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.
Is Opening A Restaurant Right for Me?
Ask 100 restaurateurs why they opened a restaurant and you’ll get 100 different answers. To know if it’s the business venture for you, it may be more enlightening to consider all the reasons not to open a restaurant, and then decide if those are obstacles you can and want to overcome.
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?
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.
Are you ready to put in the time?
Hiring good designers, accountants and managers is important, but even the best teammates can’t take your place. As celebrity chef and restaurateur Bobby Flay once told Newsweek magazine, “If you don’t want to be in it for the entire creation and life of the restaurant, then don’t open it.”
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?
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.
Do you have the business chops?
Payroll, inventory, compliance, hiring, marketing, etc. are as much a part of running a restaurant as coming up with a delicious menu or designing a cool space. Whether you run all parts of the operation or partner with a business-minded person you trust, never forget that the restaurant business is just that—a business.
Ready to make the leap? The next step is learning about all the types of restaurants currently out there, and determining which one is the right fit for you.
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.
What is a franchise?
In a franchise, a business (the franchisor) licenses its trade name (the brand) and its operating methods (its system of doing business) to a person or group operating within a specific territory or location (the franchisee), which agrees to operate its business according to the terms of the contract (the franchising agreement).
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
- A recognized brand name
- Pre-opening support
- Site selection
- 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
- Not completely independent
- Restrictions on the products and services that can be offered, pricing and geographic territory
- 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
Before signing a franchise agreement, do your research. Understand the market conditions and your target audience. Also, make sure you’re clear on exactly what resources and support you’ll receive from the franchisor on a day-to-day basis, the International Franchise Association recommends. Seek out the people at the home office in support positions, and go for a discovery day to meet them and learn about their expertise and expectations.
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.
Over time, the category has evolved to provide even more convenience—adding mobile ordering and pickup, drive-thru lanes and loyalty programs. And many other restaurant segments are following suit.
Top Fast-Casual Chains
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.
Top Quick-Service Restaurant Chains
Source: Technomic, 2019 Top 500 Chain Restaurant Report
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
Top Full-Service Restaurant Chains
Source: Technomic, 2019 Top 500 Chain Restaurant Report
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.
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.
Chase joined Central Restaurant Products in February 2016 as a Content Specialist, bringing to the role years of various foodservice experience, including front-of-house service (slingin’ chicken wings and libations with a smile on his face) and back-of-house food prep using heavy-duty commercial cooking equipment to prepare for peak dining hours at his university’s dining hall.
He puts this experience to use writing for Central’s Resource Center, website, and print catalog. ServSafe certified, he enjoys educating on food safety in the commercial setting, researching new dining room and tabletop trends, and sharing innovative solutions to enhance operational efficiencies. He also enjoys (in no specific order) long hikes with his dog, bingeing 90s sitcoms, red wine, and live music.