What is the process for opening a restaurant? A clear explanation of key points to watch out for as you prepare

Before opening a restaurant, there are things you should think about before you even start looking for a property, and things you should think about after the property has been decided.
The reason some things should be considered only after the property is set is that they depend on factors like the size and location of the premises, so even if you think about them in advance, you may have to change them later.

First, let’s go over what you should think about before you start looking for properties.

First, it’s important to think through your concept.
You won’t be able to plan the menu or decide which area to look for a property in until you’ve settled on things like your target customers and your price range.
For example, if you decide on a concept of offering high-end, luxury-oriented cuisine with a high average spend per customer, you’ll also need to consider an interior design that matches that image, as well as luxurious and stylish plating.
If you’re opening as a place that serves reasonably priced set meals, you’ll need to think about what kinds of cost-cutting measures you can take to keep prices low without compromising on taste.

Next, you will draw up a business plan, which is required when asking financial institutions and the like for a loan.
You will plan out specifically how much costs will be incurred, at what price you will sell, and how much profit you can expect per month.
By calculating costs accurately at this stage, the prices of your dishes will naturally fall into place. Also, based on these calculations, you will get a clear idea of the appropriate rent range for the type of property you should be looking for.

Next, look for a commercial property that fits the budget you’ve planned.
Some properties are what’s called “turnkey” or “as-is” restaurants, where a previous food business operated and you can use the existing equipment as it is.
However, since these places have closed down for one reason or another, you need to carefully investigate why they shut down.
For example, if the reason was the owner’s declining health, then there’s almost no issue with the location itself, but there are also cases where the closure was caused by factors such as being in a spot that customers have trouble finding.
In the case of an aging multi-tenant building, even if it looks fine on the surface, you may experience problems like water leaks or weak electrical systems once you start operating, and it’s possible the previous tenant pulled out for that very reason, so you need to be very cautious.

Once you’ve decided on a location, you need to secure funding.
There are various ways to raise funds, but for opening a new restaurant, the most common is to take out a loan from the Japan Finance Corporation.
In most cases, ordinary credit unions and banks will hardly ever provide financing for a brand-new restaurant opening.
In some cases, you may also be able to use subsidies or grants.
The budget you need will vary depending on your restaurant’s concept and location, but on average it’s around 10 million yen.
It is extremely difficult to cover the entire 10 million yen with loans if you have zero personal funds, so you should prepare at least one-third yourself—around 3 to 4 million yen in personal capital.

The next thing you need to do is develop your menu, but menu development involves a lot of trial and error, so it takes time.
Once you’ve decided on a property, rent will naturally start to accrue. It’s a waste to pay high rent just for the sake of menu development, so make sure you work on developing your menu before you move into the premises.
Menu development is extremely important for a restaurant, and it’s not enough for the food to simply be tasty and cheap.
If all you want is to make something delicious, you can use good ingredients and take plenty of time to perfect it, and you’ll be able to create great dishes—but that approach is not suitable from a business standpoint.

At major chain restaurants, items with high and low cost ratios are combined and carefully calculated so that the overall operation remains profitable.
For example, edamame, a staple on izakaya menus, has a very low cost ratio, whereas dishes that use meat or fish have a high cost ratio.
Because customers order a variety of dishes at an izakaya, the restaurant balances its profits by mixing low-cost-ratio items with high-cost-ratio ones. Ramen shops do something similar by serving beer, which helps raise the average spend per customer that would otherwise tend to be low.
Even in other types of food-service businesses, it is necessary to make efforts to reduce the cost ratio as much as possible, such as by being creative with plating or using slightly cheaper ingredients.

Once you’ve chosen a property, rent will start being charged, so try to move forward as quickly as possible after the property is decided.

If the place hasn’t previously been used as a restaurant, you’ll need interior construction work and changes to the exterior.
If the premises were used as a restaurant before, you may be able to use them as they are without doing any major work, but if they’ve been in use for a long time, they may be deteriorated or something may be on the verge of breaking.
If there are any holes anywhere, insects and rats can get in through them. Once you’ve opened, it’s extremely difficult to carry out construction work just to seal those holes, so make sure you take care of that kind of interior work properly before opening as much as possible.
There may also be cases where water faucets have become loose and are about to break, and if problems arise after opening, you may have to suspend business for a while.
For that reason, even if the premises were previously a restaurant, at the very least have a trustworthy contractor inspect them, and if necessary, arrange to have proper interior work done.

The next thing you should do is purchase kitchen equipment.
New kitchen equipment is less likely to break and can usually be used for a long time, but secondhand items often work perfectly well too.
There are also recycling shops that specialize in kitchen equipment, so it’s a good idea to visit places like that and see if they have anything you can use.
In addition, depending on the kitchen equipment you choose, it can have a significant impact on labor costs.

The next thing to do is purchase equipment and supplies.
Items used in restaurants can often be found at secondhand shops.
However, if you want to value the atmosphere of your restaurant, it’s better to be particular about things like the design of your plates.
If your restaurant is family-oriented, children will almost certainly drop things, so you should also prepare durable items made of plastic or metal that are hard to break.

Once the location has been decided and you are proceeding with interior construction and purchasing kitchen equipment, you must also, in parallel, take care of various notifications and administrative procedures.
You will need to go to the public health center to file hygiene-related notifications, the fire department for fire safety notifications, the tax office for tax matters, and to places such as the Public Employment Security Office and the Social Insurance Office as well.
If your restaurant serves alcohol after midnight (12:00 a.m.), you must go to the police station and submit a “Notification of Commencement of Late-Night Alcoholic Beverage Service in a Restaurant.”
Which documents you are required to submit will vary depending on the size of the establishment, the number of employees, and the type of restaurant.

Once you’ve completed the various notifications and filings, you’ll need to hire staff.
These days, the food and beverage industry is short of workers everywhere, and even if you raise the hourly wage, it’s hard to attract good people.
Because of this, it’s better to create systems that allow anyone to do the work easily and to prepare clear, easy‑to‑understand manuals.
For example, in a traditional restaurant where most tasks are done by hand, you don’t need to spend much on equipment, but you do need a lot of staff.
If you set up your business like that, you may not even be able to open unless you can secure enough workers. Major chain restaurants, for instance, have already implemented various measures to deal with labor shortages, such as paying bonuses when employees refer their friends.

Once the staff has been assembled, it’s common to hold a one- or two-day pre-opening, often inviting the owner’s friends and family.
This pre-opening functions like a rehearsal: you actually run the store to identify any issues and to figure out how things could be made more convenient.
Right after opening, it’s easy for large numbers of customers to come, so the pre-opening also serves to get the staff used to the work so that they don’t leave a bad impression at that crucial time.

Once all the preparations are complete, it’s time to open for business.
When a new shop opens, people living nearby are almost always interested.
In some regions, just opening a new shop can attract coverage from local TV stations or food magazines.
The period right after opening is your biggest opportunity, and whether you can leave a good impression on customers at this time will greatly affect how your business performs afterward.
To that end, make sure your staff are well trained, and set up a menu and pricing that customers will be satisfied with so you can gain many repeat customers.

We have outlined the steps leading up to opening a restaurant.
Once a restaurant is open, it is difficult to make major changes, so it is crucial to prepare thoroughly beforehand.
Even if you plan everything carefully, unexpected situations will inevitably occur, such as being unable to recruit any part-time staff and having no choice but to raise the hourly wage.
In addition to careful planning, what is important as a manager is the ability to make decisions on how to overcome unforeseen circumstances.
To be able to make sound judgments like these, make a habit of observing carefully and developing the ability to analyze things calmly.

“What do you need to open a restaurant? A summary of the information required to start a food and beverage business”provides a more comprehensive overview of what is needed to open. If you are considering opening a restaurant, it may be worth reading through it once.