It's not easy to open a restaurant, just like it's not easy to open any business. It's a lot of work, from planning the menu to publicising your business plan to hiring, training, and supervising employees and negotiating prices with vendors.
Here are the steps you should take before opening a restaurant, as recommended by industry professionals, whether you're a chef eager to share your culinary creations with the world or an aspiring entrepreneur interested in the food industry.
It's thrilling to launch a new venture, explore viable locations, and plan out the menu.
But don't let the enthusiasm forget the other things that must be done for your business to be legitimate.
If you're thinking about opening a restaurant or other food-related business, you should know that there are a number of procedures that must be completed before you can legally open for business. These will help you avoid serving tainted or otherwise unsafe food to customers, and will also ensure that you are following all legal requirements for your food business.
FAQs About Restaurant In Melbourne
Research from Restaurant Startup and Growth magazine suggests that the average restaurant owner in Australia spends $650,000 establishing their restaurant. It is a considerable investment, and it can be difficult to raise the capital required to launch your business.
Research from Restaurant Startup and Growth magazine suggests that the average restaurant owner spends around AU$650,000 establishing a restaurant. Likewise, day-to-day running costs will depend on the unique expenses of the business.
You'll need to apply for a business licence and registration from the local council. The local council will ask you to provide information such as Your food business classification. The type of food to be served.
Yes, restaurants are profitable, but they have low-profit margins. So you should factor these into your restaurant business plan. The two big factors that affect the profitability of restaurants are labour and food costs. Food costs can be 10-20% higher than a bar's liquor cost.
The hard reality is that many restaurants fail during their first year, frequently due to a lack of planning. But that doesn't mean your food-service business has to be an extremely complex operation.
Food Business Licensing
The first step you need to take is to get a proper business licence with your local council.
There can be different rules and regulations depending on where your business is based, and the requirements around licensing vary.
A simple rule to follow is to notify the proper authority if your company handles food for sale for customers. It includes businesses such as:
- Mobile food units
- Community organisations
- Charities that handle and serve food
Other types of businesses that may require a food licence are:
- Aged care facilities
- Childcare facilities
- Tour operators that prepare snacks for customers
- Food processing companies
Contact the City of Melbourne if you plan to open a food business there to find out what steps you need to take to be in accordance with the Food Act 1984.
Businesses that deal with food in any capacity (including but not limited to handling, preparation, packaging, storage, service, supply, or repackaging) must be registered with the local council in accordance with the Food Act of 1984.
A New Build Or Renovation
If you need to build your food premises or do extensive renovations that will take some time before you can open, you still need to register as a food business.
Most local councils require that you register the premises themselves well before you begin any construction.
You will need to check with your local authority before building to determine if you need to register and if a food business is allowed within the planning zone.
If You're Starting A New Business
As well as getting the necessary building and planning permits, you need to register your business with us. There are standards that food premises fit-outs must meet for us to grant registration.
New Food Premises Assessment
To initiate the process of registering a business, you must first complete and submit a New food premises assessment.
Submission of floor plans for review is highly encouraged by the City of Melbourne to ensure that all proposed works are in accordance with the Food Standards Code.
By offering this service, we help businesses fulfil their legal responsibilities when constructing or renovating a food preparation or serving facility, saving them time and money. However, this can be an expensive and time-consuming process that can put off filing the Food Act.
A downloadable resource with useful information on setting up a food business is at your disposal. Construction standards for food-related facilities (PDF 1.3 MB)
Those submitting blueprints should keep a few things in mind.
- be drawn to a scale of not less than 1:100
- show the layout of all fixtures, fittings and equipment
- describe materials to be used for surface finishes, including walls, floors and benchtops
- show the waste disposal area, bin wash area, storage areas and toilets.
One of our environmental health officers will inspect the premises to check the fixtures and fittings are suitable for a food business.
It usually takes 15 working days to complete. However, a five-working day fast-track service is available for a fee. We will advise you in writing of any additional requirements or let you know that we've approved the assessment.
If you're operating a food truck, you'll need a food truck permit and register as a temporary and mobile food premises.
If You're Purchasing An Existing Business
We advise arranging a property enquiry before purchasing an existing food business. A property enquiry will inform you of outstanding orders or structural requirements placed on the business before the purchase settlement.
Application For Property Enquiry
An environmental health officer will assess the premises during a property inquiry and write a report. It usually takes 15 working days to complete.
A five working day fast-track service is also available for an extra fee. The current and
proposed proprietors then decide who will act on any outstanding items listed in the report.
Change Of Ownership
If you decide to go ahead with the business purchase, you must follow the ownership process.
As of July 1, 2010, this replaces the Transfer of Food Act Registration due to a change in legislation.
To start changing the business into your name, you need to complete the Application for Food Act Registration form and tick Existing Premises with Change of Ownership.
Cancellation Of Registration
If you are the proprietor of an existing registered food business and wish to cancel your registration, please notify Health and Wellbeing via email at email@example.com.
If you have any queries about purchasing an existing business, contact the City of Melbourne on 03 9658 8831.
Food Safety Programs
Whether you are opening a new business or have purchased an existing business, you may need to prepare a food safety program and nominate a food safety supervisor for your business before obtaining registration.
Restaurant startup and running costs
Exactly how much does it cost to start a restaurant? There's no exact answer to this, as startup costs will differ depending on the scale, location and market. These costs include:
- Purchase or lease of a commercial property,
- Plant and equipment acquisition,
- Food and beverages
Research from Restaurant Startup and Growth magazine suggests that the average restaurant owner spends around AU$650,000 establishing a restaurant.
Likewise, day-to-day running costs will depend on the unique expenses of the business.
According to the Restaurant and Catering Association, the single largest expense for most Australian restaurants is staff remuneration. Industry benchmarks from the association indicate that on average, 44.2 per cent of costs are labour, followed by 31.2 per cent and 30.6 per cent for food and beverage products sold, respectively.
The Hidden Costs Of Australian Restaurants
The Good Food Guide conducted an investigation into what factors into the high cost of dining out.
According to reports, Australian celebrity chef Matt Moran's Sydney flagship, Aria, spends roughly $20,000 annually on replacing broken wine glasses. Additionally, the cost of laundering the table linens can add up to $200,000 per year.
Similarly, many fine dining establishments spend a significant portion of their budget on tableware.
The dining ware at Moran's Bangaroo House is estimated to be worth around $100,000. Meanwhile, $54,000 worth of tableware was prepped and ready for use when Chin Chin first opened its doors in Sydney the year before.
The Lucas Group spent close to $45,000 replacing stolen or lost bespoke cutlery across the Sydney and Melbourne locations of Chin Chin.
Who Handles Your Licensing?
You will need to apply for a licence and registration with your local council.
You will need to provide certain information, such as your food business classification, what types of food you will be serving, who will be receiving your food, whether or not your food is pre-packaged, and your nominated food safety supervisor more.
Additionally, you will have to pay a fee, and you will need to renew your licence once a year.
To find your local council and determine what process they require for your licensing, visit the Australian Business Licence and Information Service.
This site lets you search for your local information based on location and business type. For example, mobile businesses, such as food trucks, may need a food licence from the state instead of just the local authority.
Once you employ staff, you'll need to make sure they undergo the proper training for the workplace.
It should cover basic training as well as food safety and food handling.
In Australia, it's a legal requirement that all employees who handle food must be trained in food safety. You have several options for this training:
- Online nationally accredited training courses
- Classroom-based nationally accredited training courses
- Use of manuals to instruct staff
- In-house training through a consultant
Food Safety Supervisors
For many states in Australia (NSW, VIC, QLD and ACT), you must nominate a food safety supervisor on staff.
This supervisor must have the proper training and certificates and be registered before working in this position.
A Food Safety Supervisor must attend training delivered online or in a classroom through a Registered Training Organisation (RTO).
The training must be specific to their food industry sector and state or territory. The food industry sectors are retail, hospitality, food processing, transport and distribution, and health and community.
However, New South Wales only recognises the retail and hospitality food industry sectors, and only certain providers are registered to offer Food Safety Supervisor training in the state.
When you begin searching for your Food Safety Supervisor, a few things to consider are:
- They should have proper training and certification.
- They should understand their responsibilities to the business.
- They should be willing and able to supervise your employees on food safety and personal hygiene.
- They should be prepared to handle any noncompliance or negligence issues that arise.
Employing a Food Safety Supervisor is crucial to the success of any food service establishment.
If your business is open for a long period of time, it may be a good idea to have more than one Food Safety Supervisor on call at all times, though this is not a requirement.
This worker's primary duty will be to monitor compliance with state and federal food safety regulations.
In some cases, they may need to fix issues and put in extra effort to train your staff effectively.
This means entrusting the task at hand to someone in whom you have complete confidence.
But remember that your Food Safety Supervisor isn't responsible for every aspect of food safety. As a business, you also need to ensure that your staff has received adequate training in food safety. A common example is companies that require their workers to complete a Food Handler course that is recognised on a state and federal level.
Food Safety Requirements
You're required by law to comply with all food safety regulations.
It can affect how you build or style your business and how food is handled when the establishment operates.
The Food Standards Code is available to you at no charge through the Food Safety Authority Australia and New Zealand (FSANZ), which you can find on their website.
You also need to develop a Food Safety Program based on HACCP principles.
This document needs to be updated regularly and kept on the food business premises.
Your Food Safety Program could be audited at any time, and if you're not complying with all food laws and regulations, you could be fined or face more severe punishment.
The Steps in Review
Now that you have learned about getting your food business started, let's review the steps:
- Determine if you need to be registered and licensed.
- Find out what your food business classification is.
- Contact your local authority to register your business premises, pay any fees, and fill out the required paperwork.
- Determine what other licences or permits you're required to have to operate.
- Implement a Food Safety Program and show proof to your local authority
- Hire or train a Food Safety Supervisor.
Getting started with your food business is fun and exciting, yet also stressful. Ensure that you follow the proper steps outlined in this document before starting operating.
Once you have all this in place, you will need to pass regular food inspections, stay up-to-date on new food safety laws, and be prepared for any random audits by Environmental Health Officers (EHOs).
Things To Do Before Opening A Restaurant
Creating a sense of anticipation and community are two critical success factors of opening with momentum from the start.
Identify community events where tastes can provide insight into the menu before your opening.
Connect with high-profile businesses where you cater lunch or an after-work meet & greet at cost or totally as a marketing cost, with special certificates provided in advance for use the first month of opening.
Once you build these connections, you can invite all these pre-opening fans to a private pre-opening experience.
They would pay and give you valued feedback for any tweaks before the official opening.
Talk To Other Businesses
Talk to your neighbours. It is remarkable how much you can learn from the existing business owners in the neighbourhood where you intend to open your new restaurant and how few operators do this simple homework.
And as many restaurants are [filling] spaces that were previously restaurants, it can be helpful to talk to the prior operator.
Get Experience In The Industry
Aspiring restaurateurs should work in a restaurant.
Whether a few shifts waiting tables or trying your hand on the line in the kitchen, make sure this industry is for you before leaping.
While being the next 'it' chef may be glamorous, washing dishes, waiting tables and dealing with customer complaints isn't.
Do The Maths
Before opening, the most important thing a budding restaurant owner should know is simple maths.
A customer's gross-to-net breakdown is vital; little else matters if the maths doesn't work.
They need to know exactly how much each customer will impact the bottom line, what the average customer transaction is projected to be, and exactly how many customers per day are needed to keep the lights on.
Negotiate Food Prices
Restaurant operators need to have a firm handle on food [spending] since it will take up many budgets.
The more they can negotiate fair prices with suppliers, order less expensive items, and reduce waste, the more successful they'll be at running their restaurants.
Ask For Feedback
Aspiring restaurateurs should create a small packet that shows the menu, the prices, the proposed location, images of the interior, samples if possible, and a brief written piece about what the restaurant will be like.
Next, they need to show it to 100 people and have at least 15 who are not in their target demographic.
This test provides validation in many ways: It verifies assumptions about the concept and gives you the feedback you can incorporate before spending your money.
It forces you away from asking friends and family — aka the people who always say it's great — to the more honest general public. If you can't muster the effort to ask 100 people, you have no business starting a restaurant.
Get It In Writing
Creating a written partnership agreement is vital if you start a restaurant with a partner.
You must agree on how investments are made, who gets distributions, and who works.
It is almost certain that two or more people will disagree over these issues in the future. Not having an agreement can lead to expensive litigation or even dissolution of the business through infighting.
All restaurants should go further, whether one owner or many and create a corporation or LLC.
It will help limit liability in case there is a lawsuit.
Create A Website
Get a good website that converts people into making reservations — not just an online brochure that doesn't convert into business, but a customer attraction magnet that brings people to your website and your restaurant.
Make sure it's mobile-friendly and isn't flash-based.
Yes, Flash sites can be pretty, but the search engines can't read them, so they do you zero good from the standpoint of getting found.
Make sure your phone number and a map are prominently displayed on the site.
Establish A Voice
The voice of your restaurant, which encompasses its values and aims, will differentiate it from the competition; it's your unique selling point.
It's essential that entrepreneurs establish their restaurant's character early in the process and then ensure that this 'voice' is present in the dishes, the menus, the marketing, and the staff conveys it.
Get The Food Right
Make sure your menu is not only different, but also useful. Don't be the first to serve Indian or Japanese fusion in the South, but do put your own spin on the burger if you plan to open a restaurant.
Make your food memorable in every way possible for the benefit of your customers, including flavour, texture, presentation, and heat. The more bangs the better!
You want to open a restaurant in Melbourne, right? Congratulations! Some of the finest dining establishments in the country can be found in this city. You may feel overwhelmed by the sheer number of potential sites for your new restaurant, but we've put together some guidelines that should help narrow down the field.