How to Start a Restaurant - Top 10 Tips

Opening a Restaurant in San Francisco
- Top 10 Tips on Getting Started -

Opening a restaurant is a rewarding but complex undertaking. The City of San Francisco is committed to helping you succeed. The Top 10 Tips List is designed to provide you with the information and resources that you need to get started in the right direction.

Note: Please review this information prior to proceeding with planning a restaurant. You should also review the Pre-Application Checklist for more details.


Tip 1: SEEK ADVICE
Seek advice from support organizations and other restaurateurs. While each restaurant is different, you can learn a great deal from people who understand what it takes to open a restaurant. They can also connect you to other support organizations. If necessary, work with consultants to increase your awareness of general business and specific operational issues and to help asses your readiness to proceed with next steps. Keep a list of your contacts so you can refer to them on an on-going basis, if needed.

Tip 2: DEVELOP AN EFFECTIVE BUSINESS PLAN
A well-developed business plan will serve as the blueprint for your restaurant and help you stay focused on becoming profitable. Resources at the Small Business Assistance Center can help you in developing a sound plan and budget that includes sufficient financial support to cover costs until you are able to meet your on-going expenses. Many restaurants struggle in their first year because they do not have enough financing to cover the many ongoing operational costs (rent, payroll, supplies, marketing) after investing significantly in remodeling or purchasing an existing restaurant.

Tip 3: CHECK CITY ZONING REQUIREMENTS
Prior to initiating your site search, plan to visit the Department of City Planning to determine which parts of the city or a neighborhood are zoned to permit restaurants. After you find a specific location, return to the Department of City Planning to re-confirm that this specific site is zoned for your type of restaurant. Some neighborhoods will not allow any additional sit-down restaurants, although they may permit additional counter-service restaurants. If you select a site that requires a Conditional Use permit, the review process can take at least 3 months or longer and requires a public hearing. You may also have to go through a neighborhood notification process.

Tip 4: IF POSSIBLE, SELECT A LOCATION THAT IS ALREADY ZONED AS A LEGALLY PERMITTED RESTAURANT
When identifying your potential restaurant site, choosing a location that is zoned to allow the type of restaurant you want to build will save you time and money. In fact, according to many restaurateurs, taking over the lease of an existing restaurant (although you should find out why the restaurant is closing), can also help you minimize the delays, uncertainties and risks that are associated with more complex project arrangements. It is much more time-consuming and challenging to open a new restaurant in a non-restaurant location.

Tip 5: MEET STAFF FROM BUILDING AND FIRE DEPARTMENTS
Once you have identified a location and all the necessary permit and license requirements, visit the Departments of Building Inspection and the Fire Department.

At your meeting, please come prepared with a detailed set of questions involving the extent (if any) of construction and renovations. City staff will provide you with a Completeness Form at DBI that you should provide to your architect and contractor as a preliminary checklist of building code including accessibility compliance.

For more complex review, you may consider setting a pre-application meeting with DBI and Fire department staff. For example, if your restaurant has a basement area where you might want to include a kitchen or seating area, department representatives will let you know whether that is possible. They will also be able to give you information about paperwork requirements, permit and license fees, and approximate timelines for permit and inspection approvals. Make sure you try to include your contractor and/or architect to help explain the proposed construction, and that you request a letter signed by the various departments about how they interpret your site/building's issues as they relate to City codes. You will have to pay a nominal fee for the pre-application meeting. This process will help determine if your concept is one that will work under City regulations.

If you intend to serve alcohol, add the ABC (Department of Alcoholic Beverage Control) to the list of departments you should visit for a pre-application meeting. In some San Francisco neighborhoods, it is difficult to obtain new alcohol permits. If your proposed location has a moratorium on new licenses, you should consider the purchase of an existing restaurant where the seller's existing license can be transferred into your name.

Tip 6: WORK WITH A REAL ESTATE ATTORNEY AND CONTRACTOR WHEN PURCHASING YOUR BUSINESS OR NEGOTIATING A LEASE
Use a real estate lawyer when you consider buying or leasing a site. The attorney should review the proposed lease and advise you on your options. The attorney should also help explain all contingencies and be familiar with insurance, building and planning code requirements.

In addition, prior to finalizing lease negotiations or the purchase of a site, conduct a final walk-through of the property with a contractor to ensure all major issues have been addressed. This will minimize the risk of running into unexpected delays or costs during the permit review phase. Pay special attention to items (such as Disability Access compliance, Energy Efficiency (Title 24) requirements, and PG&E electrical services) that could significantly impact your start-up budget projections. Lastly, consider getting a quote for business insurance. You will have a substantial investment in the business and should protect yourself and your investment from possible loss due to fire or some other unanticipated damage to the property. Responsibility for insuring against such a contingency should be covered in your lease. With all of the above professionals, make sure you secure whatever advice or information they provide in writing.

Tip 7: IF POSSIBLE, SECURE A TRANSFERABLE LEASE, WITH OPTIONS TO EXTEND
To protect your option for change with the least downside, you should secure an initial lease term with options to extend. You should also secure a lease with the ability to transfer to another owner if your business goes under. Statistics show that it is within the first 3-5 years after start-up that most businesses face financial trouble and sometimes fail or are sold. Planning an exit strategy will help you to re-coup part or all of your startup costs.

Tip 8: DO NOT RELEASE YOUR CONTINGENCIES UNTIL ALL YOUR CITY PERMITS ARE SECURED
When negotiating a lease, make sure it includes contingencies for all the uncertainties in the permit process. In particular, make sure that you do not release your contingencies until you have secured your permits. You want to avoid a situation where you enter into a lease assuming that you will get your permits and then for some reason they are not approved or are delayed in being approved.

Tip 9: SUBMIT COMPLETE AND ACCURATE FORMS AND PLANS
Department re-submission requests to address errors or omissions in your paperwork will delay your permit approval process and opening day. Invest in quality research and planning to ensure your information is complete and accurate, particularly your construction plans, if applicable. This due diligence will help your permits stay on schedule and keep your expenses, such as leasing costs, within budget during the permit review implementation phase.

Tip 10: DEVELOP A SCHEDULE FOR INITIATING ALL PERMIT APPLICATIONS
Your project will require Occupancy and Operation permits and may require Building and Construction permits. For all types of projects, identify all related city and non-city permit applications and develop a schedule that takes into account the various timelines of each permit process. Plan ahead and prioritize those permit requirements that involve a lengthy review process to avoid delays and to help you reach your targeted completion date.

 

 

Small Business Assistance Center, City Hall, Room 110, 1 Dr. Carlton B. Goodlett Place, San Francisco, CA 94102
Phone: 415-554-6134 Office Hours: M-F, 8 AM - 5 PM