Many budding entrepreneurs think about opening a restaurant in Raleigh. While there is no doubt that the restaurant business can be very lucrative, the fact is that more than 70% of new restaurants fail within the first two years of opening. The primary reason for this high failure rate in the restaurant business is a lack of planning.
How to Open a Restaurant in Raleigh: Essential Steps for Success
Opening a restaurant in Raleigh requires more than just a love for food and a great menu idea. From choosing the right location to managing your finances, this process demands thorough planning and research.
To stand out in this market, you need a strategic approach that includes everything from identifying your target audience to obtaining the proper permits and licenses. Without this groundwork, even the most delicious food won’t be enough to keep your doors open. Below, we outline some essential steps for opening a restaurant in Raleigh and make sure you’re set up for success.
- Have a Business Plan
The competition is very high in the restaurant industry. The first thing you should do is develop a business plan. Consider every minute detail, even the menu, chef, floor plan, interiors, layout, seating capacity, kitchen appliances, staff selection, working hours, and how much money and time you are willing to put into the restaurant business.
If you think others can run your restaurant and make money for you, then the restaurant business is definitely for you.
- Identify Why You Want It
Many people think that the restaurant business is the easiest way to make money. This is a myth. It can take up to 4-7 years before you start recouping the money you invested and making a profit. Running a restaurant is not a 9-5 job; it is a full-day job with all days working.
Open a restaurant if you love food, and people, and are not afraid of hard work. There are no weekends off or any holidays. You are certainly not going to bed early. Moreover, in the first initial year, you have to invest a lot of time and money.
- Financial Planning
Opening a restaurant in Raleigh requires a solid plan, including a clear idea of how much money you want to invest. It should cover every detail of potential expenses, like furniture costs, salaries, utilities, rental bills, and lease options. You need to keep track of your competitors in your area and need to identify the target market as well.
Finally, you will also need a competitive edge and know how to make your restaurant distinct from other competitors.
- Location
This is the most important factor to consider when opening a restaurant in Raleigh. Choose a location that your research shows is thriving for restaurants. Make sure it has a great flow of customers and is considered an attractive spot for visitors.
Your restaurant can only work if there is a place where a lot of people come and chill. It may also be a good idea to make sure that you don’t have direct competitors around. There is no point in opening a pizza outlet next to leading pizza corners or Italian restaurants in the same vicinity. You can only take a chance if you know that you have something special and better to offer.
Apart from these factors mentioned above, there are many other things to consider when opening a restaurant in Raleigh. From local licensing requirements and insurance to the general state, you need to keep everything well-equipped before getting into the process.
Additionally, you must register your business with federal agencies as an employer. Always make sure to complete the necessary paperwork before you go for the big launch.
Insurance for Restaurants
Below are a few types of insurance for Raleigh, North Carolina restaurant owners to consider:
- Worker’s Compensation Insurance
Raleigh, North Carolina state law requires worker’s compensation insurance for all businesses that employ 3 or more individuals, part-time or full-time. This business insurance covers all medical bills for work-related illnesses and injuries. It also offers disability benefits to injured workers in North Carolina and protects employers from liability over an injury.
- Commercial Auto Insurance
All business vehicles in Raleigh, NC must be covered by commercial auto insurance. This policy covers the cost of accidents involving work vehicles. The minimum requirements for auto liability insurance are $32,000 in bodily injury accountability per person, $62,000 in bodily injury accountability per accident, and $27,000 in property damage accountability.
Personal vehicles used for work purposes should not rely on hired and non-owned auto insurance, as personal auto policies typically exclude business use. It can be added to a business owner’s policy or commercial general liability insurance.
Understanding Local Laws to Open a Restaurant in Raleigh, North Carolina
If you’re planning to open a restaurant, café, bar, or any food business, it’s essential to have all required licenses and permits in order.
Licenses are certificates of occupancy, liquor licenses, and food facility health permits. All these legalities have different requirements. So, it is imperative to know what you want to legally start the process of opening a restaurant in Raleigh, North Carolina.
Mentioned below are some permits and licenses needed to open a restaurant in Raleigh. What are they, what is the cost of each license, and why do you need it?
- Business License in Raleigh, North Carolina
To kick-start your restaurant business, a business license is the first and foremost license. It is also known as a business tax certificate license, which helps the business during tax season. In North Carolina, a business license is controlled by the county or city you live in. If you are planning to operate a particular restaurant in various locations all across the cities, it is necessary to get a business license for every business in different authorities.
To get a business license in Raleigh, you need an EIN, business name, proper business plan, contact number and address, COI for an insurance policy, and classification of business.
The cost of this business license in Raleigh varies depending on the county, the type of business, and the scope of business. Business licenses in Raleigh need to be renewed and paid regularly. Hence, check with the jurisdiction about how often it is required to get them renewed.
- Certificate of Occupancy in Raleigh
The Certificate of Occupancy is a document that shows that your space is precinct for your type of business. It shows that it is up-to-date, up-to-code, and safe to use. Not every city requires these permits for new businesses. Even when they do, permits are typically only needed for major construction work or changing a space’s use from housing to business.
Always be in touch with the local jurisdiction to check if the project is under a CoO warrant. To get this license, you need to check online. However, to get hold of the certificate, your business location will go under inspections like fire, plumbing, electrical, and building inspections. The cost of this certificate is different in every country and it also varies depending on the type of business.
- Food Handler’s License in Raleigh
It is also generally known as an employee health permit license which allows restaurants, merchants, and other types of food businesses to sell and serve the food with full safety. These licenses make sure that every employee is doing their job properly. It also keeps the diners safe from diseases that occur through food.
It is commonly referred to as ServSafe, which is the food handler’s test administered by the company. In Raleigh, North Carolina, it is known as the Food Handler Card. To get this license, every employee who prepares and serves food in North Carolina must get their Food handlers license within 30 days of the period of being hired.
Cooks, chefs, bartenders, and servers should have this license. Buzzers and general managers may not require this. By any chance the managers already have their food protection manager certificate, they are also not liable for getting a North Carolina Food Handler Card. Some of the jurisdictions have their own food safety programs and standards. In these cases, they are excused from getting a North Carolina Food Handler Card.
To get this card, employees must pass the test of food safety and preparation with a grade of at least 90%. The cost of this license should not be more than $30. This is to make sure that anyone working in the restaurant can easily afford it.
- Food Seller’s Permit in Raleigh, North Carolina
If a restaurant plans to sell tangible goods, it will need a seller’s permit to meet sales tax requirements. This permit also allows them to charge sales tax. To get this permit, you can register online or through the SBA license and permits portal. There are no charges for this seller’s permit. However, you might need to pay a security deposit to cover the unpaid taxes if the business shuts down.
- Liquor License in Raleigh, North Carolina
In North Carolina, the liquor license application process is way faster and smoother than in any other state. You can download application forms from the North Carolina Alcoholic Beverage Control Commission, along with other requested documentation and paperwork.
After applying for a license in the North Carolina board, your proposed location will be investigated and vetted by the commission. They will do so with the help of the Alcohol Law Enforcement Division. This is to make sure that all the requirements are being met easily. Some other requirements include:
- Validating that the space adheres to fire codes and building
- Evaluating if the space is within 60 feet of a church or school
- Exploring if your proposed alcohol-serving establishment will harm the surrounding
There are two main types of alcohol permits available in Raleigh, North Carolina. These two types are each connected with different parts of the sale of alcoholic beverages supply chain:
Retail Permit: Retail permits are necessary if you are selling alcohol at retail convenience stores
Commercial Permits: Commercial permits are also needed if you are involved in the distributing, importing, manufacturing, and bottling of alcoholic beverages. It’s also needed if you run wineries or distilleries; or engaged in activities mainly handled by the wholesalers. Also, depending on the nature of your particular alcohol business initiatives, you may need to apply for more than one permit. You may also need to fill out additional forms outside of the North Carolina liquor license documents.
- Catering Business License in Raleigh, North Carolina
In Raleigh, there is no specific catering license. However, caterers need to obtain a liquor license if they will be serving alcohol and food safety certifications.
- Food Facility Health Permit in Raleigh, North Carolina
It is mandatory to have a health permit to open a restaurant in Raleigh, North Carolina. One must adhere to safe food handling, preparation practices, and storage options. Following these regulations can help prevent food-borne diseases in people and endow them with a safe working environment.
In Raleigh, the health permit is under city or county jurisdiction. Hence, it is always advisable to check with the health department. These licenses are non-transferable. If you are starting a new restaurant, even if it is in the area of the previous restaurant, you need to get a new health permit.
When applying for a health permit, which can also be done online, you must go through an inspection. This makes sure that your practices and space comply with North Carolina’s health and safety code. If everything works well, you will get your license. The cost of this license varies from place to place.
- Employee Health Permit in Raleigh, North Carolina
In Raleigh, North Carolina, an Employee Health Permit is just like a food handler’s license. There are many legal necessities required before your grand opening day.
EIN
To get the permits above and also be able to hire employees, every business needs an EIN. Applying for this is not an easy task. You can do it online, via fax, or by mail. Most of the applicants will prefer to do it online as it is the easiest way as compared to mail or fax.
Key Financial Considerations for Opening a Restaurant in Raleigh, North Carolina
During the process of opening a restaurant in Raleigh, you have to select the right type of ownership and business entity. It is also necessary to secure funding as well for your restaurant.
Business Entity
Deciding the type of business entity is a difficult task. You need to opt between S corporation, C Corporation, sole proprietorship, and LLC.
Ownership Structure
Ownership and profit are loomed differently by various restaurants. Some have investors; some have one boss and many employees. Others function like a co-op with every employee at stake. Many businesses operate between owners and partners, but employees can also share in the profits generated by the business.
Determining the best profit-sharing structure for your business is essential. It’s important to work with an accountant and lawyer to draft all necessary documentation and contracts.
The Importance of Location in the Success of Your Restaurant
Picking up the right location for your restaurant is very decisive. A lot of research is required on demographics, the market, and your competitors. Size, space, visibility, and history of the location are very important to keep a check on. There are three options: you can buy the space, lease it, or construct it from the ground up. Some other additional criteria to keep in mind while evaluating a location for your restaurant are:
- Society
- Real estate circumstances
- Dimension on the site
- Preceding tenants
- Ideal customer summary and target market
Generally, the space and layout of the location should bring life to your restaurant idea. If you want to open a stylish steakhouse, then you must have a proper building. If you want to serve sandwiches and tacos, you can opt for the truck as well.
It is imperative to keep some points in mind like dimension, floor plan, layout, and location. If you are planning to keep an open kitchen, then you need a good space for your restaurant.
Wherever you decide to open a restaurant, be sure that your restaurant is visible. It should be easy to spot from the street on which it resides. Your parking lot is also very important as your restaurant space, especially if it is unique as compared to its competition. If a customer can’t find a place to park their car, you might lose business. For this reason, restaurants located off a highway get good business.
Other Important Considerations Before Opening a Restaurant
- Competition: Before signing the lease for your restaurant, it is vital to keep a check on your competitors. So, make sure you visit as many restaurants as you want in the area.
Visiting your competitors will give you a sneak peek at their strengths and weaknesses, which will give you a competitive edge. Look for the customer’s preferences so that you can implement them into your restaurant. Also, recognize their successes and failures to know what to do and what not to do.
- Target Customers: The type of customers you want to attract will also affect the type of restaurant you want to operate. It is vital to consider the income level, lifestyle, the age of the customers you want to attract. For example, do you wish to attract customers who typically take time while eating? Is your target audience willing to travel to the restaurant? How much money are they willing to spend on meals? Are they available during the morning, afternoon, or late evenings of the month? Once you figure out all these things, you will get a clear picture of the restaurant you want to start, the menu, price range, and even the décor and ambiance.
- Marketing: Take advantage of social media platforms to market your restaurant. Join restaurant coalitions so you can work with other restaurant owners to cross-promote your space. Many cities promote local businesses. Hence, it is beneficial to join the chamber of commerce and participate in food festivals to market your restaurant.
- Delegation: It is not easy to trust others with your restaurant, but delegating and prioritizing are a must in this food industry. You cannot do everything by yourself. Be sure to hire professional staff to your specifications and then let go.
Opening a restaurant is a major undertaking with dozens of steps and mountains of paperwork. Writing a solid restaurant business plan and securing funding are critical steps. These make sure you can cover essential building blocks like permits and licenses for your business.
Apart from all the permits and licenses, you must take care of the design and layout of the restaurant.
Seating capacity, ambiance, décor, cleanliness, furniture, and music play an important role in making your restaurant a huge success. Another important requirement is your staff. Your staff should be based on the needs of your restaurant. Below are some of the common positions:
- Management team
- Kitchen staff
- Front-of-house staff
- Bar staff
- Marketing experts, accountants, and PR specialists
To promote your restaurant effectively, start by advertising, building a website, and using mobile apps. Set up profiles on platforms like Yelp and OpenTable, and utilize social media such as Facebook, Instagram, and Twitter.
Offer restaurant gift cards to attract new customers and host a grand opening party featuring your restaurant’s specialties, including unique cuisines and drinks. Invite people to experience your space with happy hour deals and live music with a welcoming atmosphere for guests to enjoy.
As the opening day approaches, it’s a good time to explore technology options for your restaurant, like a restaurant ordering system. Consider which combination of products and systems will best support your operations from day one to set your business up for success. All these steps will get you closer to your dream of opening a restaurant in Raleigh, North Carolina.
At App2Food, we understand the challenges restaurant owners face and offer solutions to make the process smoother. Our restaurant marketing software and restaurant customer loyalty software can help you ease operations and enhance customer engagement. If you’re ready to take your restaurant concept from idea to reality, contact us today for professional support.