Frequently Asked Questions

Question 1

What are the first steps to opening a restaurant?

Accepted Answer

The first steps include developing a solid business concept and plan, securing financing, choosing a location, obtaining the necessary licenses and permits, and building your team. FoodService Resource Associates provides a comprehensive step-by-step guide covering all phases of opening a restaurant, food truck, or brew pub.

Question 2

How much does it cost to open a restaurant?

Accepted Answer

Startup costs vary widely depending on concept, size, and location — typically ranging from $175,000 for a small fast-casual concept to over $750,000 for a full-service restaurant. Key cost categories include lease deposits, build-out and equipment, licenses and permits, initial inventory, staffing, and working capital reserves.

Question 3

Do I need a business plan to open a restaurant?

Accepted Answer

Yes. A business plan is essential for securing financing, guiding your decisions, and setting measurable goals. It should include your concept overview, market analysis, menu strategy, financial projections, and operational plan. Lenders and investors will require it.

Question 4

What licenses and permits do I need to open a restaurant?

Accepted Answer

Requirements vary by state and municipality but typically include a business license, food service establishment permit, food handler certifications, a certificate of occupancy, a sales tax permit, and — if you serve alcohol — a liquor license. Our Rules & Regulations resources cover national, state, and local requirements in detail.

Question 5

What is prime cost and why does it matter?

Accepted Answer

Prime cost is the sum of your cost of goods sold (food and beverage costs) plus your total labor costs. It is the single most important metric for restaurant profitability. Industry benchmarks target prime cost below 60–65% of total sales. Keeping prime cost in check is the fastest path to a healthy bottom line.

Question 6

What food cost percentage should a restaurant target?

Accepted Answer

Most restaurants target a food cost percentage between 28% and 35% of food sales, depending on concept. Fine dining may run higher due to premium ingredients; fast-casual concepts typically run lower. Menu engineering — analyzing item profitability and popularity — is the most effective tool for managing food cost.

Question 7

How do I improve my restaurant's profitability?

Accepted Answer

Focus on the four key levers: reduce food cost through better purchasing and portion control, manage labor cost with smart scheduling, increase average check through menu engineering and upselling, and grow guest counts through marketing and loyalty. Our P&L resources and financial guides walk through each area in detail.

Question 8

What is menu engineering?

Accepted Answer

Menu engineering is the process of analyzing each menu item's profitability (contribution margin) and popularity, then strategically positioning high-margin, high-popularity items to maximize revenue. Items are classified as Stars, Plowhorses, Puzzles, or Dogs, and the menu is designed to guide guests toward the most profitable choices.

Question 9

What financing options are available for opening a restaurant?

Accepted Answer

Common options include SBA loans (7a and 504 programs), conventional bank loans, equipment financing and leasing, merchant cash advances, investor partnerships, and seller financing when buying an existing restaurant. FoodService Resource Associates connects entrepreneurs with specialized restaurant financing partners.

Question 10

How do I buy an existing restaurant?

Accepted Answer

Buying an existing restaurant involves evaluating the business's financials (P&L, tax returns, lease terms), conducting due diligence on equipment condition and staff, negotiating the purchase price and terms, and transferring licenses and permits. Our Buy, Sell & Lease resources guide you through every step of the transaction.

Question 11

Is it better to buy or lease restaurant equipment?

Accepted Answer

Leasing preserves working capital and keeps equipment current, while buying builds equity and reduces long-term costs. For high-use, mission-critical equipment like refrigeration and cooking equipment, leasing is often preferred for new operators. Our financial resources and equipment financing partners can help you evaluate the best option for your situation.

Question 12

What do I need to start a food truck business?

Accepted Answer

Starting a food truck requires a business plan, a commercial vehicle that meets health department standards, a commissary kitchen agreement (required in most states), food handler certifications, a business license, and local permits for operating locations. Startup costs typically range from $50,000 to $175,000 depending on whether you buy new or used.

Question 13

What are the rules and regulations for food trucks?

Accepted Answer

Food truck regulations vary significantly by city and county — covering vehicle inspections, commissary requirements, permitted operating zones, proximity restrictions to brick-and-mortar restaurants, and health department inspections. Our State and Local Resources pages provide links to regulatory agencies across the United States.

Frequently Asked Questions

Getting Started

Operations & Profitability

Financing & Transactions

Food Trucks & Specialty Concepts

Still have questions?