Choosing your fast-food niche

Select your restaurant concept and develop a menu based on your niche. It’s important to serve food that appeals to your target audience, so research the market before making a decision.

Exploring existing niches

Some fast-food restaurants, such as drive-through burger joints, target a wide audience using popular themes, while others capture a more specific niche with a unique cuisine. If you don’t want to create a new niche, consider using a popular concept, such as:

• Fried chicken

• Burgers

• Ice cream

• Hot dogs

• Tex-Mex

• Breakfast

• Sandwiches

• Pizza

Doing market research

To narrow your options, research what kinds of fast food are in demand in your area. The success of some niches may depend on regional food preferences.

Consider local competitors and what restaurants have succeeded. Gather demographic information about your location’s population and research what niches appeal to your ideal customer persona.

Developing a menu

Consider what dishes you want to serve and how to link them with a cohesive theme. Fast-food restaurants typically use several key ingredients in different combinations to create a customizable menu. Think about the dishes you can prepare with some staple ingredients to create your restaurant concept.

Read more: The Basics of Designing a Restaurant Menu

Using thematic branding

Your restaurant’s theme, decor, logo and mascot can reflect your fast-food restaurant’s niche. Using a theme for restaurant decor and menu item names can create a unique brand identity. Refer to your market research to identify themes that may be well-received in your community.

Writing a fast-food restaurant business plan

Before you can secure outside funding and execute your new restaurant, develop a business plan to keep your fast-food restaurant on track during the starting phases.

Your business plan helps you anticipate your income and expenses, make sales forecasts and use data-driven strategies to increase traffic to your restaurant. A solid business plan typically contains the following components.

Executive summary

The executive summary details what’s involved in launching your fast-food restaurant. The executive summary shows investors and business partners your restaurant has a plan to be successful.

This section may include a basic timeline and budget for launching the restaurant, an overall mission and value statement, a summary of market research and the core strengths that can help the restaurant become profitable.

Company description

The company description summarizes the fast-food restaurant’s day-to-day operations. It typically includes the management structure and overall concept. The description also includes the fast-food restaurant’s branding and marketing materials to sell the restaurant’s concept to customers and investors.

Concept and menu

Provide an in-depth discussion of the fast-food restaurant’s menu and overall concept. This section may feature a sample menu, complete with the menu’s visual design and recipes. Explain the service structure, such as counter or table service, and plans for the design scheme.

Management and ownership structure

Go into detail about who manages the business. Explain whether the company is a limited liability company (LLC), a partnership or a sole proprietorship. If you plan to hire a restaurant manager, include their resume or a short summary of their qualifications.

Employees and staffing needs

Make a note of how many employees you anticipate needing to successfully launch the restaurant. In this section, detail your hiring process and create basic job descriptions for key roles. You might include your employee handbook and training materials in this section.

Market and competitor analysis

Detail your market research to give readers an idea of the existing market and opportunities for building a customer base. Include information about the local market’s income level, age range and buying habits. You could also list the competing fast-food restaurants in the area and explain how their menus, concepts and prices compare to yours.

Advertising and marketing strategies

This section of your business plan summarizes your strategies to attract customers and encourage repeat purchases. Explain how each marketing method may generate revenue.

Financials

Your business plan should be a repository for your company’s financial data, including projected costs, your expected break-even point and anticipated sales during the restaurant’s launch.

Break down how much capital you have access to and how much you need to cover all costs. Forecast ongoing expenses, and make a timeline for when you can expect to be profitable and self-sustaining.

Tips for selecting a location

People visit fast-food restaurants for a convenient meal, so choosing the right location is essential to success. Some franchisors scout locations and assign a particular territory, but you have to do your own research when opening an independent fast-food location.

Consider these key factors when choosing where to place your fast-food restaurant:

• Visibility: Choose a location with good visibility from the street to generate interest from people driving by. Make sure you have space for prominent signs to direct customers toward the restaurant.

• Accessibility: Select a densely populated area with other nearby businesses to ensure your restaurant is convenient and accessible.

• Labor and supply costs: Research the cost of operating in different neighborhoods. Opening a restaurant in an area with lower labor costs may help you maximize your profit margin.

• Competition: Look for an area with fewer direct competitors to help attract more customers.

Registering a fast-food business

Before you officially open your business, consider the legal elements of starting a fast-food restaurant:

• Register as a business. Consult with a business attorney if you’re unsure which business structure to choose or how to register your company.

• Get the appropriate permits and licenses. Apply for permits to serve food and beverages, post signs at your location, resell products and collect sales tax.

• Read up on regulations. Restaurants are obligated to comply with health codes and safety regulations. Review your local health and safety laws to ensure you can pass an inspection.

How to hire fast-food employees

Consider these steps when hiring employees for your fast-food restaurant:

1. Create job descriptions. Write clear job descriptions for each position, post them on job boards and promote them.

2. Post signs to attract applicants. Post signs in your restaurant’s windows and on your social media websites, if applicable, when you have an open position. Direct applicants to apply online or visit the restaurant to fill out an application.

3. Schedule in-person interviews. During each interview, assess the candidate’s restaurant experience and relevant skills by asking open-ended questions.

4. Develop standard training materials. Use a standardized guide to train your employees on company policies and procedures.

Best ways to market your fast-food restaurant

There are several methods you can use to market your new fast-food restaurant:

• Social media ads

• Coupons

• Loyalty programs

• TV ads

• Grand opening events

• Partnerships with bloggers or reporters

Test different marketing methods to advertise your business. Use analytics from those efforts to identify the most effective options.

Examine the pros and cons of franchising

With franchises, you pay a franchise fee and ongoing royalties to a parent company in exchange for the right to use their business model. Whereas, an independent fast-food restaurant lets you control your product mix, marketing strategy and budget.

Here are several ways creating your restaurant concept differs from becoming a franchisee for an established business.

Control

As an independent fast-food restaurant owner, you can design the menu, establish branding and customize your restaurant. When buying a franchise location, you must operate the restaurant according to legal guidelines determined by the franchisor.

Risk

Franchises and independent fast-food restaurants involve financial investment. Because franchises come with a proven business plan, they may be more secure than independent ventures.

Branding

When opening a restaurant, you build a brand from scratch. If you decide to franchise, you become part of the parent company’s brand. Customers who recognize a franchise brand may be more likely to give you their business.

Opportunity for growth

Before deciding to franchise, consider whether you want to eventually own multiple locations.

If your independent fast-food restaurant is successful, you can retain more of the profits and invest them in opening additional locations. You can even become a franchisor and license your concept to franchisees.

Related: Investing in the Right Franchise

How much does it cost to open a fast-food franchise?

The initial cost of opening a fast-food restaurant varies based on location, building size and labor fees. Here’s a breakdown of the primary costs of opening a fast-food establishment.

Location and utilities

Your fast-food restaurant’s location will likely be one of your biggest expenses. Constructing a new building from scratch, buying an existing building or leasing commercial property can incur significant costs.

Buying a fast-food restaurant with the necessary fixtures to serve food is generally more affordable than building a custom space.

Equipment

Once you find a space, you need to purchase equipment for the kitchen and dining room. Depending on whether you purchase new or used equipment, appliances can cost several thousand dollars.

You also likely need a point-of-sale (POS) system, cash registers, beverage machines, ice machines, serving trays, menus and janitorial supplies. If you open a franchise, you may also have to purchase equipment from specific suppliers.

Inventory

Before opening, you need enough inventory to cover initial orders. To avoid unnecessary carrying costs, make sure you understand the supply chain. Avoid relying on a single supplier to ensure you always have stock.

Initial inventory costs for a fast-food restaurant include ingredients for menu items, frying oil, condiments, cups, lids, straws, napkins and to-go bags.

Labor

Another start-up cost to consider is the overall expense of recruiting, hiring and training employees. Research the average wage in your area for key positions, such as fry cook, restaurant server and restaurant manager, and calculate the cost for initial training and regularly scheduled shifts.

Marketing

Some business owners rely on word of mouth, press coverage and social media interactions to attract customers, making marketing more affordable. Others hire marketing agencies to develop promotional campaigns.

If you’re opening a new franchise location, the franchisor might offer free advertising, depending on your franchise agreement.

Franchise fees

If you buy a franchise, you pay a fee to the parent company in exchange for the right to use their business plan, operations manual and intellectual property. Additional charges for location scouting, insurance and other services may apply.

Frequently asked questions about opening a fast-food restaurant

How can you get funding to open a fast-food restaurant?

The high cost of opening a restaurant means you may need funding to launch your business. You may qualify for business loans. Business grants might also help with start-up costs.

Some restaurant owners seek investors, but you may need to give up part of your ownership in exchange for the investment. Finance as little as possible to minimize your business debt.

What is a soft opening?

When opening a fast-food restaurant, you might consider having a soft opening or a practice run. This will let you and your staff make necessary adjustments before your grand opening.

This can be helpful for making the public opening go as smoothly as possible. It also gives you a chance to collect feedback from participants.