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How to Start a Fast Food Restaurant Business

Do you want to start a fast food restaurant? If YES, here is a complete guide to starting a fast food restaurant business with NO money and no experience.

It is a known fact that ever since fast food restaurants became the norm in the society, loads of entrepreneurs have becomes millionaires. If you are interested in the food industry, one of the coolest ways of making money is to open a fast food restaurant.

Although this type of business is profitable, but at the same time you can run at a loss if your fast food restaurant is not well positioned and managed. It is hence important to state that loads of fast food restaurants close shop because they failed to conduct detailed market survey and feasibility studies and prepare a fast food restaurant business plan before opening.

Prior to launching this type of business, it will pay you to carry out your market research, economic and cost analysis and of course feasibility studies.

If you get things right before launching your fast food restaurant business, it will not take you long before you break even and start smiling to the bank. Thus, if you want to start your own food restaurant business, all you need do is to read this article and you will be well equipped.

Steps to Starting a Fast Food Restaurant Business

1. Understand the Industry

The Fast Food Restaurants industry consists of restaurants where clients pay for quick-service food products before eating. The food purchased may be consumed in the restaurant, taken out or delivered as requested. Gross revenue generated in the industry is derived from both franchised and company-owned fast food outlets.

Franchise fees (up-front costs associated with opening a franchise) are also accounted for in the revenue generated in the industry. Although this industry does not include coffee and snack shops but most fast food outlets also sell beverages such as water, juice and sodas, but usually not alcohol.

The Fast Food Restaurants industry has managed to excel during the last five years right through the recovery. Keeping consumers’ appetites satisfied, fast food outlets/franchises have created new menu options that capitalize on the trend of increasing awareness of the health risks associated with high – fat diet.

The industry has also thrived by developing products at price points attractive enough to weather the slow recovery, resulting in strong revenue growth. As a result of this, these trends are expected to continue and contribute to revenue growth going forward.

The Fast Food Restaurant industry is a thriving sector of the economy of the United States, United Kingdom, France, Italy, Canada and in most countries of the world. Statistics has it that in the united states of America, the Fast Food Restaurant industry generates well over $228 billion annually from more than 208,392 registered fast food outlets/franchise scattered all around the United States of America.

The industry is responsible for the employment of well over 4,269,281 people. Experts project the Fast Food Restaurants industry to grow at a 2.4 percent annual rate. MacDonald’s, Yum Brands, Inc. and Subway are the leaders in the Fast Food Restaurants industry, they have the lion market share in the industry.

The Fast Food Restaurants industry is confidently embedded in the mature stage of its life cycle. Over the next 10 years, industry value added which measures an industry’s contribution to US GDP, is forecast to grow at an average annual rate of 2.5 percent, compared with an estimated annualized GDP growth of 2.2 percent during the same period.

The industry has exhibited slow and steady long-term growth at a slightly faster pace than the economy as a whole. For this reason, many fast food chain operators are seeking higher growth in the global market.

The fast food restaurant business will continue to blossom because people will always want to eat when they are hungry and can’t afford to go home to fix meal for themselves. Despite the fact that the industry seems over – saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own fast food restaurant businesses in the United States of America.

Over and above, the fast food restaurant line of business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner like the average mom and pop business, or you can choose to start on a large scale with several outlets in key cities.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who buy/eat fast food cut across all genders and age group; male and female, adults and children all eat foods that are sold by fast food restaurants hence the demographic composition for a fast food restaurant business is all encompassing.

The truth is that when it comes to selling fast food, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people, but to all those that reside around the locations where you have your fast food restaurant and who have the purchasing power.

So, if you are thinking of opening your own fast food restaurant business then you should make your target demographics all encompassing.

It should include families, bachelors, spinsters, corporate executives, students, migrants, entrepreneurs, business people, celebrities, military men and women, sports men and women, tourists and every adult in the neighborhood where you have your fast food restaurant.

3. Decide Which Niche to Concentrate On

It is important to state that there are several niche ideas an aspiring entrepreneur who is looking towards venturing into the fast food restaurant business can choose from. As a matter of fact, it is common to find fast food restaurants majoring on a particular niche area except for large and standard fast food restaurants who have the capacity to combine all niche areas within the industry under their roof.

It is common to find a standard fast food restaurant engage in one or more of the under listed niche areas in the fast food restaurant industry;

  • Operating quick-service restaurants
  • Operating fast food services
  • Operating drive-thru and take-out facilities
  • Sale of Burgers
  • Sale of Sandwiches
  • Sale of Mexican dishes
  • Sale of Pizza and Pasta
  • Sale of Chicken and Chips
The Level of Competition in the Industry

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 fast food and snacks 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.

But over and above, there are several fast food restaurants, mobile food trucks, food carts/food kiosks, regular restaurants, sandwich shops and any other outlets that also sell fast food and other snacks scattered all around the United States.

So, if you choose to start your own fast food restaurant business in the United States, you will definitely meet stiff competitions from these brands. Besides, there are larger fast food restaurants that determine the trends in the industry and you should be ready to compete with them for customers.

4. Know Your Major Competitors in the Industry

In every industry, there are always brands that perform better or are better regarded by customers and the general public than others.

Some of these brands are those that have been in the industry for a long while and so are known for that, while 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 fast food restaurants in the United States of America and in the globe;

  • McDonald’s
  • Starbucks
  • Subway
  • Burger King
  • Wendy’s
  • Taco Bell
  • Dunkin’ Donuts
  • Chick-fil-A
  • Pizza Hut
  • Panera Bread
  • KFC
  • Domino’s
  • Sonic Drive-In
  • Chipotle
  • Carl’s Jr./Hardee’s
  • Little Caesars
  • Dairy Queen
  • Arby’s
  • Jack in the Box
  • Papa John’s
Economic Analysis

The fast food restaurant business is not a Green business; as a matter of fact, you will come across several fast food restaurants, mobile food trucks, food carts, food kiosks, regular restaurants, sandwich shops and any other outlets that also sell fast food and other snacks when you drive through town.

So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of what is required to rent a space where you are expected to build a standard fast food restaurant with government approval and the amount required to purchase furniture, flat screen TVs, sound systems, gas cookers, microwave oven, bread toaster, cooking utensils and equipment, serving wares, food ingredients and other supplies and also the cost to successfully run the business.

Over and above, if you are considering starting a fast food restaurant business, then your concern should not be limited to the cost of purchasing furniture and equipment, but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.

5. 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 fast food restaurant brand as against starting from the scratch. Even though it is relatively expensive to buy the franchise of an established fast food restaurant brand, but it will definitely pay you in the long run.

But if you truly want to build your own brand after you must have proved your worth in the Fast Food Restaurants industry, then you might just want to start your own fast food restaurant business from the scratch.

The truth is that it will pay you in the long run to start your fast food restaurant business from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.

Please note that most of the big and successful fast food restaurant business around 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.

6. Know the Possible Threats and Challenges You Will Face

If you decide to start your own fast food restaurant business today, one of the major challenges you are likely going to face is the presence of well – established fast food restaurants, mobile food trucks, food carts, food kiosks, regular restaurants, sandwich shops and any other outlets that also sell fast food and other snacks. The only way to avoid this challenge is to create your own market.

Other challenges and threats that you are likely going to face are economic downturn and unfavorable government policies. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work out well for you.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

You have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or even a sole proprietorship for a fast food restaurant business.

As a matter of fact, if your intention is to grow the business and open chains of fast food restaurants across the United States of America and other countries of the world via franchising, then choosing sole proprietorship 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, shareholders meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your fast food restaurant business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.

If you take your time to critically study the various legal entities to use for your fast food restaurant business with the ability to sell franchise and open chains of fast food restaurants all across the United States of America, you will agree that limited liability company; an LLC is most suitable.

You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your fast food restaurant business 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; you will enjoy flexibility in ownership and in your management structures.

8. 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. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business. If you are considering starting your own business, here are some catchy names that you can choose from;

  • Finger Licking® Fast Foods, LLC
  • Garvin Chickens™ Fast Foods, LLC
  • Princess Daniella© Fast Foods, Inc.
  • Finicky® Fast Foods, Inc.
  • Aunty Estee™ Fast Foods, Inc.
  • Tasty Tanya™ Fast Foods, Inc.
  • The Food King© Fast Foods, Inc.
  • Chicken Federation® Fast Foods, LLC
  • Jeff Jules© Fast Foods, Inc.
  • Taste Buds© Fast Foods, Inc.

9. 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 fast food restaurant business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own fast food 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

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own fast food restaurant business, usually you may not have any need to file for intellectual property protection/trademark.

This is so because the nature of the business makes it possible for you to successfully run the business 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 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. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.

11. Get the Necessary Professional Certification

Aside from the results you produce as it relates to preparing varieties of tasty and good food, professional certification is one of the main reasons why most fast food restaurant brands stand out. If you want to make an impact in the street food industry, you should work towards acquiring all the needed certifications in your area of specialization.

You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business.

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 fast food restaurant company;

  • Clean Health Certificate
  • Food handlers Certification
  • Catering Training Certificate

Please note that you can successfully run a fast food restaurant company 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 fast food restaurants industry.

12. Get the Necessary Legal Documents You Need to Operate

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own fast food restaurant business in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Tax Payer’s ID/Tax Identification Number
  • Food and drink handlers 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
  • Online Terms of Use (if you also operate online)
  • Online Privacy Policy Document (basically for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Building License
  • Franchise or Trademark License (optional)

13. Raise the Needed Startup Capital

Starting a fast food restaurant business can be cost effective especially if you choose to start on a small scale by running a fast food restaurant business in a street corner.

Securing a standard and well located facility and purchasing gas cooker, microwave oven, bread toaster, cooking utensils and equipment, baking and food ingredient supplies 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 go source for fund to finance the business because it is expensive to start a standard large scale fast food restaurant business.

When it comes to financing a business, one of 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 fast food restaurant business;

14. Choose a Suitable Location for your Business

When it comes to choosing a location for your fast food restaurant business, the rule of thumb is that you should be guided by the demand for fast food, drinks and other snacks, and easy access to wholesale purchasing of food ingredients directly from farmers, food hubs or wholesale food distributors.

Of course, if you are able to secure a central location for your fast food restaurant business, it will give people easy access to your fast food restaurant. It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget.

If you are new to the dynamics of choosing a location for a business such as fast food restaurant business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your fast food restaurant business.

Most importantly, before choosing a location for your fast food restaurant business, ensure that you first conduct 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.

This is why it is very important to gather as much facts and figures before choosing a location to set up your own fast food restaurant business. These are some of the key factors that you should consider before choosing a location for your fast food restaurant business;

  • The demography of the location
  • The demand for fast food, drinks and other snacks in the location
  • The purchasing power of residents of the location
  • Accessibility of the location and the road network
  • The number of fast food restaurants, hot dog and sausage carts, sandwich shops, food carts, mobile food trucks, regular restaurants, canteens and any other outlets that also sell fast food, drinks and other snacks in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al

15. Hire Employees for your Technical and Manpower Needs

On the average, there are no special technologies or equipment needed to run this type of business except for gas cooker, bread toaster, 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 (POS Machines).

So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other 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 standing, 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 fast food restaurant business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Bakers/Cook/Chef, Restaurant Manager, Sales and Marketing Officer/Sales Girls and Sales Boys/Cart Operators, Accounting Clerk, and Cleaners.

These are some of the key employees that you can work with. On the average, you will need a minimum of 5 to 10 key staff members to run a small – scale but standard fast food restaurant business.

The Service Delivery Process of the Business

When it comes to the business service process of fast food restaurant business, there are no hard and fast rules about it. Basically, it is the duty of the merchandize manager to help the organization purchase food ingredients and packaging/ serving materials et al.

They go out there to source for good purchasing deals and they also ensure that they only purchase at the right prices that will guarantee them good profits.

Once the fast food restaurant business is in full operation, the fast food and other snacks are prepared and they are listed on the menu. Fast food, snacks and drinks purchased from a fast food restaurant can be eaten in the restaurant or can be taken away. This is so because the fast food restaurant may not have the capacity to accommodate all their customers per – time.

It is important to state that a fast food restaurant business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated fast food restaurant business process is not cast on stone.

16. Write a Marketing Plan Packed with ideas & Strategies

Usually, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a fast food 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 of the fast food restaurants industry.

Businesses these days are aware of the power of the internet which is why they will do all they can to maximize the internet to market their services and products.

In other words, a larger percentage of your marketing effort will be directed at internet users; your website will become your number one marketing tool. These are some of the marketing ideas and strategies that you can adopt for your fast food restaurant business;

  • Introduce your fast food restaurant by sending introductory letters alongside your brochure to construction companies, farm settlements, camp grounds, corporate organizations, car owners, taxi companies, transport companies, households, sports organizations, gyms, schools, socialites, celebrities and other key stakeholders throughout the city where your fast food restaurant is located
  • Advertise on blogs, forums and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on social media or those who read blogs will know where to go when they need to purchase fast food, drinks and other snacks within your location
  • Create a basic website for your business so as to give your business an online presence
  • Directly market your products
  • Engage in road shows in targeted communities from time to time to promote your fast food restaurant business
  • Join local fast food 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)

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you sell your fast food, drinks and other snacks and beverages at rock bottom prices is to purchase your food ingredients directly from farmers or from food ingredient wholesalers in pretty large quantities. The truth is that the higher the quantity 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 fast food, drinks and other snacks and beverages 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 products.

18. Develop Iron-clad Competitive Strategies to Help You Win

The availability of varieties of well – prepared and tasty fast foods and other snacks and beverages in your fast food restaurant, your business process and of course your pricing model et al 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 qualified and fast foods, other snacks and beverages listed on your menu can favorably compete with the some of the best in the fast food restaurants industry and street food industry.

19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If your intention of starting a fast food restaurant business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by owning chains of fast food restaurants and franchising, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a profitable business.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your fast food 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 fast food 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 fast food restaurant business
  • Distribute your fliers and handbills in target areas
  • Contact constructions companies/sites, campgrounds, farm settlements, corporate organizations, car owners, taxi companies, transport companies, households, sports organizations, gyms, schools, socialites, celebrities and other key stakeholders throughout the city where your fast food restaurant is located informing them about your fast food restaurant business and the foods, snacks and beverages you sell
  • List your fast food restaurant business in local directories/yellow pages
  • Advertise your fast food restaurant business in your official website and employ strategies that will help you pull traffic to the site.
  • Position our Flexi Banners at strategic positions in the location where fast food 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 et al.