Operating and owning a restaurant is like a dream for many aspiring entrepreneurs. It is a dream that may have been put on hold by many as the pandemic forced restaurants to halt indoor dining or even close their doors of opportunities permanently.
The effects of the pandemic are still being felt by restaurant owners all across the country as the industry is struggling for their rights. To cover up the entire crisis, the food service department has adopted new restaurant trends with diversified revenue streams to meet up the present challenge.
Many believe that the restaurant ownership is still beyond their reach but there is a checklist that can help you get started. There are many restaurants open in Pennsylvania but opening them with proper plans and ideas will take it to another level.
Importance of Insurance in opening a restaurant in Pennsylvania
Restaurant insurance is a group of insurance policies that are designed to protect restaurants and other food service businesses in the case of property damage, customer illness and bodily injury, etc.
Who all needs restaurant insurance?
- Fine dining restaurants
- Fast food restaurants
- Ice cream shops
- Coffee shops
- Food trucks
- Doughnut shops
- Caterers
- Bars
- Cafes
- Pubs
- Nightclubs
- Bakeries
- Bistros
What type of insurance coverage do you need for your restaurant?
Just because the restaurant typically hires employees, owns a physical location, handles food, a variety of coverage options should be incorporated as a part of your policy.
General liability insurance
General liability insurance is also referred to as slip and fall coverage and referred to as restaurant liability insurance in the industry.
- Third-party bodily injury: if a customer falls and slips on a wet bathroom floor, your insurance company can cover the cost of their injury. Like lost wages and medical expenses.
- Third-party property damage: one of your waitresses by chance pops a champagne bottle and the alcohol gets all over the customer’s bag. Your insurance company can cover the cost to replace the bag if you have general liability insurance.
- Advertising injury: if any competitor claims that your advertising has damaged their reputation and they sue you for slander. Your insurance company will help you cover the cost of the legal fees, lawsuit, and all the necessary judgments and settlements.
Commercial Property Insurance
This protects your building from the damage of fire, burglary, theft, and some natural disasters. If a fire breaks out in the kitchen and it needs to be repaired, this insurance can help you cover the cost of repairing everything back again. If your restaurant is near a flood-prone area, consider adding a flood insurance policy.
Extra expense and business income
Extra expenses and business income are also referred to as business interruption insurance. If your property is damaged and you can’t remain open during repairs, extra expenses and business income can help you cover some of your operating costs.
Business owner’s policy
A business owner’s policy typically combines commercial property, general liability insurance, and business interruption insurance to create a more affordable policy. It is typically offered to small restaurants vs. large chains. Some insurers will also include other industry-specific coverage.
Workers compensation insurance
It covers the cost of all medical expenses, lawsuits, lost wages, and settlements if one of your employees gets injured or gets ill on the job. Like one of your chefs accidentally starts a grease fire and gets burned out. Workers’ compensation will cover all the medical bills and lost wages until they can return to work.
Product accountability insurance
It is also referred to as food liability insurance, which should be considered a necessary insurance in the restaurant industry. Product liability can help you protect yourself from these costly claims.
Liquor liability insurance
If you serve alcohol, your restaurant business needs to have liquor liability insurance. It protects you if the customer causes property damage or any bodily injury to another person.
The very first step on how to open a restaurant in PA is?
1. Choose a concept and brand for your restaurant
If you have been dreaming of having a restaurant of your own, you have probably thought of a concept for your restaurant business. Choosing the concept of your business is the most fun part of the whole planning process when you get to give wings to your creative side.
Your concept should comprise the type of restaurant you want to open, the cuisines you want to serve, and the services you would want to provide. The interiors of your restaurant should also be linked with the concept of your restaurant.
Below are some examples of restaurant concepts to bring out your creativity:
- A casual restaurant that specializes in building your ramen bowls
- A cloud kitchen concept that serves vegan food for delivery only
- A fine dining restaurant with a traditional French menu
Your restaurant brand is more precise and can be thought of as the way you choose to communicate your identity and mission to the public. Your restaurant name and merchandise should present a unified image of the brand. The restaurant marketing channels you use should also rely heavily on your brand individuality to influence the method and style.
Target Demographic: if you have any location in mind for your restaurant business, the demographic of the area should be used to shape your perception. If you are beginning with the concept first, you must choose a location with a demographic that can sustain it.
2. Create a Menu
Creating a menu is the next creative step in the process of opening a restaurant in Pennsylvania. Choosing what all items to feature should be relished by the food lover, but make your decisions carefully. Your menu will state the type of paraphernalia you need, the skills you should look for in your staff, and also the type of crowd you hope to catch the attention of.
For instance, if you envision a dessert menu full of delicate French pastries, you need a chef who can make pastries and all delicacies of desserts. If pizza is your thing, you need proofers, dough mixers, and also experienced chefs who know how to handle the pizza dough.
Also, consider your demographics. If you get a great deal on leasing space in a college town, your restaurant menu should be modified for college-age customers. But if you won’t budge on your dream to create an upscale menu, you must choose a place where the median personal income can support higher price points.
When you finalize your menu choices, select a unique layout for your menu to make it look more attractive and profitable as well.
3. Prepare a business plan
Starting a restaurant in Pennsylvania is just like starting any new business and it requires a solid plan as well. This step can become a stumbling step for those who are unfamiliar with the business plan.
The restaurant business plan is divided into sections that describe all the aspects of your new business, from your restaurant conception to your financials. The main purpose of the plan is to help you flesh out the minute details and also summarize your business to the impending investors.
When you reach out for restaurant loans, the restaurant business plan serves as evidence that your business enterprise will be victorious.
Mentioned below are the principal components of the restaurant business plan:
- Managerial summary: this is the first section in your business plan, but it is very helpful to write it in the last and make it a summary of other sections you have already finished.
- Company description and overview: you can use this section to write a more elaborated company overview than what you have included in the managerial summary.
- Menu and concept: in this particular section, you can describe all the details of your restaurant menu and concept.
- Ownership and management structure: always outline your ownership and management structure. It is helpful to use charts as a visual aid.
- Staffing and employee needs: it is easy to underestimate the number of staff members you need. By putting it down on paper, you will have a more realistic vision of how many employees you might need to hire to operate your business.
- Competitor analysis and marketing: this part of your business plan requires careful research. You need to offer an analysis of the demographics and the competition for your chosen location.
- Marketing and advertising strategies: use the marketing analysis you completed in the previous step to select the correct marketing strategies.
- Financial summary and projection: when it comes to obtaining funding for your new restaurant, this section is the most important. Use it to provide a forecast of sales and also a break-even analysis.
4. Obtain restaurant funding
The very next step you need on how to open a restaurant in PA is funding. Many of us don’t have adequate funds in hand to cover all the costs of starting a restaurant without any financial support.
Securing funds from an outside source will determine if you can make your dream of restaurant ownership a reality. Begin it by estimating the total cost along with the cost required for daily operation.
Use this information to create a budget and also forecast the total cost of running your restaurant for the next year. If you have a budget in hand, compare the total cost with the amount of capital you have in hand to determine how much funding you might need.
Always remember to include the cost of permits, licenses, types of equipment, staff salaries, online ordering system, and building repairs.
Mentioned below are some ways to secure funding for your restaurant in Pennsylvania.
- Traditional commercial loans: this type of loan is acquired directly through a bank. You will typically see low ratings and access to higher amounts of capital with a conventional commercial loan. However, security is required, and you must have a high credit score.
- Business line credit: similar to a credit card, you can get it approved for a maximum credit amount. The interest only accumulates as you use the money, though lending standards are higher, and you may not be able to borrow as much money as you can with another type of loan.
- Small business loan: small business loans can be taken directly from a bank, and many bank partners with small business administration. You can receive a small business loan even with borderline credit and the guidelines of SBA are set up to protect both small business owners and lenders. Security is required and it might take some time for approval.
- Investors: reach out to network or sign up for a site to find investors for your restaurant.
- Crowdfunding: find companies who can fund you and kick-start your business.
5. Rent a commercial space and decide on a location
When deciding on a location for your restaurant, you must keep the following factors in mind:
- Accessibility and visibility: select a location with proper visibility that should receive plenty of vehicle and foot traffic. Also consider parking as a top priority and ease of access for pedestrians and cars.
- Demographics: the target market of your restaurant should match the demographics of the area.
- Labor costs: your labor cost will vary depending on the location. In areas where the cost of living is much higher, you need to pay a higher wage to attract all the good employees.
- Local competition: you can learn a lot by looking at the competitive restaurants in the area. The key is to pick up a location where similar restaurants are running successfully but avoid a neighborhood that is inundated with restaurants that directly compete with the concept.
When it comes to picking up the space, it is always beneficial to take it in a lease. It allows more flexibility if you decide to expand or make other business changes when first starting.
6. Restaurant licenses and permits
To start up a new restaurant, you need to have several state, federal and local licenses, and permits. It is helpful to enlist all the legal counsel when filling for the restaurant licenses and permits to make sure you don’t miss out on a step. Below are some important licenses required before starting a restaurant business.
- Business license: all business owners who are planning to start up a restaurant must acquire a business license to operate in Pennsylvania. The type of business license you need, the cost of the license, and how often you need to renew the license varies.
- Food service license: to get a food service license for your new venture restaurant, you need to pass an inspection that shows that the business meets all the food safety regulations.
- Employee identification number: start the application for an employee identification number as early as possible as it takes a lot of time to get approved. You will also need an EIN to officially hire employees and set up a payroll.
- Liquor license: if you wish to serve alcohol at your restaurant, you should have a liquor license. Alcohol can boost your sales immensely but the process of getting a liquor license can be very time taking and costly.
7. Design your layout and space
There are two components to designing the layout of your new restaurant: it can be a commercial space and inside a mall or residential area. Each space has its requirements. If you need assistance, you must consider working with an industry expert to create a customized design layout that can fulfill your needs and requirements.
8. Find a food supplier and an equipment
Before you plan to open a new restaurant, your kitchen must be equipped with the right equipment. There are some basic types of equipment that every restaurant needs, like cooking equipment and refrigeration units. Depending on your menu, you might also need specialized equipment like pasta cookers and pizza decks. So make sure that your restaurant is well equipped with all the equipment.
9. Hire the right kind of staff
The hiring stage of opening a new restaurant offers the opportunity to build a great work culture from the very beginning. Putting thought into your employee benefits, training program, and also incentive is important when considering the balance between the work and life of your future staff.
Your employee retention will become more successful if you make these factors a priority. Start by hiring the management team so that they can help you to carry out the mission and hiring goals.
Make a to-do list of all the restaurant spots you need to fill to operate your restaurant on a daily basis. Consider how many days you want to open in a week and how many shifts you will run each day.
Your staff requirement will differ based on the unique needs of your restaurant, but these are some of the most general positions:
- Management team: kitchen manager, general manager, and front-house manager
- Kitchen staff: hosts, servers, buzzers, and food runners
- Bar staff: Barbacks, Bartenders, and cocktail servers
You might also need to hire employees like PR specialists, accountants, and marketing experts.
10. Promote and advertise your restaurant
If you are starting a new venture restaurant, you have to get the word out and attract your future customers. Marketing offers basic information about the restaurant so that potential customers know where you are located and what type of cuisine you are serving. Victorious advertising should also build stimulation around your brand.
Below are some tips to advertise your restaurant:
- Construct a website: your restaurant website should be effortless to navigate, and the design should symbolize your brand. Include basic information about your restaurant, including your phone number, address, menu, and hours. You can also go for a mobile app for a restaurant.
- Create a Google My Business, Yelp, and OpenTable Account: registering with these sites makes it super easy for potential guests to locate the restaurant information. Guests can also write and leave a review after visiting, which also increases the appeal and authority, especially if you have a high rating and positive feedback.
- Use the power of social media: today, a social media presence is an absolute must for restaurants. Create Twitter, Facebook, and Instagram accounts to share tidbits and news about your restaurant. Creating reels about your restaurant will get you more followers and it will give a boom to your restaurant’s success.
- Offer promotions to all the new guests: offer a promotion for the guest visiting the first time. A free dessert, beverage, or discount on their first bills is an exciting way to attract customers. Further, you can set up restaurant loyalty programs.
- Plan a grand opening: create a buzz around your new restaurant by hosting a grand opening. Other special events like live music, wine tastings, and cooking classes are some great ways to attract attention.
11. Host a soft opening:
There is an old saying “practice makes everything perfect”. The same goes for restaurant openings. A soft opening is a practice run to help you prepare for the actual grand opening of your new restaurant. Invite a limited number of guests to attend a soft opening, usually the family and friends of your staff. This strategy allows you to work out any time you find kinks in your service.
Below are some popular soft opening ideas:
- Start with a trial menu: offer a sample menu with a limited number of options. It reduces stress on new staff and also encourages customers to come back and see the full menu revealed.
- Limited schedule: consider operating under a limited schedule for the initial days of opening.
- Sneak peek of the event: host a sneak peek happy hour with the selected signature drinks and menu items.
- Family and friends night: invite family and friends to your soft opening for a fun, stress-free way to prepare for the grand opening
- Neighboring businesses and homes: try to gain the attention of the local fans and build community pride by offering a soft opening invite to neighboring businesses and homes.
The first step to start your restaurant in Pennsylvania is to make a business registration with the secretary of state. You also have to figure out the permits and licenses required, along with their costs.
Further necessary steps include deciding the location, putting up the staff, among other things. Considering the competition in the restaurant industry, you should also think about getting your business a technology and restaurant delivery partner to take things in the right direction.