How To Open a Restaurant in London

Thinking about opening a restaurant in London?

London, the vibrant capital of England, is renowned for its rich history, diverse culture, and dynamic culinary scene. If you're dreaming of opening your own restaurant in London, you're in for an exciting journey - but one with its fair share of challenges. 

The market in the capital is fierce. According to exclusive data from Toast, the average monthly revenue for a new restaurant that’s less than 12 months old is £88,500. The average profit margin for a restaurant is typically between 3-5 per cent.

Now more than ever, aspiring restaurant owners in London must meticulously evaluate their strategy for a successful launch.

To aid you in kickstarting your own eatery in London, we've compiled a detailed step-by-step guide on how to open a restaurant tailored to the city. This includes:

• A customisable restaurant business plan template to map out your vision
• How to secure restaurant financing and capital to make your vision a reality
• The licenses and permits you'll need to secure to operate a restaurant business
• Tips on how to do restaurant marketing and,
• Additional insights to help make your new restaurant venture a success.

Let's get into it: Here's how to open a restaurant in London. 

1. Decide on a Restaurant Idea

Diners have endless choices when deciding where to eat in London. Amongst a sea of gastro pubs, high-end restaurants, popular franchises and fast-food joints, there’s a lot on offer. In fact, there are over 15,000 restaurant businesses in London, and that's not counting the likes of ghost kitchens. So, selecting a concept that captivates Londoners is essential for getting bums in seats. 

What culinary delights will you offer? Are you aiming to be celebrated for locally sourced ingredients? Or perhaps for allowing diners to customise their pizzas? Maybe your goal is to be acclaimed for London's finest seafood.

Whatever your vision, document your aspirations and how you wish to be perceived.

To help you on your way, define your restaurant's mission and core principles to embody your identity and ethos as a dining brand. Next, you’ll want to design a distinctive logo and develop a cohesive aesthetic for your brand. Is there a sign that you can picture on your dream shopfront in Camden or Peckham? Write it all down (or sketch if you’re good at drawing)!

Now you have some of the pieces coming together, testing your restaurant concept through a pop-up or food truck in London can offer valuable proof of concept, cultivate a loyal customer base, and demonstrate to investors the profitability of your idea.

As your idea starts to come to life, it’ll serve as your restaurant's compass, paving the way to step two...

2.  Create a Restaurant Business Plan

Without an elaborate and carefully constructed business plan, your London restaurant dream will be hard to achieve. A good business plan acts as a comprehensive blueprint detailing how your venture will materialise and operate upon opening.

Utilise your business plan to guide your initial steps and secure funding from potential investors for necessary capital. An effective restaurant business plan should include:

• Executive summary, including your restaurant name
• Company overview, including your business model
• Industry analysis focusing on London's market, including target demographics, location study, and competitive landscape
• Marketing plan
• Business model and service model (Are you a quick service restaurant? Fine dining? Fast food? Dining room sit down? Decide that here)
• Operations plan (staffing, customer service policies and procedures, restaurant point of sale solution, payroll)
• Financial analysis and business model (investment plan, projected profit and loss statement, break-even analysis, expected cash flow)

If crafting a business plan is new to you, seeking advice from a seasoned advisor or restaurant mentor can ensure you have a compelling and clear vision for potential investors.

3. Secure Restaurant Capital

Let's face it: Starting a restaurant in London is an expensive endeavour. 

Whether you're franchising, partnering, or venturing solo, substantial initial capital is required. For those lacking personal funds, various financing options are available, such as:

• Equipment and Technology Loans. Negotiate with your bank or provider a way to procure loans for kitchen equipment and restaurant technology, which can be one of the most expensive costs. 
• Working Capital Loans. Working capital loans help cover operating costs while your restaurant has more expenses than income. Ideally, budget six to twelve months of operating costs until you reach the break-even point.
• Lines of Credit. If you’re approved for a business line of credit, you’ll get a maximum credit amount but will only have to pay what you use. Like a credit card, the line of credit constantly revolves. As you pay your balance, you’ll have more credit to draw on for future expenses.

Explore lending options from commercial banks, credit unions, and even partners like your POS and payment processors.

Whether expanding, investing in new equipment (new oven or walk-in anyone?), or managing short-term cash flow, a reliable funding source is essential to realise your London restaurant dreams.

4. Choose a Restaurant Location

The significance of the right location for your restaurant in London cannot be overstated. Conduct thorough research on local demographics, market trends, competition, and specifics of the potential site, including its size, visibility, and history. Alternatively, consider a ghost kitchen for a location-independent model.

If opting for a physical presence, choices include leasing, purchasing, or constructing your restaurant. Evaluate the following when considering a location:

• Target audience and customer profile
• Real estate market conditions in London
• Community engagement
• Site dimensions
• History of previous occupants

Your chosen location and its size should embody your restaurant's theme. An upscale steakhouse may require a standalone building. If you want to sling fish and chips or fancy toasties in Borough Market, you could operate from a food truck.

Remember, your location and space will significantly influence your kitchen layout and overall floor plan. If you want to create a high-volume Italian eatery with an exposed kitchen and pizza oven, a larger space and the ability to modify the structure for ventilation are necessary. But remember – landlord restrictions may apply.

5. Apply for Restaurant Licences and Permits

Securing all mandatory licences and permits is a process that can take time. Licences and permits vary based on your restaurant's concept. While some are universally required, others depend on your specific offerings (e.g., liquor licences). Here are the licenses that you may need to open your restaurant in London: 

• Premises Licence: For selling alcohol, providing entertainment, and serving hot food and drinks between 11 pm and 5 am.
• Personal Licence: To supervise the sale of alcohol.
• Food Business Registration: Must be done with the local authority at least 28 days before opening. This is free and can't be refused.
• Food Hygiene Certificate: While not always legally required, most restaurants will have their staff trained and certified in food hygiene.
• Health and Safety Assessment: Required under the Health and Safety at Work Act 1974.
• Risk Assessment: Businesses with five or more employees need to record the significant findings of the risk assessment.
• Fire Safety Risk Assessment: Must comply with the Regulatory Reform (Fire Safety) Order 2005.
• Environmental Permits: If your restaurant will discharge anything other than domestic sewage into public sewers, a permit from the Environment Agency or local authority may be required.
• Music Licence: From PPL PRS Ltd if you plan to play music in your restaurant.
• Signage Licence: If you're planning to display signs or advertisements outside your restaurant.

Early pursuit of these licences, despite their cost and time requirements, is crucial for serious restaurateurs. You don’t want red tape to delay your opening! 

6. Develop A Memorable Restaurant Menu and Beverage Program

Collaborate with your chef and bar manager to develop a unique menu and beverage selection. Depending on your restaurant type, creativity can set you apart and get you noticed by locals and tourists alike.

For instance, in a gastro pub, how will your classics like a roast stand out? What unique touches can you add? How will you position your brand through your menu? How do your prices compare to other London establishments?

Next up, your pricing will come into play. Menu pricing involves considering the cost of goods sold, food cost, sales forecasting, inventory management, profit margins, and compliance with food safety and health regulations.

Truth be told, there’s so much that goes into designing a memorable menu – from meal choices and pricing strategies to aesthetic design and item placement.

7. Hire Top-Notch Restaurant Staff

Your staff are the face of your restaurant, so they play a crucial role in its success. The hiring spans various positions, from servers to chefs and everything in between.

Recruitment options include referrals, job postings, and career websites. Creating an attractive workplace is key to attracting and retaining talent. However you go about it, be sure to find people who you click with and embody the vibe of your brand. 

8. Invest in Equipment and Restaurant Technology

Writing down customers’ orders the old-fashioned way with pen and paper will get old — and inefficient — really fast.

Restaurant guests are expecting technology in their dining experience, and according to Toast’s Restaurant Technology Report, 95% of restaurateurs agree that technology improves business efficiency. 

And remember that restaurant guests don't always want to  – and won't always be able to – dine in. That's why you need to invest in equipment and technology that facilitates a takeaway experience that's just as good as your in-house dining experience. New restaurants in London should strongly consider investing in the following:

• A cloud-based restaurant point of sale system or pos solution 
• Kitchen display screens
• An online ordering system for restaurants
• Restaurant reporting and analytics
• Restaurant inventory management software
• Restaurant accounting software
• Simple scheduling and team communication
• A restaurant payroll solution
• A restaurant loyalty or rewards solution

Contactless payment options and order-and-pay-at-the-table technology that makes guests feel comfortable

With these technologies, scaling your business and establishing a successful brand will be much easier. 

9. Create a Restaurant Marketing Plan

Launching a restaurant in London demands a comprehensive marketing plan that not only captures but also engages your target audience effectively. This plan should encompass a wide array of promotional activities tailored to build anticipation and drive foot traffic from day one. Everything from enticing opening day incentives and weekly specials that draw in regulars to a robust presence on social media and targeted email marketing campaigns should be meticulously planned and executed within your marketing strategy.

Your marketing efforts should not be a scattergun approach but a finely tuned strategy prioritising channels most likely to reach and resonate with your target demographic. This means understanding where your potential customers spend their time online and offline and tailoring your messaging to appeal directly to their preferences and dining habits.

And the first thing in your marketing calendar? Spread the word about your restaurant’s soft opening and grand opening events! 

10. Host a Soft-Opening and Grand-Opening

Once you’re ready to take London by storm, you’ll want to host soft and grand openings to introduce your restaurant to the capital. 

Before swinging those doors open to the public, a soft opening will be your trial. Invite your nearest and dearest – friends, family, and even your local neighbours – to be your taste testers for the night. They'll cut you some slack for any mistakes because they're (hopefully) on your side.

The soft opening isn't something you announce to the world; it's more of a chilled evening for your inner circle. It's your chance to work out the kinks with your team in a stress-free environment. Trust us, there will be the odd hiccup, but that's all part of the fun!

Now, onto the main event – the grand opening. This is when you swing your doors wide open and welcome the whole of London to sample your offering. Sure, there might still be a few issues to iron out, but that's normal.

Don't forget to take plenty of photos for social media to capture these milestones. Running a restaurant can be a wild ride, so remember to take a breather occasionally. Enjoy the experience, and treat yourself to a well-deserved pint at the end of a busy day. You're officially part of one of the most exciting industries out there. Cheers to you!

And if, down the line, you decide to expand your restaurant business or open multiple locations, you know where to find us.