How to Start a Restaurant Business: 10 Steps to Ensure Success

Opening a restaurant is no simple feat. It requires a lot of effort not only to start one but also to sustain it. Notorious for having moving parts that need to be managed seamlessly, the restaurant business is not for the faint of heart. Still, many entrepreneurs continue to try their hand at it because of the unrivaled rewards that await those gritty enough to stick it out.

Whether you’re a food industry professional whose ultimate dream is to become a restaurateur or just an eager entrepreneur who sees an opportunity to fill a market gap, you can use some time-tested tips to help you maximize your success in this field.

Read on to get practical insights on how to start a restaurant business that can thrive in a post-pandemic world.

Why You Should Venture into the Restaurant Business

There are a handful of reasons why a restaurant is a good business to have. One of them is the growing popularity of dining out, caused by the rise in dual-income households. People’s increased expenditure on food has driven market growth and led to a boom in the restaurant market.

While the food service industry took a hit during the pandemic, people are now starting to ease back into their pre-pandemic routines. Also, the market forecast for the industry is again looking up. In fact, the global foodservice market is projected to grow from US$2.5 billion in 2022 to US$5.2 billion by 2029, at a compound annual growth rate (CAGR) of 10.8% in the forecast period.^[1] 

The Asia Pacific region is foreseen to experience the highest growth rate during the inclusive years. Full-service restaurants will hold a big chunk of the market share, but quick-service restaurants will display the fastest growth.

So if you’re planning to become a restaurateur, you still have a chance to grab a piece of the pie. The road ahead may seem daunting—but with good planning and preparation, you can avoid major humps and potholes, making your ride to success a little smoother.

How to Start Your Own Restaurant Business: A Checklist of Things to Do

Owning a restaurant requires a lot of patience and dedication. You can’t always get everything right the first time around. While mistakes and failures are inevitable in any business, you can minimize them by covering all your bases right from the get-go. 

Below are some proven tips to help you better learn how to start a restaurant business in the Philippines.

1. Immerse Yourself in the Community 

Prior to starting any business, it’s good practice to learn as much about the industry as you can to understand exactly what you’re getting into. 

Before you open a restaurant, go out of your way to do some research. Read relevant books and articles, watch videos, and go around and ask both local restaurant owners and your target customers about their experiences and preferences. Keep an ear out for any pain points you can address and any best practices you can replicate. 

You can also go for a fully immersive experience by working at a local restaurant and seeing for yourself how the many parts of the business—e.g., management, logistics, operations, finance, human resources, and marketing—come together. 

Immersing yourself in the community will not only help you understand the local market but also expose you to the realities of running a business. You might pick up some insights that will lead you to important realizations before making a commitment. 

This exercise will also help you make some fundamental decisions—like whether to open a restaurant from scratch or just buy a restaurant franchise. You’ll also get a better idea of what your target market likes and what restaurant segment works in a specific location.

2. Scope Out Your Competition

Tight competition is one of the startup challenges you’ll have to overcome as a newcomer in the restaurant industry. Carving out a decent share of the market will likely be tougher than you expect, especially if you don’t study the competition beforehand. 

As part of your research on how to start a restaurant business, pay a visit to all the restaurants in the vicinity and study their branding, menu, customers, and the general reputation they have among locals. See what they’re already doing and what they haven’t done before—and develop your competitive edge based on what you find.

Needless to say, make sure to do all this discreetly. You wouldn’t want to start a cutthroat rivalry with your business peers. A little friendly competition will keep things healthy for everyone. It will also push you to constantly innovate and find more ways to grow and improve.

3. Prepare a Business Plan

Once you’re done with your research, you’re ready to write a business plan for the restaurant. Armed with the knowledge and experience you’ve gained, you can start to map out your strategy for every aspect of the business.

As part of your business plan, make sure to clearly define your business concept and the overall market landscape. You should also add detailed information about your financial and marketing strategies. Moreover, lay out how you’ll manage your daily operations and define your staffing requirements, as well as your training programs. Don’t forget to include a section about health and safety compliance as well. 

Your growth aspirations and exit strategies should also be clearly outlined in your business plan. You can’t be too optimistic or too complacent when running a business. Instead, be equally prepared to go to the next round or withdraw from the race at the drop of a hat.

It’s important to remember that a business plan is not a rulebook that you have to follow word for word. Rather, it’s a guide to help you navigate the ins and outs of running a business. This document will evolve as you evolve, so don’t be afraid to write an initial draft.

4. Identify Your Target Market and Carve Out a Niche

No single business, let alone a restaurant, can capture 100% of the market. That’s just not how it works. You can attract a small percentage of the population—and that’s already good enough. 

Still, before you can do so, you need to first identify your target market and choose your niche. This is one of the most crucial parts when first starting out because it can create a ripple effect impacting the rest of your business.

Specifically, your target market can influence the location you choose and the brand you develop. It can also impact other aspects of your business like your menu, store atmosphere, and promotional strategies.

There are many types of restaurants in the Philippines, and some of them overlap. But your choice will ultimately boil down to two things: your personal preferences and the preferences of your target customers. 

When choosing a niche, it’s important to do both a self-analysis and a market analysis so that you can reach a compromise that will make you and your customers happy.

👉 Restaurant Styles Based on Budget

Identify if your restaurant is quick-service, mid-range, or upscale.

• Quick-Service – This type of restaurant has limited menus and offers quick, ready-made meals at relatively low prices.
• Mid-Range – This type of restaurant offers full meals and is known for its good value for money.
• Upscale Restaurant – This type of restaurant offers full-table service but at a higher price.

👉 Restaurant Styles Based on Food Concepts

You can also decide on a restaurant style based on the types of food you want to offer. Some popular food concepts include the following:

• Bakery
• Bar and grill
• Coffee shop
• Delicatessen
• Ethnic restaurants (e.g., Japanese, American, Spanish)
• Family-style
• Filipino fusion
• Pizzeria
• Seafood
• Steakhouse
• Vegan or vegetarian

5. Raise Startup Funds for Your Business

You can get everything planned out, but without sufficient funds, you won’t be able to get your business off the ground. The amount of capital you’ll need will depend on many factors, including the business model of your restaurant, among other things. Are you going for a cloud kitchen concept? Are you building a brick-and-mortar store? The answer will dictate your budget.

But even that is just scratching the surface. You also need to consider other factors like the size of your space, the location of your business, the number of employees you’ll hire, the tools and equipment you’ll use, and the marketing campaigns you’ll need to deploy to attract and retain more customers.

If you don’t immediately have the money lying around to cover all startup costs, you can explore different business funding options. You can apply for government assistance programs, look for business partners to split the costs with, find venture capitalists or angels that will invest in your business, or go to banks and lending institutions for help. 

6. Find a Suitable Location

It’s important to choose a good restaurant location because the space you choose will likely make up one of your biggest business expenses. Plus, depending on your business model and type, your location can greatly impact the profitability of your business as a whole.^[2]

Some of the factors you have to consider when choosing a location are the traffic density in the area and the proximity of the space to other business establishments. You want to make sure that you’re in a prime location for commercial activities. 

Another thing to consider is the visibility of your space. Will you be able to attract passersby who are not yet aware of your existence? 

Accessibility is another factor. If customers find you first online, will they be able to get to your physical store easily without taking extra, unnecessary steps? 

Ensuring a decent parking space is also something to think about. Some customers won’t bother to give your restaurant a try if you can’t offer them a decent parking spo

Finally, think about your capacity to pay rent. If you’re planning to put up a store in an upscale location, make sure your business can afford the rent in the long run. The last thing you want is to close your business because the only one profiting from it is your landowner.

7. Take Care of All Necessary Paperwork

A restaurant business is not just all about customer service. You can’t run a restaurant based on charisma and passion alone. While a significant part of this job is customer-facing, there’s also a lot that goes on behind the scenes. You must prepare for these to keep your business alive.

One of the most important items you should have on your checklist of how to start a restaurant business is obtaining proper permits and licenses. Some of the documents you need to secure include the following:

• Barangay clearance
• DTI business name certificate (for sole proprietors)
• Certificate of SEC registration (for corporations and/or partnerships)
• Community tax certificate or cedula 
• Sanitary permit 
• Contract of lease

There may be other documents you need to process apart from these. Just reach out to your local government to know what else you need to secure before opening your restaurant business.

8. Adhere to Health, Safety, and Sanitation Guidelines

Apart from the inevitable paperwork, there are also other administrative tasks that you need to carry out, including managing restaurant materials, inventory, and supplies as well as ensuring that you comply with local food product and safety regulations.^[3]

✔️ Basic Health and Safety Checklist for Restaurants

Complying with health and safety regulations will not only ensure the well-being of your employees and customers. It will also let you run your business smoothly without authorities breathing down your neck.

Below are some health and safety precautions you should take when running a restaurant.

• Require all employees to wash their hands thoroughly before preparing and serving food.
• Prevent cross-contamination by keeping different food types separated, using color-coded kitchen tools, and sanitizing each tool or equipment before and after use.
• Enforce the proper and consistent use of personal protective equipment (PPE) like gloves, non-slip shoes, and safety goggles. 
• Purchase supplies only from approved providers.
• Store, cook, and serve food at the ideal temperature.
• Reduce and manage waste responsibly to keep your site pest-free.
• Clear any walking surface of objects and obstructions that may cause slips, trips, and falls.
• Keep a first aid kit within the premises. Make sure every employee is trained in administering first aid.
• Have enough fire extinguishers on hand.

9. Build a Team that Supports Your Vision

One of the secrets to becoming a successful entrepreneur is investing in the right talent. If you can surround yourself with the right people and get them to rally behind you, you’ve already won half of the game. 

The people that make up a business also greatly influence its success, so find people who possess not only the right skills and experiences but also the right attitude that aligns with your vision. Remember, skills can be taught (that’s what training is for), but attitude is often innate and hard to rewire. While changing people’s attitude is doable, it’s just easier to build a team that believes in you, shares your vision from the get-go, and doesn’t think twice about helping you recenter when you veer off course.

Keeping your people happy is another thing to prioritize. When you own a restaurant, it’s not enough to find the right people. You also have to consider how to keep them happy. Thinking about your team’s welfare will do your business a favor in more ways than you could ever imagine.

10. Devise a Marketing Strategy to Build Customer Loyalty

Marketing should be a big part of your business strategy for your restaurant because you wouldn’t want a line out the door only on the first day. Instead, what you want is a consistent influx of customers day in and day out.

A marketing plan will help you get the word out about your restaurant and gain repeat business that will ultimately improve your bottom line. You can use digital marketing platforms to optimize your reach—but make sure not to forget the power of word-of-mouth marketing, especially in the restaurant business. 

Customers talk, and customers listen when other customers talk. If they say great things about your restaurant, you can be sure other people will try it out as well. Make sure to take care of your existing customers as part of your marketing plan. Create great menus, offer great services, and devise great loyalty programs that will elevate your reputation among your target customers.

Final Thoughts

If you want a magic manual that will teach you how to start a restaurant business that succeeds from day one, you’re out of luck—no such thing exists. And if it does, it’s most likely bending the truth—because when it comes to business, no outcome is ever guaranteed. You can only influence the results by minimizing the negative and maximizing the positive.

No business strategy is infallible—there’s always at least a 1% chance that it will fail. But what’s important in business is never letting the 1% keep you from trying. 

You can only do so much preparation before you begin. But until you take the first step and see for yourself what works and what doesn’t, you’ll never know how close you really are to making it as a successful restaurateur.

Sources:

• ^[1] Food Service Market Size, Share, and COVID-19 Impact Analysis (Fortune Business Insights, 2022)
• ^[2] Restaurant Management: How to Choose the Right Location? (EHL Insights)
• ^[3] Asia Pacific Food Law Guide: Philippines (Baker McKenzie)