How to start a restaurant business

Are you ready to start a restaurant? Our in-depth guide is packed with great insight on costs, budgeting, regulations and branding.

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Whether you’re an experienced chef that’s always dreamt of a place to call your own, or a savvy entrepreneur that’s spotted a gap in the market, opening and running a restaurant is a dream for many across the UK.

Still, it’s been a rough few years for the sector. Between rising business energy bills, supply chain issues, and a shortage of readily available staff post-Brexit, opening a restaurant is a venture that should be approached cautiously by would-be restaurateurs.

Thankfully, things are looking eggs sunny-side up. The food service industry workforce was projected to grow by 500,000 jobs by the end of 2023. Still, a lot of careful planning and hard work is required to reach the dizzy heights of success stories like Flat Iron and Mowgli.

Thankfully our guide is full of expert insight from seasoned restaurateurs and will give you plenty of inside knowledge on market research, costs, budgeting, regulations, and branding. Read on to find out everything you need to cook up an enticing restaurant business plan.

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Everything you need to create a website for your restaurant

There’s a lot of planning that needs to go into launching a successful restaurant. Thankfully, one area which needn’t cause undue stress is creating a website to promote your business. Thanks to modern templates like the one below, you can create one of your own in under an hour.

restaurant website template

At Startups.co.uk, we test and rate website builder tools, and we’ve identified Wix as one of the best you can choose for creating a restaurant site. Wix even has a selection of custom website templates designed specifically for restaurants – you simply drop your own restaurant’s information, wording, menu and preferred imagery into your chosen template. It can even create an online booking system for you. Better still, it’s completely free to try for yourself.

How to open a restaurant: step-by-step

We’ll cover these in more detail below, but first here’s an at-a-glance guide to some of the steps you’ll take when you start a restaurant.

  1. How much is it to open a restaurant?
  2. How to budget when starting a restaurant
  3. How to manage restaurant payments
  4. Write a restaurant business plan
  5. Restaurant market research
  6. Buying/renting restaurant premises
  7. Branding and designing your restaurant
  8. Stock your restaurant
  9. How to hire top talent

So, let’s really dive into each step, starting with costs:

1. Restaurant startup costs: how much is it to open a restaurant?

It’s almost impossible to give a definitive answer on restaurant startup costs – you could spend a few thousand pounds getting a popup going in an inexpensive area or a few million creating a high-end dining destination in central London. But, as a very rough guide, expect to spend at least £100,000–£200,000 getting a decent-sized restaurant off the ground.

Here are some of the bigger costs you’ll need to consider:

  • Premises – Whether you’re renting or buying, securing your restaurant premises will always be a major expense.
  • Staffing – You’ll almost certainly need to hire at least a few staff, and their wages should be a key part of your costs plan.
  • Supplies and equipment – Depending on how ambitious and experimental you want to be, you can spend a lot of money on catering equipment and ingredients. If you do, make sure you mark up your dishes accordingly.
  • Energy bills – Restaurants need a lot of power, so it’s crucial to shop around and find the best deal.

2. How to budget when starting a restaurant

To make money running a restaurant, it’s absolutely essential to budget effectively.

You need to work out your costs (like the ones discussed above) and give a reasonable estimate of what your sales might be. Your total sales minus your total costs is your profit (or loss), the most important number for any small business.

It can be hard to keep track of where your money’s going when you’re running your restaurant, so it’s a great idea to invest in some good accounting software once you’re up and running.

Top accounting software like QuickBooks costs around £20 a month and not only automatically track the money coming in and out of your business account, but also let you work out when your most profitable periods are and easily handle tax time.

To learn more, take a look at our rundown of the best accounting software for small businesses.

3. How to manage restaurant payments

When you’re starting a restaurant, getting a good POS system is essential.

You’ll need it to take payments and, while you might be able to get away with an iPad-driven POS system like Zettle to start with, advanced POS systems offer so much more than payments.

Lightspeed POS is our pick as the best restaurant POS system, and gives a good idea of the extra features you can expect from a high-end restaurant POS such as:

  • A customisable menu that lets you easily add or remove items to account for seasonality or food trends, and also add photos and descriptions to help your servers
  • The ability to take orders from anywhere and send them directly to the kitchen, making the whole process much more efficient
  • Inventory tools that make it easy to stay on top of your supply levels
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For more insight, check out our guide to the best POS systems for restaurants.

4. Writing a restaurant business plan

For the purposes of this guideline, we’re going to use a fictional establishment – let’s call it The Goodfare Restaurant* – to show you exactly how a restaurant business plan should work in practice.

You can find a more comprehensive breakdown of what to include in our general business plan template.

*Any resemblance to a real restaurant is entirely coincidental!

Executive summary

This is a brief snapshot of the key information the reader needs to know about The Goodfare Restaurant.

  • The restaurant – The Goodfare Restaurant is a 100-seat family eatery in North London, serving moderately-priced comfort food classics
  • Your mission statement – The Goodfare Restaurant exists to bring hearty, reasonably-priced grub to the masses
  • Objective(s) – to be the most popular moderately-priced eatery in North London
  • Values – the customer is almost always right

The company

This section should go into detail about the management team, the legal structure of the business, and operations.

  • Founders/management team – Founders Stelmo and Philip Blimp are brothers with a combined 25 years’ experience working in some of the UK’s most successful restaurants
  • Ownership structure – The Goodfare Restaurant will be 100% owned by the Blimp brothers (unless equity is given away as part of an investment deal)
  • Legal and insurance – The restaurant will abide by all UK health and safety laws, as well as food hygiene legislation etc.
  • Startup costs – We estimate initial startup costs for The Goodfare Restaurant will total £150,000, self-funded by the Blimps
  • Property – The 2,000 square foot property has space for 100 covers. It comes fitted with a functioning kitchen and bathrooms, but will require some minor renovation
  • Location – The restaurant is located on the high street in an area of high footfall
  • Opening hours – Monday to Friday – 11am to 11pm
  • Responsibilities – Stelmo will be responsible for stock management and finances, while Philip will be in charge of managing staff and payroll
  • Suppliers – Thanks to their years of experience in the industry, the Blimps have excellent relationships with a number of quality local suppliers

Market analysis

This section is where you prove the viability of your proposition with thorough market research.

  • The industry – over the last two years, London’s restaurant industry has seen the highest level of closures in decades, as well as very high staff turnover. Chains and high-end establishments have been hit particularly hard, with consumers hankering for more authentic independents like The Goodfare Restaurant
  • The target market – The local population of around 260,000 people is comprised of young professionals and families, with a median annual income of £40,000
  • Competitors – There are three direct competitors within a five-mile radius, including:
BingosCrunksSlaters
Size200 covers120 covers70 covers
Product / Service offeredStandard fareOverpriced swillHearty grub
Price of comparable product / serviceMenu prices range from £6-£17Menu prices range from £12-£25Menu prices range from £5-£12
Strengths

Familiar chain restaurant Great locationVery affordable prices
Weaknesses High staff turnoverOverpricedPoor location
Threats posed by competitorMuch better name recognition than Goodfare None Attracts a similar crowd to The Goodfare Restaurant
Opportunities presented by competitor Consumer shift towards independent restaurantGoodfare offers better food at a more reasonable price pointGoodfare is in a much better location

Marketing

The Goodfare Restaurant will position itself as the number one mid-range family restaurant in North London.

We will incorporate traditional and digital marketing elements in our strategy. Primarily, we will:

  • Develop relationships with local businesses by offering lunchtime deals
  • Implement a loyalty scheme
  • Encourage repeat visits through our email database

Financials

Restaurant finance

Below is a rough breakdown of the expected costs of starting and running The Goodfare Restaurant, and the revenue generated assuming an average table turnover rate (i.e. the number of daily sittings at each table) of 2.5.

A good rule of thumb is that you want to be turning over your tables every 45 to 90 minutes during busy periods.

Here are some other restaurant metrics you could track:

Startup costs – The Blimp brothers will provide the estimated £150,000 startup costs

Important assumptions – For the purposes of this business plan, we will assume the following:

  • Average customer spend of £20
  • Average 250 covers served per day
  • Average meal cost of £3.50
  • The restaurant will employ 25 people:
    • 10 waiting and bar staff on average salary of £18,000*
    • 10 kitchen staff on average annual salary of £24,000
    • Two managers and one head chef on average annual salary of £30,000
    • Two cleaners on average salary of £17,000
  • Sales forecast – Based on assumed daily covers and average spend, we estimate an annual revenue of £1,825,000 in the first year

Staff salary cost: £544,000

Average variable meal cost: £319,375

Annual rent: £365,000

Other running and maintenance costs: £91,250**

Total annual expenses for year one = £1,319,625

  • Startup costs = £1,469,625

Estimated year one profit of: £505,375

*Salaries based on data from Glassdoor

**The average restaurant budgets 1-3% of revenue for maintenance, according to restaurantequipmentrepair.org 

This is a very basic (and perhaps generous) breakdown of the estimated revenue and running costs of a restaurant in London.

You may have to provide a more granular account of your monthly expenditure and revenue sources in order to convince investors that your financials are sound.

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5. Restaurant market research

Your market research should focus on your local area, but it’s also worth noting the trends likely to impact the restaurant industry over the next few years, including:

Growing popularity of vegetarianism, veganism, and flexitarianism

Driven by factors like personal beliefs and a developing awareness of the impact of food production on climate change, lots of people are wanting to either eat less meat or no meat.

Indeed, a Statista survey in 2021 of 2,000 UK consumers found that 7% of respondents followed a vegetarian diet and a further 3% followed a vegan diet.

Increasing adoption of tech

Research company EHL Insights recently identified several digital tools whose use is rapidly growing in UK restaurants, including EPOS systems, digital menu boards for kitchen staff, online table reservation systems, QR code menus, online ordering, and inventory management software.

Not all of these will suit your business, but it’s worth considering which could really make it easier to run your restaurant.

Transparency, sustainability, and trust

Consumers are becoming much more concerned about the social and environmental impact of the restaurants they eat at, spurring developments like the iconic Michelin guide introducing a Michelin Green Star to highlight restaurants leading the way in terms of environmental sustainability.

6. Buying/renting restaurant premises

Finding the right restaurant premises is a hugely important part of starting a restaurant. There’s a lot to consider, from location and transport links to lease lengths and business rates.

To learn more, we spoke to Thibault Bouquet de Jolinière and Youri Michel – two of the co-founders of The Initiative Group, a French team that has launched and managed an eclectic range of hospitality outlets all over the world.

In short, they know their stuff.

Expert Insight – Thibault Bouquet de Jolinière and Youri Michel, The Initiative Group

Bouquet de Jolinière and Michel had the following advice for budding restaurateurs:

Location is king

“Location is always the most important factor in choosing your premises. You should be aware of both good and bad competition around you. Not having much competition will increase the time needed to become profitable, whereas if there are already a few successful restaurants nearby, then people will already be travelling to and from the area to eat and you may be able to benefit from this.”

Link your location and concept

“Don’t bring a concept to a location – instead, build a concept around the location you have chosen. You might be able to adapt your original concept, but you should always do proper market research to find out what else is in the area, and how it will affect your original plans.”

Things to ask

“We would always ask for both the rent and business rates, and we would also request to see the current licence on the property. We would recommend never buying an existing company, as often there is the risk you will end up finding hidden debts. And by taking over an existing company, you will also be taking over the staff – a cost and a risk you don’t want to inherit.”

Buying restaurant premises

Although the easiest way to obtain premises for your restaurant is to take over a pre-existing establishment (and you might even find one with a fully kitted-out kitchen and bar), this can be a major commitment.

Think about whether the size and location of the establishment really suits your plans and level of experience, and try to find out how the previous business fared and the reasons for the sale.

Bouquet de Jolinière and Michel advise that you should ask how long the lease on the property is for, and request the previous restaurant’s profit and loss statement.

If you do want to go down this route, BusinessForSale.com has a dedicated section for restaurants, which lists the asking price and sometimes the current turnover and net profit (otherwise you’ll have to request these).

Rightmove also lists restaurants for sale, where you can just buy the premises or commercial unit.

7. Branding and designing your restaurant

It may be the most important part, but having great food is only one aspect of running a successful restaurant.

You’ll also have to think about branding and design – your name, logo, menu and interior should all clearly convey your concept, and a striking website should show it all off.

Here are some pointers:

Restaurant name and logo

The name and logo of your restaurant should:

  • Leave a lasting impression
  • Be easy to pronounce and/or spell
  • Reflect your concept

Generally speaking, less is more. Aim for a single word or two that sums up your concept and create a logo that’s simple and doesn’t distract with too many colours.

Your market research should inform this process. Look closely at what your competitors are doing and think about how effectively their names and logos convey their concepts.

Finally, avoid well-known existing names – even if your family name is McDonald, calling your restaurant McDonald’s is only going to confuse people and maybe even get you sued.

Creating a restaurant menu

It’s easy to underestimate the importance of menu design, but it’s one of the main things that potential customers will base their dining decisions on.

A good menu should be descriptive, easy to read, and uncluttered, and complement your theme.

You should also break your dishes down into clearly identified sections, highlight special or popular dishes, eloquently and accurately explain your dishes, and include allergy and dietary information.

You should avoid clip art (use free image databases like Shutterstock instead), too much technical jargon your customers won’t understand, too many disclaimers, difficult-to-read “artistic” fonts, and overly long dish descriptions. You should also avoid laminating your menu.

Restaurant interiors

To get some expert guidance on restaurant design and layout, we spoke to Lauren Woodhouse from West Yorkshire-based LW Interior Design, who specialises in restaurant, bar, and hotel interiors.

Expert Insight – Lauren Woodhouse, LW Interior Design

Woodhouse shared the following golden rules for restaurant interiors:

The bar or feature kitchen should be the focal point

“The bar should always be the focal point of the room. It should be well lit and attractive, and you should be able to see it from all corners of the room. However, if you plan to have a feature kitchen where your diners can see the food being prepared, then this should be the focal point and the chefs should take centre stage.”

Hide the kitchen and toilets as much as you can

“Unless you have a feature kitchen, the kitchen should be situated at the back or at the side of the room. Similarly, the toilets should be situated towards the back of the restaurant, or downstairs and, where possible, have a good lobby/entrance vestibule so that the toilet door doesn’t open onto the restaurant and diners can’t see into the toilets when the door is open.

“Additionally, any stairs in a restaurant should be towards one of the outer walls, so that if anyone is going up/down, they don’t have to walk through other diners to get to them.”

The senses are key for interiors

“Ambience plays a key part in a customer’s feelings towards a restaurant. It’s good to play on the five main senses: sight, hearing, touch, taste, and smell all play a huge part in helping someone to decide whether they love or hate your restaurant.”

And she picks out some key trends.

“Deep, luxurious velvets are huge at the moment – they look and feel stunning, and can take a restaurant from fast food to fine dining easily! Nature is a huge trend as well. Greenery, whether faux or real, can create a sense of the outside within, and can be used to section off areas of the restaurant without a wall. Rattan style furniture and earthy tones are used to similar effect, and can make diners feel more relaxed.”

Your branding should also be a key part of your restaurant marketing campaign. Head to our restaurant marketing guide to learn how to launch with a bang and keep customers coming back again and again.

And, if you’re keen to make a splash with your restaurant Instagram page, then make sure you take a look at our how to use Instagram for business guide for some top tips on creating impactful Insta posts.

Restaurant website design

Wix restaurant template

One of Wix’s restaurant website templates

Once you’ve got a great name, striking logo, expertly crafted menu, and atmospheric interior, then you need a great website to show it all off.

Thankfully, setting this up is much easier than it used to be. Top web builders like Wix have loads of restaurant-specific templates that can be easily customised to reflect your design concept.

Or, just use Wix’s ADI (Artificial Design Intelligence) to create a restaurant website in minutes by making a few key design choices.

To learn more, head to our dedicated restaurant website design guide.


8. Stocking your restaurant: supplies and catering equipment

This is not exactly the glamorous side of the restaurant business, but you can’t have a restaurant if your chefs have nothing to cook and nothing to cook with.

That brings us to supplies and equipment.

Supplies and ingredients

When you put together your menu, you should have at least half an eye on your ingredient costs. If you can, try to avoid buying too many specialty ingredients that are only used in one dish and try to base much of your menu around common, affordable ingredients.

And remember, using an elite restaurant POS system like Lightspeed can make it so much easier to stay on top of your ingredient inventory – its counts update automatically as supplies come in and dishes are sold, leaving you one less thing to worry about.

Choosing a supplier

It’s really important to choose your food supplier carefully. You’re not just running the risk of late deliveries – unhygienic packing and transportation of perishable food products could pose a real health risk to you and your customers.

With that in mind, make sure to look into the following when considering suppliers:

  • Are they registered with the local authority?
  • Do they have any certification or quality assurance?
  • Are they recommended by other local restaurants?
  • Do they store, transport and pack their products in a hygienic way?

It’s also a good idea to carry out your own spot checks on temperature and quality to make sure produce is suitable.

You are legally required to keep a record of all food products you’ve bought, where you bought them from, how much you bought, and the date of purchase. Keep this information safe in case it ever needs to be presented to an inspector or enforcement officer.

Equipment

There’s no two ways about it, restaurants need a lot of equipment.

The following list should give you a good idea of the things you’ll need to invest in:

Cleaning and hygiene

  • Cleaning equipment (eco-friendly if possible)
  • Toilet hygiene
  • Pest control
  • Safety signs
  • Bins

Tableware

  • Crockery
  • Glassware
  • Cutlery
  • Table linen
  • Service trays

Consumables

  • Disposables (paper napkins, paper straws etc.)
  • Food labels and wrapping
  • Lighting

Clothing and uniform

  • Chef uniform
  • Staff uniform
  • Aprons

Kitchen appliances

  • Fridge
  • Freezer
  • Ovens
  • Deep fat fryer
  • Hobs
  • Stainless steel tables
  • Sinks
  • Shelves
  • Dishwashers and glasswashers
  • Microwave
  • Toasters

Catering equipment

  • Knives
  • Chopping boards
  • Graters
  • Food processor
  • Blenders
  • Pasta maker

Of course, not every restaurant will need all these things, and the dishes you serve are always going to impact the equipment that you need.

Finally, you really should carefully consider how you’ll manage the considerable energy costs generated by restaurants. Shopping around is crucial and our guide to the best small business electricity rates and suppliers for 2024 is full of top tips.


9. Restaurant recruitment: how to hire top talent

Hiring the right people is crucial to the success of your business, whether that’s front of house staff like greeters and waiters, or back of house personnel like chefs.

However, as our how to recruit in a hiring crisis piece discussed, this is not an easy time to hire people, with Brexit and “the great resignation” meaning there’s a shortage of high-calibre candidates.

A lot of the advice in that guide also applies to restaurants: ensuring that your establishment has a positive workplace culture that rewards its employees, making the story of your business a key part of your pitch, devoting enough time to hiring, and offering some form of flexible working.

When it comes to recruitment, The Initiative Group’s Thibault Bouquet de Jolinière and Youri Michel advise hiring a mix of experienced professionals that can mentor and bring consistency and younger employees that are cheaper and eager to learn.

It’s also important to offer incentives to keep your staff motivated, as well as career development paths that encourage them to stay with your restaurant for longer (such as a pay increase after a set period of time).


Final thoughts

As you can see, there’s a lot that goes into running a successful restaurant – you’ll need to tackle everything from recruitment to interior design.

But, if you’ve got the skills and a real passion for food, then this is a business that you can really stamp your personality on. Food may be the starting point, but successful restaurants are about identity and atmosphere combining to create memorable dining experiences.

While we’ve covered a lot in this guide, it really is just a starting point. There are loads of resources out there giving detailed advice on all the aspects of running a successful restaurant, so make sure you take advantage of them.

As long as you focus on creating a positive atmosphere for your staff and your customers, then you shouldn’t go too far wrong.

Good luck!

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Frequently Asked Questions
  • How much does it cost to open a restaurant?
    As a very rough guide, expect to spend at least £100,000–£200,000 getting a decent-sized restaurant off the ground.
  • How do I start a restaurant in the UK?
    This comprehensive guide includes expert insight on all the key parts of starting a restaurant business – covering everything from writing a restaurant business plan and choosing a premises to deciding on an interior style and hiring staff.
  • How much does a food license cost UK?
    According to Gov.uk, it's free to register, and your registration cannot be refused. You should register at least 28 days before opening.
  • Do I need permission to open a restaurant?
    No, you do not need permission to open a restaurant in the UK, however you do need to ensure you have a food licence.
Written by:
Alec is Startups’ resident expert on politics and finance. He’s provided live updates on the budget, written guides on investing and property development, and demystified topics like corporation tax, accounting software, and invoice discounting. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, and writing a wide variety of freelance pieces.
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