Restaurant Law Blog

Tuesday, September 20, 2011

Checklist For New Restaurant Formation

CHECKLIST FOR NEW RESTAURANT FORMATION

CONCEPT

  • Create your own concept
  • Consider buying a franchise
  • Consider purchasing an existing restaurant
  • Draft a business plan
    • Include a confidentiality agreement to give to those you discuss / share your ideas with
    • Include your goals and strategies
    • Include your proposed menu
    • Include your proposed menu pricing
    • Include your target market analysis
    • Include your projected staffing needs
    • Include your projected financing needs
    • Include sales and profit analysis from best to worst case scenarios

DUE DILIGENCE

  • Survey target market with email blasts, direct mailers, etc.
  • Research the following:
    • Market, trends and competitors
    • Demographics
      • Consider purchasing demographics report on credit card or public utility data
    • Consider purchasing prospect lists from the chamber of commerce
    • Consider hiring a marketing firm to help with the research
    • Taste test your menu

THE TEAM

  • Consider hiring professionals early in the process, such as:
    • Restaurant consultant
    • Accountant – early to get the numbers together for the business plan, especially if you need outside financing
    • Real estate broker
    • Attorney
    • Marketing firm
    • Designer
  • Consider partnering with others

BUSINESS FORMATION

  • Consult with a lawyer and an accountant to determine the correct business entity for your restaurant
    • Sole proprietorship
      • Advantages: No formalities or filings with the secretary of state required (except for, in some cases, a fictitious business name registration)
      • Disadvantages: Personal liability for the owner
      • Other: Pass-through taxation
    • Partnership
      • Advantages: No formalities or filings with the secretary of state required (except for, in some cases, a fictitious business name statement)
      • Disadvantages: Personal liability for the partners
      • Other: Pass-through taxation
    • Limited partnership
    • Limited liability company (LLC)
      • Advantages: Owners in most cases are not personally liable for the business debts, and fewer formalities than corporations required.
      • Disadvantages: Requires filing with the secretary of state and possibly securities registration
      • Other: Pass-through taxation
    • Corporation
      • Advantages: Owners in most cases are not personally liable for the business debts, and flexibility in raising capital
      • Disadvantages: Requires filing with the secretary of state, formalities in maintaining the corporation and possibly securities registration (or a notice of exemption)
      • Other: Taxation at both the corporate level and shareholder level
    • S Corporation
      • Advantages: Owners in most cases are not personally liable for the business debts, and flexibility in raising capital
      • Disadvantages: Requires filing with the secretary of state, formalities in maintaining the corporation, restrictions on the number and status of shareholders and possibly securities registration (or a notice of exemption)
      • Other: Pass-through taxation
    • Form the business entity
      • File appropriate documents with the secretary of state, if need be
      • Register securities or file a notice of exemption, if need be

FINANCING

  • Consider the following sources for startup financing:
    • Personal savings
    • Family or friends
      • In the case of family or friends, make sure to document the transaction and clarify the terms
    • Loans
      • Inquire at the Small Business Association to see if your business will qualify for help
    • Investors
    • Partner
    • Purveyors
      • See if your purveyors will defer payment of your bills or otherwise lessen the burden during startup
    • Set up business bank accounts
    • Work with your accountant to set up the books and establish a plan for regular financial reporting
    • Obtain a credit card processing system

LOCATION, LOCATION, LOCATION

  • Consider engaging a real estate broker to help find the space
  • Check with the chamber of commerce, zoning boards, and other local agencies / offices for help in finding a place
  • Consider hiring an attorney to assist in negotiating a lease
    • Consider asking for a rent abatement while setting up
    • Consider sharing a percentage of sales with the landlord to help keep rent at a manageable rate
  • Once in the space:
    • Set up utilities
    • Engage a pest control company
  • Engage contractors, architects and interior designers as needed
  • Consider trash services, dumpsters, grease removal, recycling
  • Obtain building permits
  • Obtain certificate of occupancy
  • Obtain Fire department permit
  • Elevator inspections
  • Compliance with ADA (www.usdoj.gov/crt/ada/adahom1.htm)

EQUIPMENT AND SUPPLIES

  • Consider new versus used and buying versus leasing
    • Computer
    • Fax / phone
    • Reservation system
    • Kitchen equipment
    • Signage, business cards, takeout bags, letterhead, napkins, other printed material, etc.
  • Locate equipment suppliers
  • Locate food / beverage source suppliers
  • Obtain purchasing sheets for all products
  • Purchasing agreements with purveyors
  • Purchasing manual

PERMITS, LICENSES AND OTHER LEGALITIES

  • Liquor license
  • Safety / sanitation / hazard issues
  • Employee certification for safe food handling
  • Zoning / building codes
  • wage and hour laws
  • Health code compliance / health department permit
  • Business license
  • Employer tax ID
  • Building permits
  • Certificate of occupancy
  • Fire department permit
  • Elevator inspections
  • Seller's permit

EMPLOYEES

  • Help wanted ads
  • Hire employees
    • chef
    • general manager
    • managers
    • supervisors
    • waiters
    • hostess
    • dishwashers
    • etc.
  • Develop job descriptions, pay rates, benefits package, hours
  • Employee and operational manuals
  • Train employees
  • Each establishment must have at least one employee who is certified in food safety and sanitation
  • Engage a payroll company
  • Get forms together (e.g. I-9 , W-4s)
  • Hiring standards must pass the business necessity test
  • Background checks must comply with federal Fair Credit and Reporting Act (15 USC §§ 1681 – 1681u)
    • General requirements:
      • Notice
      • Authorization
      • Certify compliance to credit agency
      • Provide copy to applicant
      • Provide notice of adverse action
    • Paperwork checklist for employees:
      • Offer letter
      • Employee contract
      • I-9 / W-4 / government forms
      • Agreement to arbitrate
      • Employee handbook with acknowledgment of receipt
      • Authorization for payroll deductions
      • Benefits application form
    • Consider independent contractors where possible
      • Advantages of independent contractors:
        • Employer does not pay the usual employer contributions for:
          • State employment tax
          • Social security
          • Federal unemployment tax
        • Employer does not need to provide benefits such as life or medical insurance, vacation, sick time, pregnancy time or retirement plan
        • Employer decides whether to provide workers compensation
        • Labor laws and wage and hour laws do not apply
          • National Labor Relations Act (29 USC § 151 et seq) and Fair Labor Standards Act (29 USC § 201 et seq) does not apply
        • Reduced risk of discrimination claim
        • Minimized potential for wrongful termination claim
      • Disadvantages of independent contractors:
        • Loss of control – cannot control how the contractor performs the service
        • Cannot terminate without cause (or risk breach of contract)
        • Need to continuously monitor relationship to make sure it is legitimately an independent contractor relationship because penalties for misclassification are high

INSURANCE

  • Property
  • General liability
  • Liquor liability
  • Auto
  • Workers’ compensation
  • Unemployment
  • Flood, earthquake, etc
  • Employment practices insurance
  • Loss of business income insurance
  • Food contamination and spoilage

TRADEMARKS, TRADE SECRETS, COPYRIGHTS, LOGOS, BRAND IDENTITY

MARKETING / ADVERTISING

  • Website, email, etc.
  • Mailers, tv, radio, newspapers, trade publications, word of mouth

James DiPasquale, Esq.

DIPASQUALE LAW GROUP

Join us on Facebook

Connect with us on Linkedin

Become a Member of:  Restaurant, Bar, Tavern & Nightclub Entrepreneurs


Archived Posts

2019
2018
2017
2016
2015
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
November
October
September
August
June
February
2012
2011
December
November
October
September
July
June
May
January
2010




© 2019 DiPasquale & Summers | Attorney Advertisement
555 5th Avenue, 14th Floor, New York, NY 10017
| Phone: 646-383-4607

Clients | Testimonials | Bar & Restaurant News | Services

Attorney Website Design by
Zola Creative