How to Start a Restaurant

One of the biggest challenges businesses in all industries face is a lack of qualified labor. As the food-service industry in general continues to grow and thrive, the demand for workers in an already-diminished labor pool is also increasing. Finding qualified workers and rising labor costs are two key concerns for food-service business owners.

The first step in developing a comprehensive HR program is to decide exactly what you want someone to do. The job description doesn't have to be as formal as one you might expect from a large corporation, but it needs to clearly outline the job's duties and responsibilities. It should also list any special skills or other required credentials, such as a valid driver's license and clean driving record for someone who is going to make deliveries for you.

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Next, you need to establish a pay scale. You should do research to find out what the pay rates are in your area. You'll want to establish a minimum and maximum rate for each position. You'll pay more even at the start for better qualified and more experienced workers. Of course, the pay scale will be affected by whether or not the position is one that is regularly tipped.

Every prospective employee should fill out an application--even if it's someone you already know, and even if that person has submitted a detailed resume. A resume is not a signed, sworn statement acknowledging that you can fire the person if he or she lies about his or her background; the application, which includes a truth affidavit, is. The application will also help you verify the applicants' resumes, so you should compare the two and make sure the information is consistent.

Here are some tips to help you find and keep great people:

  • Hire right. Take the time to thoroughly screen applicants. Be sure they understand what you expect of them. Do background checks. If you can't do this yourself, contract with a HR consultant to do it for you on an as-needed basis.
  • Create detailed job descriptions. Don't make your employees guess about their responsibilities.
  • Understand wage-and-hour and child labor laws. Check with your own state's Department of Labor to be sure you comply with regulations on issues such as minimum wage (which can vary depending on the age of the workers and whether they're eligible for tips), and when teenagers can work and what tasks they're allowed to do.
  • Report tips properly. The IRS is very specific about how tips are to be reported; for details, check with your accountant or contact the IRS.
  • Provide initial and ongoing training. Even experienced workers need to know how things are done in your restaurant. Well-trained employees are happier, more confident and more effective. Plus, ongoing training builds loyalty and reduces turnover. The National Restaurant Associationcan help you develop appropriate employee training programs.

There are several categories of personnel in the restaurant business: manager, cooks, servers, busboys, dishwashers, hosts and bartenders. When your restaurant is still new, some employees' duties may cross over from one category to another. For example, your manager may double as the host, and servers may also bus tables. Be sure to hire people who are willing to be flexible in their duties. Your payroll costs, including your own salary and that of your managers, should be about 24 to 35 percent of your total gross sales.

  • Manager. The most important employee in most restaurants is the manager. Your best candidate will have already managed a restaurant or restaurants in your area and will be familiar with local buying sources, suppliers and methods. You'll also want a manager with leadership skills and the ability to supervise personnel while reflecting the style and character of your restaurant.

To get the quality of manager you want, you'll have to pay well. Depending on your location, expect to pay a seasoned manager $35,000 to $55,000 a year, plus a percentage of sales. An entry-level manager will earn $28,000 to $32,000 but won't have the skills of a more experienced candidate. If you can't offer a high salary, work out a profit-sharing arrangement-it's an excellent way to hire good people and motivate them to build a successful restaurant. Hire your manager at least a month before you open so he or she can help you set up your restaurant.

  • Chefs and cooks. When you start out, you'll probably need three cooks--two full time cooks and one part time. Restaurant workers typically work shifts from 10 a.m. to 4 p.m. or 4 p.m. to closing. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One full-time cook should work days, and the other evenings. The part-time cook will help during peak hours, such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation. Cooking schools can usually provide you with leads to the best in the business, but look around and place newspaper ads before you hire. Customers will become regulars only if they can expect the best every time they dine at your restaurant. To provide that, you'll need top-notch cooks and chefs.

Salaries for chefs and cooks vary according to their experience and your menu. Chefs command salaries significantly higher than cooks, averaging $1,300 to $1,800 a week. You may also find chefs who are willing to work under profit-sharing plans. If you have a fairly complex menu that requires a cook with lots of experience, you may have to pay anywhere from $575 to $650 a week. You can pay part-time cooks on an hourly basis; check around for the going rate in your area.

  • Servers. Your servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure, meeting the demands of customers at several tables while maintaining a pleasant demeanor. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 5:30 to 6 p.m.

Because servers in most establishments earn a good portion of their income from tips, they're usually paid minimum wage or just slightly more. When your restaurant is new, you may want to hire only experienced servers so you don't have to provide extensive training. As you become established, however, you should develop training systems to help both new, inexperienced employees and veteran servers understand your philosophy and the image you want to project.

How to Start a Restaurant

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The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

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