Business Overview

This type of business serves prepared food and drinks and caters to consumers who don’t want to cook or who want the experience of dining out. Some restaurants specialize in one type of cuisine, like Italian or Mexican, while other restaurants serve general “American” fare, like diners. The market depends entirely on the type of restaurant, restaurant concept, and the average price per menu item.

Who is this business right for?

A restaurant is a fast-paced business and very stressful to run. As such, it's best suited to people with excellent organization skills and entrepreneurs who have a passion for food. Restaurateurs often live a modest and hectic lifestyle. Because of this, it’s not a business for those who are easily stressed out or desire a “hands-off” business.

What happens during a typical day at a restaurant?

The day starts by opening the restaurant and printing up the specials for the day. Restaurant owners also need to check their stock and order any necessary ingredients. Daily cleanliness inspections of the kitchen are a must. After meeting with the chef and prep cooks about the plan for the day, it’s time to inspect the dining room and set up for the first service of the day.

If you serve breakfast, this will usually mean having the dining room open and ready by 6 or 7 am. If you serve a lunch-dinner service, then you can open up at 11 am.

After prepping for each service, the bulk of your day is spent reacting to events as they happen. Customer orders and complaints, peak service, and prep for the second service are all stressful and busy events.

Once service starts, it’s usually non-stop until close.

What is the target market?

Customers are typically individuals and families who are dining out for the day or evening. Some restaurants also cater to larger functions, like business or government organization events, birthdays, and other large-scale catering events.

How does a restaurant make money?

A restaurant makes money by charging customers money to prepare food and drinks for them. Prices are typically fixed on a menu. Customers may also tip waiters and staff for good or exceptional service. For waitstaff, tipping is customary. These tips are sometimes split amongst the workers in the restaurant, or can contribute to the waitstaff’s pay.

What is the growth potential for a restaurant?

Small restaurants can be run as a diner or a small sandwich shop or even a food truck service. Larger restaurants usually operate in a centralized location, with a large kitchen and dining room area.

Scaling is typically a matter of opening up new locations based on demand, staffing, and financial ability.

For example, a small family-owned restaurant may never outgrow its first location. A franchise, like McDonald’s, Applebee's, or Red Robin, will have many chains across the country and, sometimes, across the world.