concept to opening: 2-3 months for planning and funding, 1-2 months for location search, 3-6 months for permits and buildout, and 1-2 months for hiring and training.

Biggest delays? Permit approvals (can take 3-6 months alone), construction issues, and equipment lead times. Start permit applications immediately after signing your lease since some tasks can happen simultaneously.

What type of restaurant is cheapest to start?

Food trucks ($75,000-$200,000) and ghost kitchens ($50,000-$150,000) are cheapest because they eliminate dining room buildouts and minimize rent—test your concept before committing to brick-and-mortar.

Fast-casual ($300,000-$600,000) is the cheapest traditional restaurant format: smaller spaces, simpler kitchens, counter service, and lower complexity. You can start small (1,200-1,500 square feet) and still serve quality food.