8 Steps To Start a Restaurant in Australia - The Simple Guide
Quickly jump to 👇
Are you dreaming of starting your own restaurant in Australia?
If so, you’ve come to the right place.
In this blog, we will guide you through the step-by-step process of turning your dream into a reality.
From understanding the restaurant business in Australia to finding financing options, choosing the perfect location, and navigating licenses and insurance, we’ve got you covered.
But that’s not all!
We’ll also delve into designing a mouth-watering menu that stands out, equipping your restaurant for success with the essential kitchen equipment, and hiring the right staff.
Plus, we’ll explore how crucial it is to have the right restaurant technology to support your business.
All of the steps are important, as a restaurant is one tricky business where a small mistake can lead to a quick failure for the business and there are stats that prove it.
Consider this: According to one recent study, between 60-80% of new restaurants fail within the first year, mainly for reasons such as choosing the wrong location, business mismanagement or bad menu planning, or uncompetitive pricing and then there is something as simple as hygiene issue which cost the Australian food service sector 1.5 Billion dollars in a year (source).
So get ready to take notes as we walk you through each stage of starting your own restaurant in Australia.
Understanding the Restaurant Business in Australia
To achieve success in the Australian restaurant industry, it is crucial to familiarise oneself with the regulations and norms of the Australian food industry.
To begin with, the restaurant industry experienced significant growth last year.
The combined revenue generated by cafes, restaurants, and takeaway food services exceeded $58 billion in 2022.
According to Frollo, monthly spending on pubs, cafes, restaurants, and takeaways has increased by 22% since 2021, reaching $2,048.
This represents a substantial rise compared to the previous year’s figure of $1,675 (source).
Moreover, as of the end of the 2022 financial year, there were over 51.9 thousand operational cafes and restaurants throughout Australia.
This number has steadily increased from approximately 41.5 thousand establishments in 2017 (source).
Another important statistic that can be useful is consumer spending in restaurants across different states. A helpful graph from Resdairy provides insights into this data.
Among other significant industry statistics is the popularity of Japanese cuisine as the most consumed dish in restaurants.
Such simple stats and analyses like the above of the Australian restaurant industry help you design your business plan and set up the base foundation for what you need to do to start a successful restaurant in Australia.
Let’s get started by looking at the 9 Simple Steps to Start a Succesful Restaurant in Australia:
Step 1: Start with the Business Idea and Elaborate it into a Business plan
You will not like me for presenting you with a bitter truth about the Restaurant Industry – The National Restaurant Association estimates a 20% success rate for all restaurants.
About 60% of restaurants fail in their first year of operation, and 80% fail within 5 years of opening. (source)
To start a restaurant in Australia, it is crucial to have a strong business idea and elaborate it into a comprehensive business plan.
Begin by researching the market and identifying a unique concept for your restaurant that sets it apart from the competition.
In the following steps, we will talk about things that will help you strengthen your business idea and plan as we will dive into the details that form the backbone of a business plan.
Before I move to the next step, I want you to keep in mind that a business plan for a restaurant needs to go beyond the finance, marketing research, competitor research, registration, etc, into the territory of licenses and compliance.
The Queensland Govt website states, ‘All food businesses in Australia must comply with the Australia New Zealand Food Standards Code (the Food Standards Code).
The Food Standards Code is a bi-national standard adopted by all Australian States and Territories (and New Zealand) into their own food legislation.’ (source)
Also, you should research the industry to identify everyday expenses.
For example, According to the Restaurant and Catering Association, staff remuneration is the highest cost for most Australian restaurants. The association’s industry benchmarks reveal that, on average, labour accounts for 44.2 percent of expenses, while food and beverage products sold contribute 31.2 percent and 30.6 percent, respectively. (source)
Time to move to the next step.
Step 2: Find The Financing Options For Your Dream Restaurant
Step 2 of starting a restaurant in Australia and an essential part of the business plan is researching different financing options.
Potential funding sources include traditional bank loans, government grants, and crowdfunding.
Again going back to the business plan – To attract investors or lenders, create a detailed business plan showcasing your restaurant concept’s financial viability.
Additionally, exploring partnerships or joint ventures with other businesses or individuals can help share the financial burden.
It’s advisable to consult with financial advisors or experts to determine the best financing option for your specific restaurant goals.
Another finance option is Small Business Administration (SBA) loans, which offer lower interest rates and longer repayment terms.
It’s important to carefully evaluate each financing option and consider factors such as interest rates, repayment terms, and any additional fees or requirements.
Step 3: Choosing the Perfect Location for Your Restaurant
Choosing the perfect location for your restaurant is crucial in setting up your food business.
How do you do that?
Here are a few tips that will help you choose the perfect location for your restaurant:
- Consider the area’s target market and demographics to ensure demand for your cuisine.
- Evaluating the competition in the area will help you determine if there is room for your restaurant.
- Look for a location with high foot traffic and visibility to attract potential customers. Accessibility and parking options are also essential factors to consider for the convenience of your patrons.
- Consider the cost of rent or lease and any necessary renovations or permits for the chosen location.
Once you have decided on the location, you will obviously face the question of Lease v/s Purchase.
My 2 cents – When deciding between leasing and purchasing a property for your restaurant, consider factors like location, budget, and future growth plans.
Leasing offers flexibility and lower upfront costs, while purchasing provides stability and potential appreciation.
In my world of startups and small businesses, I would instead lease than buy and run the business for a year as a pilot project before I go ahead and buy the building.
Step 4: Navigating Licenses, Certificates, and Insurance in the Hospitality Sector
Navigating the hospitality sector’s licenses, certificates, and insurance requirements is a crucial step in starting a restaurant in Australia.
As I mentioned earlier, all Food business in Australia is a part of food standard codes.
Furthermore, you must be across legislations like ACL, Food Standard codes, Competition and consumer act, franchising Code of Conduct, etc.
I highly recommend visiting Business.Gov.au on Accommodation and Food Industry website.
The website also takes you to other links with information on Food safety regulations in every individual state and territory in Australia.
And that is not it.
It also provides info on taxation, employment laws, etc.
It is like your gateway to compliance and govt regulations for restaurants in Australia.
You can use it as a reference to understand the govt norms before you engage a lawyer to take you through the nuts and bolts of the compliance and regulatory system.
Before I forget: Depending on your circumstances, you may also need additional licenses, such as a Liquor License, if you plan to serve alcohol.
In terms of restaurant insurance – having the right insurance coverage is vital for safeguarding your restaurant business from potential risks and liabilities.
It is essential to understand the different types of insurance that are crucial for restaurants in Australia.
These include general liability insurance, property insurance, workers’ compensation insurance, and liquor liability insurance.
General liability insurance covers accidents, injuries, and property damage that might occur on your premises.
Property insurance protects your physical assets, such as your building, equipment, and inventory, against loss or damage.
Workers’ compensation insurance covers any work-related injuries or illnesses your employees suffer.
Step 5 : Designing a Mouth-Watering Menu
Righteo! We have sorted the business plan, location, compliance / cecompliance/certificatesme to focus on the core of the restaurant business that attracts the customers.
Let’s get down to designing a mount watering menu.
As a thumb rule – To create a menu that appeals to your customers, it’s vital to research popular menu items and trends in your restaurant industry.
For example, if you are opening a burger restaurant, look at the names that your competitors use to sell the same stuff.
A chicken burger might be called the Mighty Chicken burger.
Find something catchy that holds the attention of your customers.
How do you do that?
It’s not a straightforward step but a well-researched exercise that involves considering your target audience and their preferences when designing your menu.
A few pointers to help you get that ‘mouth-watering menu’ in place are:
- Start with the type of cuisine you want to specialise in. It’s crucial to research popular cuisines and food trends in Australia to ensure your menu is appealing to diners.
- Incorporating unique flavours or ingredients can set your restaurant apart from competitors.
- Compliment the cuisine with the overall theme or concept of your restaurant. Something that should be reflected in the menu. Think Mcdonald’s or HungryJacks, where nothing seems out of place.
- Try and offer various options that cater to different dietary preferences and restrictions, including vegetarian, vegan, and gluten-free dishes.
- Lastly – To entice customers, use enticing descriptions (remember the mighty chicken burger idea 🙂 )and appealing visuals to showcase your dishes on the menu.
By carefully crafting your menu, you can attract and satisfy customers, setting the stage for a successful restaurant venture.
Step 6: Equipping Your Restaurant for Success
To ensure the success of your restaurant, it’s crucial to have the right equipment and supplies.
The key here is ‘right’ and that is where you might need to research high-quality kitchen equipment that caters to your restaurant’s specific needs.
In my experience, the right way is to first identify the needs of your requirements based on the cuisines you are serving.
It is important as a burger joint will have different equipment than a fancy fine-dining Italian restaurant.
Acknowledging that the industry may incur significant financial expenses due to equipment replacement, such as crockery and linen, is essential.
An interesting story I found online backing the typical expense was – Aria, the Sydney flagship of Australian celebrity chef Matt Moran, reportedly spends around $20,000 a year replacing broken wine glasses.
At the same time, the annual table linen laundry bill can reach as high as $280,000 (source).
Having said that, some standard supplies you need are ovens, refrigeration units, and cooking utensils.
In addition, remember the essential front-of-house supplies such as tables, chairs, and dinnerware.
These play a significant role in creating a comfortable and inviting dining experience for your customers.
It’s also worth considering the use of technology to streamline your operations. POS systems and online reservation platforms can help with order management and customer service.
Lastly, prioritise safety by having fire extinguishers and first aid kits readily available.
Stock up on necessary ingredients and food supplies to ensure smooth operations and avoid any disruptions.
Step 7: How Crucial is the Right Staff for Your Restaurant?
Having the right staff is essential for the success of your restaurant.
They can enhance the dining experience, maintain cleanliness and efficiency, and ensure customer satisfaction.
Hiring staff for a restaurant can take time and effort for new restaurant owners.
But fear not, we’ve got you covered with some simple tips to make the process a little less stressful.
So grab your chef’s hat and get ready to build your dream team:
- Clearly define the roles and responsibilities: Know exactly what positions you need to fill and what tasks each role will entail.
- Look for experience: Hiring experienced staff can help ensure that they have the skills and knowledge needed to excel in their roles.
- Remember personality: While experience is significant, pay attention to the importance of finding staff members who have a positive attitude and work well with others.
- Ask for references: Contacting previous employers or supervisors can give you valuable insights into an applicant’s work ethic and reliability.
- Conduct thorough interviews: Use the interview process to assess applicants’ qualifications and gauge their enthusiasm for the job and ability to handle high-pressure situations.
- Consider trial shifts: Having potential hires come in for a trial shift can give you a firsthand look at their abilities in action.
- Check for certifications: Certain positions may require specific certifications (such as food handling certificates) depending on your location, so be sure to verify that candidates have these qualifications.
- Offer competitive compensation: To attract top talent, offering fair wages and benefits that align with industry standards is important.
- Provide training and support: Even experienced hires may benefit from additional training or guidance specific to your establishment. Be prepared to invest time and resources into developing your staff members’ skills.
- Trust your gut: Ultimately, hiring decisions should be based on a combination of qualifications, personality fit, and intuition.
Step 8: Finding The Right Restaurant Technology To Support Your Business
When it comes to finding the right restaurant technology to support your business, it’s crucial to determine your specific needs.
The key points while identifying the technology for a restaurant business are:
- Start by identifying what software will streamline your operations, such as point-of-sale systems, online ordering platforms, inventory management systems, and reservation management software.
- Map the technology to hardware requirements: This includes devices such as POS systems, tablets for taking orders, and kitchen display systems. To ensure a smooth operation, selecting hardware that is reliable, user-friendly, and compatible with your chosen software is crucial. Consider the size and layout of your restaurant when making these decisions, as you want the hardware to fit seamlessly into your space.
- Think from a Scalability perspective: scalability is essential to consider, ensuring that the technology can grow and adapt to your restaurant.
- Look for integration capabilities with existing systems, like accounting software or inventory management. Ease of use and reliable customer support are essential for a smooth implementation and ongoing use of the technology.
- Once you know the technologies, take the time to research different providers and compare their features, pricing, and customer reviews.
FAQs about Restaurant Business:
What’s the potential of the Restaurant business being successful in my locality?
The restaurant business has the potential to thrive in your locality. With its diverse population and vibrant culinary scene, there is a strong demand for dining establishments.
The local residents are known for their love of food and dining out, making it an ideal market for restaurants to flourish.
However, conducting thorough market research and developing a solid business plan is important to ensure success in this competitive industry.
How Hard Is It To Open A Restaurant?
Opening a restaurant is a challenging task. It requires careful planning, dedication, and a lot of hard work.
From finding the right location to securing funding, there are numerous challenges that aspiring restaurateurs must overcome.
The process involves navigating through permits and licenses, designing a menu, hiring and training staff, and creating a marketing strategy to attract customers.
Which one is better: Franchise or self-owned Restaurants?
Franchise and self-owned restaurants both have their advantages and disadvantages, making it difficult to determine which one is better.
Franchises offer the benefit of a proven business model, established brand recognition, and ongoing support from the franchisor.
On the other hand, self-owned restaurants provide greater flexibility and autonomy in decision-making, allowing owners to tailor their concept, menu, and operations to their specific vision.
Starting a restaurant in Australia may seem daunting, but with the right steps and guidance, it can be a rewarding venture.
From understanding the restaurant business in Australia to finding financing options, choosing the perfect location, navigating licenses and insurance, designing a mouth-watering menu, equipping your restaurant for success, finding the right staff, and utilising the right restaurant technology – each step is crucial to ensure the success of your restaurant.
If you’re ready to leap into the world of hospitality, follow our simple guide on starting a restaurant in Australia.