Start a fine dining restaurant by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your fine dining restaurant . These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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 are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a fine dining restaurant ?
You can easily spend a million by building your destination eatery and filling it with the very best leather seating, hand-carved tables, and cut-crystal stemware. Yes, your kitchen will require $100k to $200k in equipment, but the dining room can still look a mint while saving some needed cash. A good goal for start-up including interior decor should run about $500k.
What are the ongoing expenses for a fine dining restaurant ?
You will be paying for your staff, alcohol, food supplies and maintaining the building. Your employees and alcohol will truly be the largest expenses, but alcohol provides plenty of profit. A healthy operating split is spending 30% on food, 30% on alcohol, 30% on staffing, and about 10% on the dining environment.
Who is the target market?
If you are situated in a large metropolitan area, there will be plenty of high-end executives and wealthy individuals who will look to you for a special night on the town. In more rural neighborhoods, your most common customers will be politicians, local celebrities, and resident patrons of the area economy.
How does a fine dining restaurant make money?
Your profit is generated through charging for the food served to your clientele. While it might seem like profits will be huge in such an exclusive location, you will also be paying a premium for your chef, maitre d’, manager, and other employees. The cost of sourcing the freshest ingredients also eats into your bottom line.
How much can you charge customers?
Do your diligence and compare prices from other local fine dining establishments. Typically, you are able to charge between $40 to $100 per plate, but location does affect your pricing scale.
How much profit can a fine dining restaurant make?
Your target should be that 30% of each meal is profit. While the national average for most restaurants is about $80,000/year in net profit, you can see significantly more when your fancy spot hits the lottery for the popular place to wine and dine.
How can you make your business more profitable?
Never skimp on the quality of your ingredients when catering to your upscale crowd. You can make huge profits by serving cocktails as alcohol provides an excellent profit margin. Just make sure that you hire a bartender of a similar caliber to your chef.
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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your fine dining restaurant is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
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
- 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.
Recommended: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
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.
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.
State & Local Business Licensing Requirements
Most states require retail businesses to obtain a seller’s permit. A seller’s permit enables states to record and collect taxes from the sale of taxable goods and services. More information can be found here:
Certain state permits and licenses may be needed to operate a fine dining restaurant. 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 fine dining restaurant 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 fine dining restaurant.
- 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 fine dining restaurant 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
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
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.
How to promote & market a fine dining restaurant
You will need to launch a major marketing campaign for your grand opening, but you should ignore the typical TV and radio spots targeted at prime time viewership. Personal invitations to celebrities tied into a media event will generate the word of mouth to which your niche restaurant audience will respond. Offer wine tastings at the local food celebrations, enter high-end cuisine competitions, and offer catering for business seminars. You can offer lots of free samples at many local events to kick off your restaurant.
How to keep customers coming back
Low prices and half-off appetizers will never be part of your attraction. Your restaurant building must have an elegant and welcoming exterior. As the owner you will want to work your contacts and invite the mayor, police chief, and various representatives to celebrate your opening. Schedule interviews with local newspapers, foodie bloggers, and local restaurant review shows. Your customers have to hear about you from somebody else--that's the key of promoting an exclusive business. Why will they come back? Because you provided a memorable meal served by attentive staff in an elegant yet energetic dining room.
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.
Start A Fine Dining Restaurant In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The owner of a fine dining restaurant will have a passion for exquisite food, love to network with customers and local celebrities, and be able to clearly define the line between work and social hour.
What happens during a typical day at a fine dining restaurant ?
While there is the obvious part of cooking and serving meals to the paying public, that is only the tip of the iceberg. Here are some additional tasks your restaurant will need to manage:
- Take reservations for future dates
- Coordinate with kitchen to ensure just enough fresh product is available to prepare tonight's meals
- Maintain the dining room, allowing no sign of dirt or wear to appear on any surface or utensil
- Work with local farms, gardens, wineries, craft brewers, and wholesale suppliers to create a unique menu and wine cellar
- Provide event options for weddings, rotary clubs, anniversary dinners and other celebratory moments
- Clean the kitchen to create a sanitary environment to prepare the cuisine
- Train servers to provide superlative service with complete knowledge of the menu and wine list
- Maintain the building
- Pay vendors, suppliers, and employees
What are some skills and experiences that will help you build a successful fine dining restaurant ?
If you intend on doing the cooking, then you should definitely have years of experience working in successful fine dining kitchens. If you are simply the owner, your experience will lie more in the marketing end. You need a keen sense of what is popular in the foodie world at this instant, current styles, and how that may affect the design for your restaurant. Other items to keep in mind would be:
- ServSafe certification for food handling and preparation
- Background in the hostess and entertainment industry
- Basic business skills
- Excellent networking ability
- Knowledge of cuisine, top-shelf drinks, and fine wine
- Insight into expectations of a fine dining customer
What is the growth potential for a fine dining restaurant ?
Should you find the magic mixture of menu, service, excellent food, and an electric atmosphere, there is every possibility you may look at adding extra seats in the near future. Franchising into multiple locations should only be considered once you have passed the five-year mark with continued growth forecast, otherwise you may end up looking down a very large hole of debt.
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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.
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 fine dining restaurant ?
You are targeting customers that like spending money but also want some entertainment. Invest in the latest tech toys for payment systems, online reservations, lighting, VIP parking, and even loyalty perks. However, it will always be your cuisine that will keep them coming back. Make sure to hire the very best chef available who has a unique flair that won't be duplicated by the other restaurants in town.
How and when to build a team
You need your chef, restaurant manager, and maitre d’ as part of your development team from the beginning. Servers and other kitchen staff can be hired one month before opening.