How to Start a Chinese Restaurant

by Anam Ahmed - Updated June 27, 2018
Beef lunch meal served in tray on table at Chinese restaurant in Yokohama

A Chinese cuisine is a popular option for many diners. The unique flavors, culinary variety and low price-points attract millions of customers each year. Opening your own Chinese restaurant, however, is no easy feat, and requires careful planning and preparation.

Create a Unique Menu

There are a number of regional cuisines in China, including Szechuan, Cantonese, Hakka and Hunan. Figure out what kind of cuisine your restaurant will focus on. You can even choose to offer multiple regional varieties. Keep in mind that you will have customers with certain dietary restrictions, such as vegetarian, vegan, gluten free and dairy free. Try to offer at least a few items on your menu for this segment of the population. Try to spot the gap in the current Chinese food market in your area so you can fill it with something unique and creative that will catch the attention of your customers.

The kind of food you serve will be closely connected to the selling price of each portion. While certain international cuisines garner both gourmet and cheap-and-cheerful price-points, Chinese food has generally favored the latter. Even the celebrated French chef Jean-Georges Vongerichten was not able to sustain a top-dollar Chinese restaurant in New York City. While typical Chinese-American cuisine such as vegetable chow mein and egg rolls cost very little to make, the prices they are sold at are also low. Keep this in mind as you develop your menu.

Ensure that you have detailed knowledge about the cuisine your restaurant will offer, either from your own experience or with a chef you’ll be working with. It’s imperative to understand the intricacies of the cuisine so your restaurant can stand out from the crowd of other Chinese restaurants. In addition, you’ll need to consider sourcing specialty ingredients that may not be readily available in your area, or figuring out how to get by without them while still putting out the delicious and authentic fare.

Decide on a Suitable Location

Location, location, location: any business owner will tell you these are the three most important aspects that lead to success. Figure out which area is best for your Chinese restaurant. While it may seem counter-intuitive, being close to another Chinese restaurant might work in your favor. Picking a location in or near Chinatown in your city might bring in lots of foot traffic from hungry customers who are specifically looking for Chinese food. In addition, some healthy competition with neighboring restaurants could help to increase the quality of your food and the reputation of your business.

Your location is related to your hours of operation. If you’re located in a business or industrial area, you will likely not see any customers after nine-to-five business hours. However, if you’re on a street with bars and clubs, you may have a rowdy late-night crowd. Decide carefully on your location because it will affect the kind of clientele you will get as well as how late you will be open.

Do some research to find out if other restaurants have come and gone in the same area. This could be a major red flag. Perhaps there was not enough parking, or maybe the streets were too dimly lit at night to attract visitors. If you’re planning on opening your restaurant in a location where other eateries have failed, try to dig into why so you can avoid those pitfalls.

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Develop a Winning Business Plan

Writing a solid business plan will help you get capital from investors and loans from banks, and it will also help you see any holes in your plan. It’s a good way to lay out everything in detail to see if your business will succeed.

Try to be as detailed and accurate as possible in your business plan. You’ll need to cover how much capital you have, what kind of long-term income you expect and what kind of expenses you will incur. You’ll also need to consider fluctuating food costs, payroll and taxes. Your business plan should outline the required licenses and permits and any health and food safety laws you’ll have to adhere to.

Be sure to cover how you will market your business. You can focus on creating a brand for your restaurant, including the name, look and vibe of the place. You’ll have to figure out where and how you will advertise, how much it will cost and what kind of return on investment you can expect.

Implement Cost-Cutting Tips

Opening up a new Chinese restaurant is going to be costly, but there are a number of ways you can reduce your expenses from the get-go. Instead of building from the ground up, consider taking over a former restaurant and giving it a surface makeover with paint and new furniture. Save money on branding by forgoing an expensive marketing agency and hiring a local designer instead. Focus on the essentials: not all restaurants need equipment like a soda machine, cup dispenser or ice machine. Find out if those will be integral to your business, and if they aren’t, ditch them. Find used restaurant equipment on buy-and-sell sites or buy directly from restaurant wholesalers to cut out the middleman. Rely on free or cheap publicity vehicles such as social media to get the word out about your grand opening.

About the Author

Anam Ahmed is a Toronto-based writer and editor. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing articles for small business owners and entrepreneurs. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.

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