Do you want to start a Chinese restaurant? If YES, here is a complete guide to starting a Chinese restaurant business with no money and no experience.
If there is any niche restaurant from a country that has successfully stamped its foot in the globe, it has to be the Chinese restaurant. If you reside in the united states of America or in most parts of the world, you will notice that Chinese restaurants are amongst the restaurants that generate huge income.
One good thing about this business is that you don’t necessarily need to be a Chinese before starting a Chinese restaurant; you can learn how to prepare and serve Chinese menus. In essence, if you are a Chinese living in the United States and you are looking towards leveraging on the vast population of Chinese descent in the US to generate revenue, then one of your best options is to start a Chinese Restaurant.
The truth is that if you can successfully start a Chinese restaurant in the United States, your clients aren’t going to be just Chinese but every other person within your location who loves exploring delicacies from different parts of the world.
Please note that prior to starting this type of business, it will pay you to carry out your due diligence as it relates to market research, economic and cost analysis and of course feasibility studies. The good part of this is that if you get things right before launching your Chinese restaurant business, it will not take you long before you breakeven and start smiling to the bank.
So, if you have the desire to own a Chinese restaurant business in the United States, all you need do is to read this article and you will be well equipped to build a business brand that can outlive you.
Steps to Starting a Chinese Restaurant Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Know Your Major Competitors in the Industry
- 4. Decide Whether to Buy a Franchise or Start from Scratch
- 8. Discuss with an Agent to Know the Best Insurance Policies for You
- 9. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 10. Get the Necessary Professional Certification
- 11. Get the Necessary Legal Documents You Need to Operate
- 12. Raise the Needed Startup Capital
- 13. Choose a Suitable Location for your Business
- 14. Hire Employees for your Technical and Manpower Needs
- 15. Write a Marketing Plan Packed with ideas & Strategies
- 16. Work Out a Reasonable Pricing for your Services & Products
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
Chinese restaurants generate huge income even in the United States of America hence the need to have an industry on their own. Chinese restaurants comprise of chain and franchised restaurants that serve Chinese food to patrons. It is common to find Chinese restaurants selling alcoholic and other beverages.
A recent report published by IBISWORLD shows that franchise Chinese food restaurants are dominated by well-known brands including Panda Express, PF Changs and Pick Up Stix.
The industry includes both quick-service and full-service Chinese restaurants. Demand for industry establishments is driven by economy-wide trends in consumer spending, dining trends, healthy eating trends and the relative price of substitutes, such as other fast-food and full-service.
The Chinese Restaurants industry is a thriving sector of the economy of the United States and the industry generates over $2 billion annually from more than 3,381 registered Chinese restaurants scattered all around the country. The industry is responsible for the employment of over 29,968 people.
Experts project the industry to grow at a 3.3 percent annual rate between 2012 and 2017. Panda Express, PF Changs and Pick Up Stix have lion market shares in the industry.
The Chinese Restaurants industry has minimal barriers to entry, with minimal startup capital and no specific licensing requirements. On the other hand, the high level of competition and market saturation in a declining industry can prove challenging to aspiring entrepreneurs who want to start their own restaurant.
Most players in the Chinese restaurant line of business are small – to medium – size establishments that cater to the local and international community.
The Chinese restaurant business will continue to blossom and good enough, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own Chinese restaurant businesses in the United States of America.
Some of the factors that encourage entrepreneurs to start their own Chinese restaurant business could be that the is easy to set up and manage with minimal startup capital and manpower especially if you choose to operate in a small community.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who eat food served in Chinese restaurants cut across all genders and age groups, hence the demographic composition for a Chinese restaurant business is all encompassing. The truth is that when it comes to selling Chinese food, there is indeed a wide range of available customers.
In essence, your target market can’t be restricted to just migrants from China, but all those that reside around the locations where you have your restaurant
The Level of Competition in the Industry
The competition that exists in the Chinese restaurants industry goes beyond competitions amongst Chinese restaurants in your location; you are expected to compete with intercontinental restaurants and any other outlets that also sell Chinese inspired meals.
So, it will be right to say the competition in the Chinese restaurants industry is tough. The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry.
Just ensure you are good at preparing the varieties of Chinese inspired meals you have on your menu; you can deliver excellent customer care services and you know how to attract and reach out to your target market.
3. Know Your Major Competitors in the Industry
Come to think of it, in every industry, there are always brands that perform better or are better regarded by customers and general public than others.
Some of these brands have been in the industry for a long while, and others are best known for how they conduct their businesses and the results they have achieved over the years. These are some of the leading Chinese restaurants in the United States of America and in the globe;
- Panda Express
- PF Changs
- Pick Up Stix
- Beijing Pie House, Monterey Park
- China Magic Noodle House, Chandler
- Chef Chu’s, Los Altos
- Class 302, Rowland Heights
- Del Mar Rendezvous, Del Mar
- Enjoy Vegetarian Restaurant, San Francisco
- Little Sheep Mongolian Hot Pot, San Mateo
- San Tung Chinese Restaurant, San Francisco
- Sea Harbour Seafood Restaurant, Rosemead
- Newport Tan Cang Seafood Restaurant, San Gabriel
- Tropical Chinese, Miami
- R&G Lounge, San Francisco
- Canton House Chinese Restaurant, Atlanta
- Tasty China, Marietta
- Legend Seafood Restaurant, Honolulu
- Sweet Home Café, Honolulu
- Sun Shui, Arlington Heights
When it comes to successfully launching a business and maximizing profits, then you don’t have an option other than to get your economic and cost analysis right and try as much as possible to adopt international best practices in the industry you choose to build a business in.
Chinese restaurant business in the United States is not a Green business, as a matter of fact; you will come across a couple of Chinese restaurants, intercontinental restaurants and other outlets that serve Chinese inspired meals when you drive through town.
So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey of the required amount needed in renting a space where you are expected to build a standard Chinese restaurant, the amount required to purchase furniture, flat screen TVs, sound systems, gas cookers, microwave oven, cooking utensils and equipment, serving wares and other supplies and also the cost to successfully run the business.
The bottom line is that if you are considering starting a Chinese restaurant business in the United States, then your concern should not be limited to the cost of purchasing furniture and other supplies, but also on branding and building a robust clientele base. The truth is that if you are able to build a robust clientele base, you are going to maximize profits in the business.
4. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, it will pay you to buy the franchise of a successful and well – established Chinese restaurant brand as against starting from the scratch. Even though it is relatively expensive buying the franchise of an established Chinese restaurant brand, but it will definitely pay you in the long run.
But if you want to build your own brand, after you must have proved your worth in the Restaurants industry, then you might just want to start your own Chinese restaurant business from the scratch. The truth is that it will pay you in the long run to start your Chinese restaurant business from the scratch.
Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies for the business.
Please note that a good percentage of successful Chinese restaurants in the United States started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
5. Know the Possible Threats and Challenges You Will Face
If you decide to start your own Chinese restaurant business today, one of the major challenges you are likely going to face is the presence of well – established Chinese restaurants and other food retail outlets that also sell Chinese inspired meals.
The only way to avoid this challenge is to create your own market. Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in a bad shape, Chinese restaurants and niche restaurants usually struggle to maintain their old customers or even welcome new customers. So also, unfavorable government policies can also hamper the growth of your Chinese restaurant business.
6. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When it comes to starting a Chinese restaurant business, the legal entity you choose will go a long way to determine how big the business can grow. From a generally perspective, you can either choose a general partnership, limited liability company, or even a sole proprietorship for your Chinese restaurant business.
Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale Chinese restaurant business especially if you are just starting out with a moderate startup capital in a small neighborhood and with just one outlet.
But if your intention is to grow the business and open chains of Chinese restaurants across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships.
Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your Chinese restaurant business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities available to use for your Chinese restaurant business with the ability to sell franchise, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or a ‘S’ corporation especially when you have the plans of going public.
Interestingly, when you upgrade to a ‘C’ corporation or ‘S’ corporation you will have the opportunity to grow your Chinese restaurant business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
7. Choose a Catchy Business Name
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own Chinese restaurant business, here are some catchy names that you can choose from;
- Stan LEE® Chinese Restaurant, LLC
- China Town™ Chinese Restaurant, LLC
- Cho Cho© Chinese Restaurant, Inc.
- Chang Sandra® Chinese Restaurant, Inc.
- Lee Kin Cho™ Chinese Restaurant, Inc.
- Yuen Shui™ Chinese Restaurant, Inc.
- New China© Restaurant, Inc.
- Chinese Sisters® Restaurants, LLC
- Xi Lee® Chinese Restaurant, Inc.
- Chef© Chinese Restaurant, Inc.
8. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your Chinese restaurant business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own Chinese restaurant business in the United States of America;
- General insurance
- Health / Medical insurance
- Liability insurance
- Workers Compensation
- Building / Property insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
9. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own Chinese restaurant business in the United States, usually you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successful run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your unique recipe, company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
10. Get the Necessary Professional Certification
Aside from preparing varieties of tasty Chinese inspired food, professional certification is one of the main reasons why most Chinese restaurant brands stand out. If you want to make an impact in the Chinese restaurant industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your own Chinese restaurant;
- Clean Health Certificate
- Food handler Certification
- Catering Training Certificate
Please note that you can successfully run a Chinese restaurant in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the restaurants industry.
11. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentation.
If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own Chinese restaurant business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID / Tax Identification Number
- Foods and drinks handler certificate
- Health inspection Certificate
- Proof of district-issued food and drinks manager identification card
- Copy of license for the service support facility and/or a recent inspection report
- Business Plan
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
12. Raise the Needed Startup Capital
Interestingly, starting a Chinese restaurant business can be cost effective especially if you choose to start on a small scale by running the business in a street corner. Securing a standard and well – located facility and purchasing cooking and serving wares et al are part of what will consume a large chunk of your startup capital.
If you choose to start the business on a large scale, you would need to source for fund to finance the business because it is expensive to start a standard large – scale Chinese restaurant business. When it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan.
If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business. Here are some of the options you can explore when sourcing for startup capital for your Chinese restaurant business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
13. Choose a Suitable Location for your Business
When it comes to choosing a location for your Chinese restaurant business, the rule of thumb is that you should be guided by the demand for Chinese inspired meals and easy access to wholesale purchasing of food supplies directly from farmers, food hubs or wholesale food distributors.
Of course, if you are able to secure a central location for your Chinese restaurant, it will enable people to locate your restaurant.
It cannot be overemphasized that the location you chose to start your Chinese restaurant business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.
Most importantly, before choosing a location for your Chinese restaurant business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.
These are some of the key factors that you should consider before choosing a location for your Chinese restaurant business;
- The demography of the location
- The demand for Chinese inspired meals in the location
- The purchasing power of residents of the location
- Accessibility of the location and the road network
- The number of Chinese restaurants and any other outlets that also sell Chinese inspired meals in the location
- The local laws and regulations in the community / state
- Traffic, parking and security et al
14. Hire Employees for your Technical and Manpower Needs
There are no special technology or equipment needed to run this type of business except for cooking utensils, serving wares, food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.), Storage hardware (bins, utensil rack, shelves, food case), Counter area equipment (counter top, sink, ice machine, etc.), Computers and receipt issuing machines, Sound System (For playing music), and Point of Sale Machines.
You will also need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
As regards leasing or outright purchase of a restaurant facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location.
If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location / facility for such business.
When it comes to hiring employees for a standard Chinese restaurant, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Cook/Chef, Restaurant Manager, Waiters and Waitresses, Accounting Clerk, and Cleaners.
On the average, you will need a minimum of 10 to 15 key staff members to run a small – scale but standard Chinese restaurant business.
The Services Delivery Process of the Business
When it comes to the business service process of a Chinese restaurant business, there are no hard and fast rule about it. Basically, it is the duty of the merchandise manager to help the organization purchase food ingredients and packaging/serving materials.
Once the Chinese restaurant business is in full operation, Chinese delicacies such as; Cajun-influenced dishes, variety of seafood, such as fish with basil-and-walnut shrimp, Hainan chicken rice, Americanized-Chinese food such as sweet-and-sour chicken et al are prepared and they are listed on the menu. Food purchased from a Chinese restaurant can be eaten in the restaurant or can be taken away.
It is important to state that a Chinese restaurant business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated Chinese restaurant business process is not cast on stone.
15. Write a Marketing Plan Packed with ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a Chinese restaurant business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the industry.
Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet (videos / YouTube) to market their services and products. In other words, a larger percentage of your marketing effort will be directed to internet users.
These are some of the marketing ideas and strategies that you can adopt for your Chinese restaurant business;
- Introduce your Chinese restaurant by sending introductory letters alongside your brochure to residents and other key stakeholders throughout the city where your Chinese restaurant is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business, so as to give your business an online presence
- Directly market your products.
- Engage in roadshows in targeted communities from time to time to promote your Chinese restaurant business
- Join local Chinese restaurant business associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community – based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
16. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you sell your Chinese inspired meals at rock bottom prices is to make sure that you purchase your food supplies directly from farmers or from food ingredient wholesalers in pretty large quantities. The truth is the higher the quantities of items that you purchase directly from farmers, food hubs and wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your Chinese inspired meals at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your menu.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost of paying sales and marketing executives.
17. Develop Iron-clad Competitive Strategies to Help You Win
The availability of varieties of tasty Chinese inspired meals in your restaurant, your business process and of course your pricing model are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base.
Over and above, ensure that your organization is well positioned, key members of your team are highly competent and Chinese inspired meals listed on your menu can favorably compete with the some of the best in the Chinese restaurants industry not just within your city but all across the globe.
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a Chinese restaurant business is to grow the business beyond the city where you are going to establish your first restaurant outlet to become a national and international brand by owning chains of Chinese restaurants and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
Irrespective of the industry you belong to, the truth is that the market is a dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your Chinese restaurant business;
- Place adverts on both print (newspapers and food magazines) and electronic media platforms
- Sponsor relevant community – based events / programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your Chinese restaurant business
- Install your Billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your Chinese restaurant business
- Distribute your fliers and handbills in target areas
- List your Chinese restaurant business in local directories / yellow pages
- Advertise your Chinese restaurant business in your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions in the location where Chinese restaurant business is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles, trucks and vans are well branded with your company logo.