Is Opening a Restaurant Right for You? The Types of Restaurants to Consider

Whether you’ve always dreamed of opening a restaurant or you’re searching for an opportunity to be your own boss, knowing what type of concept to launch takes a good amount of research and a bit of soul-searching. Knowing all the types of restaurants out there goes a long way toward achieving your dream.

There are numerous types of restaurants out there. It’s not just about having a vision. If you’re serious about being a successful restaurant owner, you’ll need to do a market analysis to understand what’s already out there, what customers want and how you can differentiate your concept from the competition.

You also need to know what makes sense for you. Do you have your own unique vision, or would you be happy bringing somebody else’s brand to life? How much money do you have to kick in from the start? Where will your business be located and what kind of space can you afford to occupy? What kind of dining experience do you want to deliver? 

These are just some of the questions that will help match you to the kind of opportunity that won’t just be another business endeavor, but a true passion project. 

Do you have enough capital?

Experts say one of the top challenges restaurants face is undercapitalization. It’s one thing to have the money to build the space. But are you confident that your capital will sustain you through the early months of operation, before the restaurant starts making money? 

Read also:

• How Much Does it Cost to Open a Restaurant
• 39 Ways to Finance a New Restaurant
• Staying on Budget When Opening a Restaurant
• How to Save Money When Opening a Restaurant (And Where You Shouldn’t Cut Costs)

Are you in the right market?

Many entrepreneurs dream of returning to their hometown or retiring to a favorite destination and opening a restaurant. The right location, however, is less about what you want and more about what the market demands. 

Read also:

• How to Write a Restaurant Business Plan
• Why Every Restaurant Needs a Mission Statement

Do you have the passion—and perseverance?

Even if you have a strong launch, staying on top requires unrelenting marketing, analysis and effort. Will you have the wherewithal to weather the months when traffic and sales drop? 

Read also:

• 8 Surprises to Anticipate When Opening a Restaurant
• Lessons Learned: Wisdom from a Real-Life Restaurant Startup

Are you ready for employee drama?

Having a cohesive team that works together to give customers an excellent experience is critical. For many small businesses, restaurants in particular, staff becomes much like family. And, just like family, relationships can be difficult and messy at times. How you manage these dynamics can make or break you.

Read also:

• Finding a Good Restaurant Manager
• How to Hire Staff for Your Restaurant
• Employee Turnover in the Foodservice Industry Today
• Restaurant Labor Costs: 10 Tips to Balance Expenses & Productivity

Types of Restaurants: Should You Franchise or Go It Alone?

Before deciding on the type of restaurant to open, you should first decide if you want to start your own unique concept or invest in an already proven prosperous endeavor.

While owning a franchise requires that you have some skin in the game—usually in the form of a minimum investment and a franchise fee—the turnkey nature of the business model makes it more attractive to many entrepreneurs. 

As a franchisee, you’ll be bringing to market a known brand with a proven track record along with the support and resources of the larger company behind you. That typically means marketing, real estate and operations support—including help siting and securing a lease, equipment and design packages to build out a space and established policies and procedures for operation. 

That doesn’t mean a franchise is a “set it and forget it” model. The most successful franchisees are those who are actively involved in their businesses.  

Moreover, owning a franchise is a long-term commitment that can extend 10 years or more. That’s a long time to be in business with someone—even a successful brand. So make sure not only that you believe in the brand and the company behind it, but that you have confidence that the type of restaurant and the food it sells will be in demand for years to come. 

The Pros and Cons of Owning a Franchise

 

Pros

• A recognized brand name 
• Pre-opening support 
• Site selection
• Design
• Construction
• Financing
• Training
• Grand-opening program
• Ongoing support
• Research and development of new products and services
• Training for you and your management team
• National and regional advertising
• Operating procedures and assistance
• Ongoing supervision and management support
• Increased spending power
• Access to bulk spending

Cons 

• Not completely independent 
• Restrictions on the products and services that can be offered, pricing and geographic territory 
• Fees
• Initial franchise fee
• Ongoing royalties
• Ongoing advertising fees
• Duration and terms of termination in the franchise agreement—make sure you understand all of these before you sign on the dotted line

The Most Common Types of Restaurants

If you decide to start a restaurant concept from scratch, or even if you’re weighing what form of restaurant franchise to partner with, you’ll need to consider what kind of restaurant appeals to you and your customer base. Here, we outline the most common types of restaurants.

Fast Casual On the Rise

Among the widely recognized restaurant segments—casual dining, fine dining, quick service, fast casual and family dining—fast casual has been the fastest growing for more than a decade and continues to lead the pack.  

Fast casual restaurants marry quality ingredients, moderate prices, appealing restaurant designs and the convenience of fast service that especially attracts younger diners, including millennials. Yet the model is flexible, lending itself to a full range of food types from burgers to pizza, salads to ethnic menu items. And guests can customize their order along a service line and pay at the counter, then have it delivered to their table or bagged up to go. 

Top Fast-Casual Chains 

• Panera Bread 
• Chipotle Mexican Grill 
• Panda Express 
• Jimmy John’s Gourmet Sandwiches 
• Zaxby’s 

Source: Technomic, 2019 Top 500 Chain Restaurant Report 

Quick Service or Fast Food

When many people think of fast food, they think of the giant chains that dominate this category and the restaurant industry overall. It’s with good reason: Quick-service chains account for more than 80% of the sales in the limited-service segment (that includes fast–casual restaurants), according to Technomic. But that doesn’t mean there isn’t room for new entrants, though it depends on the market. Keep in mind, this restaurant category includes sandwich shops, bakeries, ice cream stands, donut shops and pizza places—the types of restaurants that form the fabric of many communities and the foundation of numerous family businesses. 

Full Service

Sit-down restaurants offer a wide array of dining styles from down-home breakfast and buffet spots to white-tablecloth steak and seafood establishments—and everything in between. Sales at these types of restaurants have struggled overall. But that has paved the way for innovative restaurant owners to be more creative with their restaurant designs, menu offerings, services, marketing and operations.  

Even with the rise of takeout and delivery, diners still look to restaurants for a unique experience. As a result, anything goes. Among the trends: 

• Open and theater-style kitchens present cooking as entertainment 
• Restaurant layouts cater to a range of dining occasions—bars and dining rooms, pick-up windows, counter seating, private-dining spaces, outdoor patios, rooftops, bars and lounges—all in one space
• Loyalty programs entice customers to return
• Entertainment that used to mean dinner and a show, now can mean bowling, ping pong, golf or arcade games
• Making money off-hours by opening up the space to yoga classes, painting groups and other activities 

Nontraditional Restaurant Types

Space constraints needn’t squash your dream of owning a foodservice operation. The rise of food halls, food trucks and shared kitchen spaces means that entrepreneurs can fulfill their dream of launching a concept outside the traditional four walls of a restaurant.   

Consumers’ desire for creative menus, convenience and local flavors create a desirable market for these types of operations. And a food truck, a concept inside a food hall or a delivery-only operation often can serve as the launchpad for a brick-and-mortar restaurant once the business gets off the ground and establishes a strong customer base. 

Read also:

• 10 Reasons to Start a Food Truck
• How to Launch a Food Truck Business

Final Thoughts on Restaurant Types

At the end of the day, no matter what type of restaurant you choose, the success of your business will come down to the amount of time, research, work and planning you put into the process of building, opening and operating it. 

•  Do what you love. Whether it’s your own vision or an established brand, running a restaurant is a 24/7 operation. Even when the lights are off, there’s work to be done, equipment to be maintained, bills to be paid, employees to manage, marketing to execute. Whatever format you choose, make sure you’re attracted to the pace and pressures of the work—not turned off by it.  
•  Do your homework. As we said at the beginning, a vision alone isn’t enough. There are no shortcuts for restaurant market research, concept development, a proper business plan, adequate capital, and a smart hiring strategy. To realize your dream, you have to get real.