How to open a restaurant in Austin

How to open a restaurant in Austin

Most people aspire to enter the hospitality industry by opening a bar or restaurant. The restaurant and hospitality industries have attracted many successful business owners. The food industry supports more than 40,000 jobs in the Austin metropolitan area and contributes $4.1 billion in annual wealth creation. 

If opening a restaurant has been a lifelong dream of yours, or if you are in the process of opening your eatery, then maybe this article is for you.

Due to the COVID pandemic, which has changed the nature of employment for many Americans, people are leaving their businesses in large numbers. Many people glamorize starting a restaurant as being joyful and gratifying. There are a lot of hoops involved in being successful in the food service industry, even just opening your doors.


Opening a restaurant in Austin


With a large number of taco businesses, BBQ restaurants, and food trucks, Austin has lived up to its values. Austin’s booming food industry was named the sixth most epic city, according to a recent study by the financial website WalletHub.

 Many people want to work in the hospitality sector and start a bar or restaurant. The bar and restaurant business has been successful for many business owners. In the United States, there are over 570,000 bars and restaurants, and they generate $375 billion in sales each year. 

Despite the significant hazards and long working hours, being a restaurant owner is one of life’s most gratifying experiences.


The Restaurant’s Failure Rate


Starting a restaurant is exciting, but the process is drawn out and it is one of the most difficult businesses to launch. 60% of restaurants fail within a year of opening. Even though exact figures are difficult to obtain, it is reasonable to assume that over 50% of pubs and restaurants fail – they are losing business that closes within a short period.

 As lucrative as the restaurant business may seem from afar, operating a restaurant is a huge job. These facts may make you wonder why some businesses experience failure. Restaurants ultimately fail because of an insufficient understanding of the demands of the industry.

 What is the root cause of failure?

The answer is a lack of preparation. It is not enough to dedicate your valuable time to planning every aspect of your restaurant. To become a successful businessman in the hospitality sector, you must have done market research before serving a single diner. The planning and research phase will decide the fate of your restaurant, determining everything from culinary equipment and food to floor design and personnel choices.


Deciding a solid concept for opening a new restaurant


Sometimes going to a restaurant feels like a different world. The vibes, atmosphere, and culture there touch our hearts. This is nothing but the effect the concept of the restaurant has on the mindset of the customers. Even though starting a restaurant can seem daunting sitting down to sketch out new ideas and thoughts, that’s the fun aspect of opening your doors and filling seats.

 It is not mandatory to have a physical restaurant to plan a great concept and interior for your restaurant. The remarkable and innovative concepts can be applied to any type of eatery, whether it’s a food truck or a physical restaurant. 

From food trucks to gourmet restaurants, there are nearly endless possibilities in the Austin area. All of them have a better chance to succeed. It’s important to find a concept that appeals to you and your target audience while meeting the needs of the local market. 

 Austin’s nature and philosophy of keeping things curious have helped them promote their foodie culture around the world. At this point, there is no doubt that Austin, Texas, has an excellent barbecue and a wide variety of Tex-Mex. But not everyone is aware that in this city people try their different ideas on food trucks which are seen everywhere, or we can say that they started their restaurant business first from a food truck. 

It was an experiment to determine if dishes were popular enough to be taken out with their permanent eateries. This strategy for Austinites helps reduce their risk in the early stages of the restaurant opening. 

 Your restaurant idea is the cornerstone of your brand and the place to build a remarkable and effective enterprise. Your food idea will be crucial in defining the way you run and manage your restaurant, as well as how consumers will see and experience it. 

Don’t believe that lower costs or better management will give you a competitive advantage. It is challenging to trust those things. We’ll discuss prices shortly, but undercutting neighboring restaurants on pricing is a bad move as it will result in you going home with less money at the end of the day. 

Be as specific as possible when expressing your opinion. Our world is a special one. People are searching for specialized services – the greatest in a particular area – in any major city, and Austin is no exception.


Finalizing a perfect location for opening a new restaurant


Your target market may be the most important consideration when choosing a restaurant location. If you’ve already started looking for a position, you should have an idea of ​​your ideal client by this point. If not, go back a few steps and find the target step. 

 As a general rule, try not to locate your restaurant very close to direct competitors. If they are currently well-known in the area, you will need a lot of effort and patience to “catch up” with their customers. Another thing is that the establishment is already very famous. This will ultimately cost you, the consumer.

After you have selected a general area, aim to find reasonably priced dining areas in busy neighborhoods. Lots of restaurant owners offer better drive-thru and restaurant delivery options. Remember this as an essential component of establishing the experience of the physical seating area.

 The investigation of the selected outlets would be incomplete without a thorough examination of the security and crime statistics of the area. You may face the possibility of losing consumers if the area is deemed hazardous. Additionally, you will need to spend more on security protocols and additional licensing.

You can prevent many potential short-term and long-term problems by conducting a comprehensive restaurant location study. Additionally, this will guarantee that you will pick the ideal location for the restaurant.


Recruiting expertise of manpower


It must be emphasized again and again that the restaurant is known by its staff. Your most valuable asset is your restaurant team as the treatment they provide to the customers directly affects the image of your establishment. The hospitality sector has a relatively high turnover rate which leads to wasted time and irregularities that can affect an establishment’s entire processes and service. As a result, one of the major difficulties in managing the hospitality industry is recruiting and keeping the right people.

 One of the most challenging aspects of being an Austin restaurant owner is finding and keeping relevant talent. Recommendation recruiting is widely accepted, and current employees often recommend family and acquaintances.

 The hotel sector is evident for a high staff turnover rate. Additionally, the current pandemic hasn’t made things any better. According to 75% of restaurant owners, hiring is their biggest business concern.

Many young people typically begin careers in the hospitality sector, but as more Gen Z students are earning graduate degrees, fewer are seeking entry-level positions in this field.

Recruiting high-quality in-service employees is not affordable when you consider the cost of ongoing personnel replacement. You may be shocked by the high churn cost associated with this.


Factors, metrics, and indicators


Commerce is generally a numbers game, and this is true in the case of the restaurant sector. The responsibilities and duties of a restaurant manager or restaurant owner are not limited to just setting it up and hiring employees to run it. They need to do a lot more. Measuring business performance, risk and opportunity is the most important aspect that owners need to perform.

 Numerical data can reveal information about profit and expenses, specific customer expenses, and employee turnover. Without measurement, management is impossible. But what and how should be measured?  

  • Cost of goods sold 
  • Marketing cost
  • Operating cost
  • Prime cost
  • Food costing 
  • Net profit 
  • Staff turnover rate
  • Customer retention rate

 These factors and measures affect our perceptions of how well the business is performing and generating profits. By regularly monitoring the restaurant’s finances, you can be sure everything is going well. All of the mentioned indicators provide useful insight into revenue generated, workforce, costs incurred, and cost of goods.

With the help of these factors, data can be obtained reliably and easily. Garbage in, garbage out, as the saying goes. Before creating a process to calculate and report these metrics, make sure the data you use to support your calculations is accurate and up-to-date.


Is it Better to Buy a Restaurant than Open One?


Whatever industry you enter, such as a restaurant company, you need to decide whether to build or buy. Your inventiveness is the only thing stopping you from opening a restaurant. There are many tempting elements to the process of building a new restaurant site. 

Restaurant owners are free to plan their area for the maximum number of customers as the existing building does not impose any restrictions on them. You can create a budget based on your available resources. However, you can try to figure out what your budget should be when considering competitors. Construction projects can have cost overruns and take longer than anticipated. Make sure your building contractor is knowledgeable about the area and has the expertise in setting up a restaurant similar to yours if you are starting one. 

 There are some benefits to buying an established, profitable restaurant. Taking over an established restaurant site can have varying results depending on the history of the company, the preferences of the owner, and the expectations of local customers. The backend doesn’t need much adjustment as everything is set up now. It is a wise choice to promote the restaurant and start it as a new business.

But your creativity and uniqueness are immediately limited as soon as you decide to buy an already-running restaurant. There is nothing you can do to change the look of the restaurant. Theoretically, you still can’t modify it if you don’t like it. 

 Since almost every situation will be unique, it is hard to declare which option is “better” for everyone. If you’re just starting in this field, buying an existing restaurant seems to be a more practical option, as opposed to building a new restaurant from the ground up. 

 Thinking about the best approach as a businessman is important if you want to have a fruitful restaurant business. Starting a new restaurant from scratch can be interesting, but there are advantages to buying an existing business, too. The benefits far outweigh the drawbacks, and the risk factors are reduced to an extent. Do a thorough investigation and decide whether to accept the call after considering all the features at your disposal. You can hardly go wrong if you plan it well!


Factors to Take into Account When Buying a Restaurant


Determining whether or not a business is worth acquiring is an important step in starting your own business and should never be skipped or rushed, no matter how attractive the restaurant or vendor may seem at first glance. Get it right away by applying pressure. Even a high-end restaurant with a steady stream of patrons can eventually fail. Conversely, a small out-of-town eatery may become your secret treasure.

 You must first determine whether investing in a restaurant will be beneficial to both you and your company. You should thoroughly investigate the financial status of the place, regardless of how much you appreciate it or how pretty it looks. You will be notified promptly if any serious issues arise or are already submitted. 

Get an idea of ​​the company’s informal reputation before going through both steps. Consider the general public’s suggestions and opinions before making a buying decision. Before making an offer, you should make a thorough and professional study of the business’s operations, financial records, and past.

 Excluding the mountain of debt, the measures provide a reliable indicator of a company’s financial well-being. Buying a commercially successful business costs more. Buying an existing firm costs more. As was mentioned, you don’t pay asset value when you buy a profitable restaurant or bar; you will also have to make many sales. That doesn’t always mean that if a company isn’t growing, it isn’t a good buy. 

 In special circumstances, the landlord may agree to transfer the existing lease to the new owner. If it isn’t, you should always make sure the landlord is willing to offer a new lease by asking your restaurant company.


Now the query which arises in every mind is:


Why is a business owner or restaurateur looking to sell their profitable business to someone else? After all, no one would want to shut down a fruitful restaurant business.

Selling a profitable restaurant business can have mainly two objectives: 


  • The business owner may want to resign or they may be tired of running things themselves. It can be tiring due to the demanding nature of the work and long working hours. Some individuals may find running a restaurant too difficult due to health concerns, family issues, or other personal issues.
  • It is possible that they are not making enough money to pay their bills. Perhaps they are attempting to destroy the eatery to prevent total failure.


How much starting capital is required to open a restaurant?


How much does it cost to set up a new restaurant, and what other costs are involved? The decision is not an easy one and depends on a variety of variables, including the type of restaurant you want to build, your location options, and your anticipated restaurant size. 

Starting a restaurant business can cost anywhere between $175,500 to $750,000. Even though the hefty initial fee may seem discouraging, don’t give up. We’ll discuss the costs involved in starting your restaurant, as well as how cutting-edge strategies like the Phantom Restaurant Approach can significantly reduce these costs.


  • Cost of adopting new technology:

Technology currently serves as the foundation of a visitor’s journey, compared to a few decades ago when technology was only a small part of the hospitality sector. Without the support of modern technology alone, you may be faced with the prospect of delivering a poor customer experience, which can significantly reduce profitability.

  • Labor Expenses:

Labor costs include hourly wages, Social Security taxes, paid vacation, sick pay, and other incentives that account for a large portion of your operating expenses. Your production costs vary based on market conditions and newly applicable regulations. Moreover, it is also likely that the cut will lead to an increase in these prices as well. According to research, 7 out of 10 restaurants are having trouble filling vacancies due to staff crunch.

  • Food cost

The cost of food has a significant impact on your operating expenses. This is often between 28% and 35% of the restaurant’s recurring costs. Depending on the menu options you offer, the price may also change.

  • Marketing Cost:

You can turn your cuisine business from one that no one knows about to one that customers love and appreciate. If restaurant marketing is managed internally then the cost is less. For example, you might assign a potential employer to spend a few hours each week promoting campaigns on social media platforms such as Facebook. 


Permission and licensing required


Before setting up a new firm, entrepreneurs must ensure that their company is compliant with all licensing and compliance standards. Many permits and authorizations can take weeks or even months to be approved. Some of the following things an entrepreneur may need when starting or buying a pub or restaurant in Austin are:

  • The certificate of occupancy (City of Austin)
  • Registering your restaurant 
  • Restaurant Permit
  • Austin food enterprise permit
  • Facilities Permit      
  • Outdoor seating permit
  • Alcohol permit
  • Certified food manager certificate
  • Sales and Use Tax Permit
  • Permit to Operate a Food Enterprise 

 A general corporate license is not required in Austin, Texas. However, statutory organizations may impose licensing and permitting norms depending on the type of operations. You should also contact the neighboring county and municipal government to find out if there is anything else you need to do to guarantee that all licensing requirements have been met.

 Apart from the company license, there is another legal process for employees. At a minimum, one of the restaurant’s employees must have a license as a food manager, which can be obtained by completing a test conducted and authorized by the Texas Department of State Health Services to obtain a permit for a retail food establishment.


How can a corporate lawyer assist?


A corporate attorney can guide you through the process of going from one person to owning a restaurant, even though attorneys often don’t help with the restaurant idea and food. A skilled corporate lawyer should be seen as the captain of your litigation squad.

Business attorneys help company owners structure their lead connections, obtain financing, purchase pre-existing restaurants or other companies, and deal with a wide range of other transactional and service agreement difficulties.



Opening a restaurant requires patience, a lot of hard work, and dedication. It won’t happen anytime soon because it will take a long time. If an eatery is already operational, a new eatery can replace it within thirty days. However, if you are starting a new business, the permitting and licensing process itself can take weeks.