Business Overview

A fast food business sells affordable food to customers in as little time as possible. These restaurants provide service by way of drive-thrus as well as traditional sit-down meals. Some customers opt to bring their order with them in a “to go” fashion. This business is quite popular as it provides tasty food in a quick, low-cost manner. Open a fast food business and you will provide people with an affordable means of eating, staying energized, and feeling fulfilled.

Who is this business right for?

If you are looking for a way to make people happy, satisfy cravings and provide people with the sustenance they need to work hard, you should consider opening a fast food business. Fast food restaurants are ideal for those who enjoy making and serving delicious food that people of all income levels can enjoy. This business is your chance to improve the mood, satisfaction and energy levels of those in your community as well as those passing through town.

What happens during a typical day at a fast food restaurant?

The typical day at a fast food restaurant involves preparing, cooking, and serving food to customers. Employees take customer orders, make food, clean the restaurant and prepare ingredients for upcoming days. The fast food restaurant manager delegates work to employees, resolves customer complaints, interacts with the restaurant owner, and ensures customers are enjoying their experience at the restaurant.

What is the target market?

The target market is busy individuals who do not have the time or energy to cook meals. Youngsters and those who earn low wages are also target customers due to the comparably low cost of fast food.

How does a fast food restaurant make money?

This business makes money by selling food and drinks to customers.

What is the growth potential for a fast food restaurant?

Fast food businesses are extraordinarily popular. Most people work at least eight hours per day. There is little time left to cook meals once one has completed his/her workday, traveled home and taken care of additional responsibilities. This is precisely why fast food businesses are popular and growing. Establish a successful fast food restaurant, open up a second location, and continue to grow the business across the region. The potential for growth is unlimited.

Getting Started

What are some skills and experiences that will help you build a successful fast food restaurant?

An individual who has a background in food service or customer service will likely succeed in this line of business. The business owner should be hyper-focused on efficiency, cost reduction, and providing high-quality food in as little time as possible. He/she must be able to delegate work to others, keep labor costs under control and anticipate customer demand with a high level of accuracy.

What are the costs involved in opening a fast food restaurant?

This business requires the physical restaurant itself, cooking equipment, food/ingredients, labor, insurance and marketing. Building a restaurant can cost upwards of $100,000 or more. The cost of cooking equipment and ingredients will likely be several thousand dollars if not tens of thousands of dollars.

What are the steps to start a fast food restaurant?

Once you're ready to start your fast food restaurant, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2. Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your security guard company is sued.

STEP 3. Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4. Open a business bank account

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 5. Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6. Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7. Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8. Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9. Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting a fast food restaurant?

The success of this business is dependent on the customer experience. Hire mystery shoppers to get a gauge the quality of the typical customer's experience in terms of how long it takes to receive one's order, food quality, and employee friendliness. Of critical importance is speed. If it takes more than five minutes to take and complete a customer order, customers won't perceive the restaurant as an establishment that serves “fast food”. Make sure enough employees are available to fill orders in a timely manner.

Be sure to offer unique food items that can't be found at other local fast food restaurants. Try to offer healthy items so health-conscious customers have something tasty to order at your establishment. Location is critically important. Situate your fast food restaurant in a busy area of town with ample traffic so people can see and patronize your restaurant with ease. Many fast food restaurant entrepreneurs find it easier to open up a franchised location that is regularly assisted by a corporate headquarters. Such a setup provides the entrepreneur with guidance for every aspect of the business. However, opening up a franchised fast food restaurant limits the entrepreneur's ability to expand/alter the menu and operate the business in the manner he/she desires. So be sure to weigh all the positives and negatives of opening a franchised fast food restaurant versus those of launching your own unique fast food business.

Growing Your Business

How to promote & market a fast food restaurant

Promote the business through a wide variety of local channels. Increase awareness of your fast food restaurant through advertisements on billboards, in local newspapers, on the radio, TV, and beyond. Consider offering coupons in the local newspaper to encourage people to give your fast food restaurant a try. Consider giving away a free toy with offerings geared toward children. Sponsoring local events and sports teams to present your fast food restaurant and brand in a positive light will also help. You can also sponsor local contests, giveaways, and other promotions to increase your brand's exposure.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

The speed at which food is prepared, cooked, and served is the most important factor. Offer one or several drive-thru lanes so customers do not have to park their vehicles and walk inside to place their order. Keep your prices competitive with those offered at other local fast food chains.

How and when to build a team

It is important to hire employees right away. The business will require cashiers, line cooks, cleaning staff, a manager, a marketing expert, and an accountant. Though the business owner can handle marketing, accounting, and possibly even management duties at the outset of the restaurant launch, professionals must fill these roles as the business grows.

Legal Considerations

Federal Business Licensing Requirements

There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a fast food business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.

  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Certificate of Occupancy

A fast food business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a fast food business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your fast food business will be in compliance and able to obtain a CO.

Food Regulations

When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections

Earning Potential

How much can you charge customers?

Customers should be charged anywhere from a few dollars to $10 for the typical order. Fast food restaurants typically charge a dollar or two for a beverage and around $5 for the average food order.

What are the ongoing expenses for a fast food restaurant?

This business requires laborers, marketing, insurance, cooking equipment, monthly rent, and utilities. Laborers who take customer orders, cook food, serve meals, and clean the facility usually earn $7 to $10 per hour. Fast food restaurant managers earn between $25,000 and $55,000 per year. Accountants and marketing professionals earn a yearly salary in the range of $35,000 to $60,000. Budget several hundred dollars or more per month for utilities. Plan on spending $500 to $1,000 or more per month to market your fast foo restaurant. Cooking equipment and ingredients will cost several thousand dollars per month. Most fast food restaurant owners own their facility. Yet there might be a monthly loan payment. Budget $1,000 to $2,000 or more for the monthly loan/rent payment.

How much profit can a fast food restaurant make?

This business can rake in plenty of money. A single fast food restaurant can generate $50,000 to $100,000 or more per year. Open additional locations and it is possible to earn millions of dollars per year.

How can you make your business more profitable?

Add additional drive-thru lanes to accommodate additional customers. It is also possible for fast food restaurants to provide catering services for local businesses, organizations and events. Do not throw out old cooking equipment. Sell it to other restaurants and reinvest the proceeds in new equipment and improvements for your fast food restaurant.

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