Start a fusion 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 fusion 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 fusion restaurant?
Costs can be extremely high to start a restaurant. The median price is about $275,000, which includes equipment, supplies, and rental costs, as well as licensing fees you’ll need for the building. However, what you pay is highly dependent on where you open and how big the place is. A hole in the wall with only space for a few seats may only cost $100,000, though you will limit your profit potential by limiting the seating.
Considering fusion restaurants do best in large cities, you’ll likely need to budget for closer to $500,000 if you’re planning to set up in a highly trafficked area. You may wish to consider starting a food truck before opening a restaurant if you want to keep your costs down.
What are the ongoing expenses for a fusion restaurant?
Ongoing expenses can include the following:
- Employee salaries
- Cost of food
- Equipment repair
Who is the target market?
You want customers who are interested in trying new things when it comes to how they eat. You may have a difficult time finding a major market in smaller cities and towns in the US, so you should concentrate on the major tourist areas or large cities. You also want your clientele to be those who understand different types of cuisines separately. If they’ve never had Korean or Mexican food before, then their first experience likely shouldn't be at a fusion restaurant because it may turn them off from both cuisines entirely.
How does a fusion restaurant make money?
Dishes are generally priced at a significant margin over the cost of what's on the plate. Ultimately, an owner can charge whatever the market will allow, but most restaurants will triple the price of the ingredients on the plate to cover the labor costs, rents, etc. of the restaurant.
How much can you charge customers?
Customers understand that they’re paying for innovation and expertise as much as they are what’s on the actual plate. Certain chefs can create flavors so complex that a home chef could never hope to compare. Once people are hooked, this type of one-of-a-kind taste can net up to 10 times the cost of ingredients. However, you should research other restaurants in the area before determining specific price points.
How much profit can a fusion restaurant make?
Fusion restaurants can become hugely profitable, especially if they choose to franchise. However, owners can expect relatively modest gains. Restaurants usually net a profit margin between 2 and 3% of each check. So if the restaurant does $400,000 of sales in a year, that’s between $8,000 and $12,000 in profits.
How can you make your business more profitable?
Owners can consider franchising their business, or opening up a smaller, less expensive sister restaurant (e.g., take-out only.) If a business has a signature dish with a special sauce, consider selling the sauce on the website or at the physical restaurant location.
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 fusion 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.
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 fusion 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.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A fusion 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 fusion 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
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 fusion restaurant
Owners need to show people why their food is different. Use social media and Yelp ads to generate interest in what you’re doing, and give out free samples so people understand what they can expect from the cuisine. Roy Choi created an empire of his Korean/Mexican fusion foods based on just a few Twitter alerts, a food truck, and a lot of hard work.
How to keep customers coming back
Excellent food and service need to be the lowest standards at your restaurants. No matter which cuisines you choose, you need to create unique flavors that can't be found elsewhere. The best way to keep your business afloat is to listen to your customers’ feedback and then make adjustments based on what your clientele wants to see.
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 Fusion 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?
This business is excellent for a foodie who enjoys introducing new flavors to people’s palates. The ideal owner should be obsessed with different combinations of foods, and familiar with how different foods, textures, and spices pair together. Owners also need to be passionate and persistent. The restaurant industry is incredibly competitive and has a low profit margin, so a solid attitude will go a long way toward succeeding at the beginning.
What happens during a typical day at a fusion restaurant?
A fusion restaurant owner has a variety of tasks to complete throughout the day:
- Overseeing employees
- Ordering supplies
- Maintaining cooking equipment
- Ensuring health standards are met
- Reviewing and adjusting menus
- Advertising and marketing tasks
What are some skills and experiences that will help you build a successful fusion restaurant?
Restaurant owners need to be organized to keep up with the many details of running a business. Ideally, the owner will have management experience in a restaurant of similar size. They’ll also need to be excellent at hiring and managing employees. Everyone from the chef to the busboy needs to be invested in order for the restaurant to succeed.
What is the growth potential for a fusion restaurant?
Growth potential is defined by a variety of factors, though it is possible to experience major growth in fusion food. Fusion restaurants are often seen as trendy due to their uniqueness, which means you have the potential for major social media proliferation as well as general word of mouth. Roy’s is a California cuisine/Hawaiian chain restaurant that has managed to achieve a very steady clientele offering fresh foods that satisfy.
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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 fusion restaurant?
You’ll need to see what type of need there is in any given area, and then begin to develop your ideas from there. The good news is that people (especially in large cities) are always looking for something new and different to be their next favorite take-out or sit-down restaurant. The bad news is that you may be entering an already saturated market, which means you’ll have little room for error.
Owners also need to be careful with the nuts and bolts of food preparation. Local inspections from the health department need to be treated with the utmost respect. You may want to consider having employee salaries be dependent on how well they adhere to the rules. You’ll also need to know the guidelines of the FDA (Food and Drug Administration) backwards and forwards before getting started. Keep in mind that the FDA's regulations may change as new information comes out about foods.
How and when to build a team
You should preferably be building a team as early as you possibly can — especially when it comes to management. The more people have a chance to learn about and prepare for their position in a fusion restaurant, the more likely they are to actively promote and sell both the food and experience to customers.