We have to assume that opening a restaurant anywhere was always a hard job, no matter where you want to open it. However, opening a restaurant in New York was certainly harder than opening a restaurant than anywhere else at any point in time.
Nowadays, it’s probably harder than ever.
Just take a look at this: in just a short five years, between 2013 and 2018, exactly 1,920 restaurants opened in New York. There are only 1825 days in 5 years. That means, during that period, a new restaurant opened in New York every single day. A few times two opened up on the same day.
That’s a lot of competition right there.
Does that mean that opening a restaurant in good-old Gotham is impossible? No, of course not, however, if you want to do things the right way, you need to plan everything out carefully.
Creating a Business Plan for the Restaurant
If you don’t have a business plan, you won’t have a business anytime soon. A plan will guide you through the entire process from registering the company and getting the right documentation to perfecting the menu selection and hiring additional cooks.
For starters, you need to decide what type of business model your restaurant will operate on. If you register an LLC, you need to register with the state authorities. One the other hand, if you decide to operate as a sole proprietor, you can simply register with a county clerk.
Restaurant Equipment and Inventory
Depending on the type of restaurant, kitchen small wares, equipment, and furniture can cost between $25,000 and $250,000. Here is a quick breakdown of the finances:
- Kitchen Equipment (This is the most expensive investment; large equipment like ovens, fryers, and freezers will cost you between $15,000 and $150,000)
- Smallwares (This includes glasses, utensils, and small restaurant equipment, and the costs go between $8,000 and $80,000)
- Furniture (The furniture is the cheapest investment and depending on the restaurant type, can cost between $2,000 and $20,000)
Finding the money for equipment may be a challenge but there are options even for people with small budgets. As Steven Rahavy, the owner of kitchenall.com explains, although kitchen equipment is a big investment, you can still find 24/36-month financing options. If you’re working on a tight budget, this won’t solve your financial problems completely, it will still give you enough time to find more money.
If you want to renovate the place, you will have to invest a little bit more money. The budgets for this differ in the kind of space you’re starting with and the kind of look you’re aiming to achieve. If space wasn’t originally designed to have a restaurant floor plan, you’re in trouble. This will require more investment than working with a space that’s been used for a restaurant in the past.
Permits and Licenses for the Restaurant
We’ve officially come to the worst aspect of opening a restaurant: acquiring all of the permits and licenses. Of course, this heavily depends on the type of restaurant you want to open. Vegan and regular restaurants require different permits, for instance. In any case, at the bare minimum, a restaurant needs to have the following permits:
- New York Business Registration (The fees for business registration in the city are between $100 and $120 depending on which country you’re registered in)
- New York Restaurant Permit (A restaurant permit in the state will cost you $280, however, it expires after a year and has to be renewed annually for the same price)
- New York Food Protection Certificate ( You don’t need to pay for food protection classes, however, the final exam costs around $25)
- New York Liquor License (If your restaurant plans on serving liquor, you will have to get a license, which thankfully, isn’t that difficult in New York City)
Getting Restaurant Insurance
After getting all of the permits and licenses that will allow you to work legally, you need to start thinking about protecting your new investment. Although you might not be aware of it, restaurants face serious risks such as damage to property, employee injuries, and customer lawsuits on a weekly basis. What’s the best way to stay safe from all of these risks? Find the right insurance.
Some policies described here are legal requirements. Others, however, are designed to meet certain business requirements. Policies every restaurant owner in NYC should consider are:
- General Liability Insurance (This policy will protect your establishment against financial loses due to claims related to 3rd-party damage to property and personal injury)
- Workers Compensation Insurance (This policy is required by the state; it pays for the rehabilitation costs and medical bills for your employees, in case they get injured on the job)
- Commercial Property Insurance (Commercial Property policy protects your restaurant from incidents that can damage the property like fires and natural disasters)
- Liquor Liability Insurance (Once again, if you plan on serving alcohol, you need to have this insurance policy, in addition to the license)
The Costs of Building the Right Team
Almost 20,000 people work in the foodservice industry in New York so there are enough people out there that will be willing to work in your restaurant. However, there’s a good reason why large companies have dedicated Human Resources departments. Finding the right people is not only challenging but it’s also time-consuming.
In New York, one of the biggest problems for restaurant managers is having to deal with high turnover rates. And as we mentioned before, even when it comes to employment, there are certain legal requirements you need to fulfill. For instance, in New York City, the minimum hourly wage for tipped workers is $10. And that’s not where the costs end.
If you want to avoid paying numerous fines down the line, you also need to think about training the rest of your staff. To avoid the wrath of the health inspection, you need to ensure that all of your cooks and waiters know how to handle and store food right. Your manager will need to pass the food protection course, which is cheap but you’ll have to spend some time making him take the test.
With that, we are finally done. Of course, opening a successful restaurant in New York will take much, much more careful planning. You will definitely need to create a business plan before you even start thinking about how to find the money for all of the equipment you need.
The process of opening a restaurant can be quite rewarding and exciting. If you decide to try to open a restaurant, you have to be prepared to work hard for more than a few months and be as disciplined as possible In the end, all of that hard work will pay off and you’ll be able to make your dream a reality.