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.
Learn how to start your own Fast Food Restaurant and whether it is the right fit for you.
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Start a fast food restaurant by following these 10 steps:
- Plan your Fast Food Restaurant
- Form your Fast Food Restaurant into a Legal Entity
- Register your Fast Food Restaurant for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Fast Food Restaurant
- Get the Necessary Permits & Licenses for your Fast Food Restaurant
- Get Fast Food Restaurant Insurance
- Define your Fast Food Restaurant Brand
- Create your Fast Food Restaurant Website
- Set up your Business Phone System
We have put together this simple guide to starting your fast food restaurant. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Fast Food Restaurant Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
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 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.
Who 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.
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.
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.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your fast food restaurant is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
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.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
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.
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.
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.
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
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Fast Food Restaurant needs and how much it will cost you by reading our guide Business Insurance for Fast Food Restaurant.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
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.
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.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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 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 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.
Take the Next Step
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
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.
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.