There are a few tried and true strategies for starting a restaurant with no money. You can gain (and leverage) industry experience, start a small food business that grows, raise funds, or swing for the fences with the wildcard strategy of entering cooking competitions. I’ll walk you through several ways to start a restaurant with no money, including the pros and cons of each strategy so you can pick the plan that works best for you.
I’ve worked in the restaurant industry and with restaurant owners for nearly two decades, alongside many restaurant owners who started their own restaurants with no money. In this article, I’ll tell you everything I know about how to start a restaurant of your own with little to no money.
Gain (and Leverage) Restaurant Experience
According to the National Restaurant Association, eight out of 10 restaurant owners started their career in an entry-level restaurant position. Working in a restaurant allows you to learn everything about your target market, from the most common customers to the most popular menu items. If you want the most dependable strategy for starting a restaurant with no money, this is it. I have never seen a restaurant worker who wanted to eventually open their own restaurant fail to do it.
To get the most out of this strategy, you want to work at the management level in either the dining room or the kitchen. Restaurant management is a complex but thrilling job—it’s one I held for more than a decade. You can get a taste of what the life of a restaurant manager is like by reading our guide to restaurant management—or watching season two, episode seven of The Bear. If (spoiler alert) Richie’s transformation in that episode moves you, you might just have the soul of a restaurant manager.
|You get paid to learn the ins and outs of your target market||Your schedule is set by others|
|Every workday is a networking opportunity||You’ll be working for someone else for awhile|
|You can learn if the restaurant industry is a fit for you||Hours can be long, and shifts can be stressful|
All this strategy requires is getting a job—preferably at the management level—in either a restaurant kitchen or the front of house. Ideally, this job should be at a restaurant in the market you hope to operate in yourself. You’ll get the benefit of being paid to learn the ropes of navigating your market (what vendors to use, what permits and licenses you need, etc.).
This is the most reliable and most common way to open a restaurant with no money. It requires you to be excellent at the job, though. So excellent, in fact, that you get noticed by would-be business partners who then offer to bankroll your future restaurant. That might sound like a fairy tale—but it is one that I have seen happen several times. This strategy has fringe benefits; if you don’t get poached by a partner, your restaurant experience will make it more likely you’ll be approved for financing and small business loans if you decide to go the fundraising route.
If you need a real-world example, it doesn’t get any higher level than Grant Achatz. Achatz was working as the chef of an Evanston, Illinois, restaurant when a regular customer—Nick Kokonas—approached him to open a restaurant. The restaurant they opened together, Alinea, was named the best restaurant in the country a year after it opened.
Look for restaurants in your desired location. Apply for any available job openings. It doesn’t matter how entry-level—but try to get as high up the chain of responsibility as you reasonably can. The more supervisory and managerial tasks you have, the more aspects of the business you’ll learn. But even if you start as a dishwasher, busser, or host, driven and focused people tend to move up the restaurant ranks quickly.
There has never been a better time to look for restaurant work; most US restaurants are currently understaffed. While you can get a degree from a culinary or hospitality management school, it is absolutely not necessary. Restaurants are an industry where having skills is more important than where you learned them.
Set up alerts for restaurant jobs in your preferred location on job sites, like Indeed, and on restaurant-specific sites, like CulinaryAgents. While you wait for interviews, learn restaurant skills. Servsafe offers online food safety training (with certificates of completion), while Typsy offers training on front-of-house skills, like guest interaction and upselling, as well as kitchen basics, like essential knife skills.
Start a Smaller Food Business
You might wonder why I’d advise you to start a whole other food business before starting your restaurant. There are several benefits:
- You can test your menu before you commit to a full restaurant space.
- You can build a customer base before you open your restaurant.
- You can see if you like running a food business before committing to a full-service restaurant.
- You can use the profits to bankroll your restaurant development.
Serving food to the public (even on a small scale) carries some risk. With any size and scale of food business, ensure that you file for the appropriate business license with your local Secretary of State’s office. And, obtain food vendor’s liability insurance to protect your business in the case of foodborne illness.
There are several small food businesses that can be the foundation of a restaurant, all of which have proven successful for restaurant owners operating today. Let’s look at your options in detail:
|Hours are flexible—only need to operate once a week or month||You’ll need to work around the hours of operation of your host restaurant|
|The host restaurant is responsible for getting their kitchen inspected; you don’t need to worry about it||You’ll need to pay rent or profit share with your host restaurant|
|Some host restaurants will allow you to order your supplies through their suppliers, giving you access to lower prices||In most states, you need a food safety license and food vendor’s insurance|
A pop-up restaurant is a temporary food service business that operates from an existing food service business. For example, a restaurant that is open for dinner only might sublet its space to a pop-up lunch restaurant for a couple of days, weeks, or months.
Pop-ups are much less expensive than full-service restaurants because—while you will need to pay some form of rent or profit share to the host business—you won’t need to secure dozens of permits and buy tables, chairs, and dishes before you can start serving your food. This setup is an excellent way to build buzz around your food and gain experience as a chef.
The pop-up to full-service restaurant pipeline is a strong one. Nearly every week, a major food outlet reports that a popular pop-up is becoming a brick-and-mortar. Some recent examples include the high-end seafood forward concept Street Disco in Portland, Oregon. Mexican tasting menu restaurant Corima is in the process of moving from a tasting menu pop-up to a full-service establishment in New York City. In Montclair, New Jersey, after two years of running as an invite-only Italian ramen pop-up, pastaRAMEN opened a full-scale restaurant in February 2023.
Starting a cottage food business only requires a few steps. While specific regulations vary from state to state, the process in most places is generally the same:
- Form your pop-up business into a legal entity as a Limited Liability Corporation (LLC).
- File a doing-business-as (DBA) form with your state if your pop-up will operate under a name different from yours (most do).
- Get Food Vendor’s insurance (an annual premium of $350 to $1,000 is standard).
- Check with your local health department for any necessary food safety permits or food safety exams that are required.
- Complete any required training (some states require a food safety class).
- Secure a host restaurant that will sublet their space to you for the duration of your pop-up.
Interview potential host venues just like you would a business partner. Some host venues might want to have a vote on everything, from how you plate your entrees to how you price your menu. If you want that guidance, such a relationship can be a great fit. But if you have a strong vision, it could get tense. Don’t be afraid to walk away and seek a host that is a better fit for you.
Some pop-up restaurants operate out of vacant spaces, like art galleries, storefronts, or even parking garages. You generally get the best bang for your buck if you work with a proper restaurant that has a commercial kitchen certified by the local health and fire departments. Working with a restaurant is safer for you (it has all the necessary equipment, including fire suppression), and for your customers (who will be less likely to encounter foodborne illness or cross-contamination).
Cottage Food Business
|You can operate from your home kitchen||Limitations on the type of foods you can prepare and sell|
|Cottage foods tend to be inexpensive to make, especially seasoning mixes||Some states restrict where you can sell|
|Typically only requires an inexpensive permit; most states don’t require a health department inspection||Some states restrict how much you can sell in a year|
|You can prepare your products in your own time; most cottage foods have a long shelf life|
|Short lead time to get started|
In a cottage food business (sometimes called a “residential kitchen” business), you sell foods to the public that you prepare in your home kitchen. Cottage food businesses are approved to operate in all 50 states (once New Jersey’s law became effective in October 2021). Laws vary slightly from jurisdiction to jurisdiction, but generally, you can prepare and sell foods that are safe to store and serve at room temperature.
These include items like:
- Bakery items: Breads, cakes, fruit pies, pastries, and cookies
- Preserves: Jams, jellies, pickles, marmalades
- Confections and snacks: Candies, fudge, popcorn balls, dried fruits, trail mix, toasted nuts
- Seasoning blends and condiments: Dry herbs, flavored vinegars and oils, hot sauce, salsa, mustards
- Dry goods: Tea blends, coffee beans, pasta noodles, granola, cereals
There are some limitations—you won’t be able to sell any foods that need a specific hot or cold temperature to be held safely. But many cottage food operators have built a booming business out of baked goods, especially breads and cakes. Most cottage food laws also have guidelines for where and when cottage food businesses can sell. Most states, for example, won’t allow you to sell cottage foods directly from your home, and many stipulate that you only sell directly to consumers—as at a farmers market—and not wholesalers or retailers.
Notable cottage businesses that grew into brick-and-mortar businesses include Duff Goldman’s Charm City Cakes.
Besides bakeries, many cottage foods lend themselves to an eventual restaurant concept. A hot sauce business can easily grow into a wing stop. A cottage business trading in jams, coffee, and granola is a great foundation for a coffee shop or cafe.
Starting a cottage food business only requires a few steps. While specific regulations vary from state to state, the process in most places is generally the same:
- Apply for a cottage food or residential kitchen license from your local health department.
- Pay the license fee (usually around $100).
- Register your business with the state, file a DBA (if needed), and get food vendor’s insurance.
- Complete any required training (some states require a food safety class).
- Create labels for your products that comply with state labeling requirements.
You can find information about your state’s requirements on your health department website. Otherwise, visit the cottage food networking site Forrager to scan state-by-state summaries and connect with nearby cottage food operators. The community at Forrager tends to be friendly and full of good information.
Micro-enterprise Home Kitchen Operation (MEHKO)
|Operates from your home kitchen||Limitations to how much you can earn|
|Can sell a wide array of foods for same-day consumption||Requires health department inspection|
|Potential to sell wine, beer, and spirits||Not legal in every state|
|Some regulations prohibit pets in the home|
Micro-enterprise Home Kitchen Operations (MEHKOs) are also called “home restaurants.” And that is exactly what it sounds like—a restaurant that operates from your home. Like a cottage food business, MEHKOs operate from residential kitchens.
In a MEHKO, you can serve food that you have prepared the same day. This is a great fit for cooks that want to serve their most beloved dishes to the public and is a great way to build a customer base for a brick-and-mortar restaurant.
MEHKOs are a much more recent development in the micro-food business world, but they are growing quickly. Currently, California and Utah have approved MEHKO operations, with several other states considering them.
MEHKOs have been operating in California since 2019, and it seems that many states are watching how California’s MEHKOs succeed before permitting them in their area. As such, there aren’t a lot of MEHKOs that have made the leap into full-scale brick-and-mortar.
While that may be the case, Los Angeles comfort food concept Ronnie’s Kitchen followed a MEHKO model—without ever actually being a registered MEHKO. Chef Ronnie Munoz started cooking and serving food out of his home during the COVID-19 pandemic. He spun his home restaurant’s popularity into a food truck, and that truck transformed into a full-service restaurant on Sunset Boulevard.
In counties and states that permit MEHKOs, you’ll need to:
- Apply for a license via the Health Department
- Pay a license fee (from $300 to $650, depending on the location)
- Take a food safety managers’ course and exam (typically around $100)
- Get an inspection of your home kitchen to ensure it complies with health department standards
- Register your business with the state, file a DBA (if needed), and obtain food vendor’s insurance
You can learn if your state has approved MEHKOs by checking with your local health department. Cottage food website Forrager also tracks proposed MEHKO legislation from state to state. FoodNome, an online platform for MEHKOs, includes step-by-step support to help you refine your business concept and process payments for orders.
Home-based Catering Business
|In most states, you can operate from a licensed home kitchen||A few states will only license caterers operating from commercial kitchen spaces, which is an added expense|
|Can serve a wider variety of foods than cottage businesses||Requires a kitchen inspection|
|Catering customers have higher budgets than cottage food and MEHKO customers||Can be more expensive to run than a cottage food business or MEHKO|
A home-based catering business is a food business where you cook food in a licensed home kitchen to serve at events offsite. Many home-based caterers specialize in weddings or other large social events.
Entertaining powerhouse Martha Stewart’s first foray into the culinary works was a catering company she started in her basement. She just opened her first restaurant, The Bedford, in 2022. But you needn’t take nearly as circuitous a path from catering to restauranting.
- Check with your state health department for local regulations.
- File for a health department permit.
- Schedule an inspection of your home kitchen.
- File for a business license with your state, including a DBA (if needed).
- Secure food vendor insurance policy.
To start, you can rent common catering equipment, like glassware, chafing dishes, and tablecloths, from rental companies and pass these costs directly onto your catering clients. As your business grows, however, you may prefer to purchase some of these things and rent them to customers directly. If you have storage space, it is a nice service to add.
Private Dinner Club
|Appeals to a high-end clientele||Operate in a legal gray area in some states|
|Most operate only a few nights a week or month||Can be difficult to get food vendor’s insurance|
Private dinner clubs are pop-up events that serve a multi-course set menu in a private home. Unlike more traditional pop-up restaurants, private dinner clubs are typically roving, semi-regular affairs.
Most serve once a week and may move from location to location. In some locations, this is by necessity; in some states, private dinner clubs exist in a legal gray area between dining in someone’s home (which is unregulated) and dining in a restaurant (which is highly regulated).
Check your local health department laws before starting a private dinner club, and ensure you are operating with all the necessary permits.
Michelin-starred Los Angeles restaurant, Kali, started as a roving private supper club. Chef Kevin Meehan cooked and served a multi-course tasting menu in private homes for more than a year to bankroll his dream restaurant.
The tricky part of private dinner clubs is that many states do not offer a legal framework for operating one, so it can be difficult to get insurance coverage and business licenses. The safest way to operate a private dinner club is to get the licenses and coverages designed for a home-based catering or a private chef business.
Both formats typically require that you:
- Register with your local health department.
- Take a food safety course and examination.
- Have your home kitchen inspected.
- Incorporate your business and register it with your state (typically for a nominal fee).
- Get food vendor’s insurance.
Contact your local health department for additional, local regulations.
You can list your dinners on communal dining sites, like EatWith, which will handle your payment processing and introduce your business to new customers. Many of the businesses on EatWith are reviewed on TripAdvisor, just like traditional brick-and-mortar restaurants. Though if you are going to list your business so publicly, you will want to be 100% sure that you operate within the limits of local laws.
Many private dinner clubs operate underground—with no permits and licensing. I do not recommend this strategy as it can open you up to liability if any of your customers develops a foodborne illness.
This is the “step one: find money” strategy. If you want to open a full-scale restaurant as soon as possible, this is the fastest way to start a restaurant without any money. There are several ways to fundraise for a small, independent restaurant. Since you’ll need to raise between $250,000 and $2 million, most restaurants use a combination of all these fundraising strategies. Expand the sections below to see each strategy in detail.
See our guide to the costs of opening a restaurant for a full list and tips on where to spend and where to save.
|Public sharing of a crowdfunding campaign gives potential customers time to get excited about your restaurant||Raising large sums typically requires your campaign to go viral|
|A large network of small investors will be rooting for your success||Could alienate friends and family members|
|Small investors become your first customers||Can be demoralizing if you fall short of your goal|
Crowdfunding typically involves using an internet fundraising platform to request small sums of money from a large network of friends. Online fundraising campaigns are best suited for raising smaller amounts of money, as it can be difficult to get the attention you need for large sums, unless your campaign goes viral.
Greenpoint, Brooklyn coffee shop Stonefruit Espresso + Kitchen crowdfunded for its opening funds. It is now opening a second location.
To get started crowdfunding you’ll need to boil your business down to its essence so it is easy for funders to understand. Think about a business plan, but flashier (and with perks).
- Write an enticing description of your restaurant and proposed menu.
- Capture relevant images of your development process so far—menu images, images of your ideal space, action shots of you and any business partners cooking or serving food.
- Compose a list of potential rewards to offer at various investment levels. Free appetizers, desserts, or whole dinners for two are common. Though merchandise and public thank-yous are also good ideas.
- Create a profile on your preferred crowd-funding site and create your funding campaign page with the content you have prepared.
- Share your campaign on social media and directly with friends, family, and industry contacts.
- Post regular updates and thank yous to your campaign page as you start to receive funds.
Get Business Partners & Investors
|The more funds raised through investment, the fewer loans you will need||Can take time|
|Encourages you to build a strong business plan||Requires excellent forecasting and financial planning, plus the cost of a business attorney|
|Many people will be invested in the success of your restaurant||Partners and investors may have different visions for your restaurant|
Partners and investors typically give you some amount of money toward opening with the expectation that they will be paid back a percentage of the profit once the restaurant becomes profitable. Some partners play more active roles in your day-to-day business, whereas others simply invest in the capital and take a lighter role in how you handle the daily runnings.
If you are confident that your restaurant will be a success, seeking business partners and investors is a great way to start a restaurant if you don’t have personal funds to invest.
One of the best ways to appeal to business partners and investors is to have a strong business plan. Many potential business partners will also want to see that you have the industry experience to back up your business plan. So your first step to attracting investors and business partners is to create that plan.
- Create a detailed, comprehensive business plan with financial forecasts detailing your expected profits and losses.
- Calculate the time it will take for your business to become profitable, so investors can see how long it will take to see a return on their investment.
- Contact a business attorney to compose an investor agreement that details the terms of the investment.
In addition to approaching friends, family, and industry contacts, consider approaching investors through sites like Honeycomb Credit or Mainvest. These sites give your local community the chance to invest small amounts in businesses they would like to see open in their area. Best of all, they handle the details of managing your investor agreements so you save administrative time.
Our guide to starting a restaurant includes a template for a restaurant business plan that you can use to appeal to investors.
Apply for Startup Loans
|Can spend most funds on any business expense||Typically requires a personal credit score of 680+|
|Loans are typically for larger sums than single investors can afford||May require collateral|
|Can take 30 to 90 days for a decision from lenders|
Startup loans are funds designed to support new businesses. Many small business loans have “time in business” requirements, so new businesses can’t apply. Startup loans, on the other hand, typically do not have time in business requirements—though these can have a longer time for consideration, and have other requirements like collateral to back up the loan.
One of the best ways to get approved for startup small business loans is to have a high personal credit score or an asset like a house that you can offer as collateral. Industry experience and a strong business plan also help. But generally, the steps for applying for a loan are straightforward.
- Identify a loan you qualify for.
- Complete loan applications (sometimes on paper, frequently online) with the lender.
- Submit requested supporting documents (may be pay stubs, bank statements, financial projections, or a business plan).
- Wait for loan approval from the lender.
- Once approved, wait for the fund transfer.
Depending on your loan type, approvals and fund transfers can take 30 to 90 days. So make sure all of your paperwork is completed correctly; you don’t want to add more time due to simple typos.
These strategies are long shots—but they have worked for several successful restaurant owners. If you perform well in a food competition, for instance, you can typically leverage the attention you receive into restaurant investment. These strategies might be risky, but they’re also potentially a lot of fun and will provide your restaurant with some excellent biographical points on your “about us” page.
Enter Cooking Competitions
|Awards for your food create instant customer confidence||Some competitions are limited by food type|
|Competitions are essentially free advertising for you and your food||May require entry fees|
|Prize money can go toward your restaurant opening||Televised competitions may require a lot of your time without any pay|
|You don’t need to win the competition to get a boost||Competitions are incredibly competitive and can be stressful|
This is a high-risk high-reward strategy. If you are an amateur cook with a strong culinary vision but lack funds, food competitions—in real life and on television—can give you the boost you need to get your restaurant started. The long-running Pillsbury Bake-Off, for example, awards its annual winner $50,000, which—along with the recognition of winning—could be your first funds toward opening your restaurant.
Reality competitions are also great platforms for showcasing your cuisine and possibly garnering some prize money.
Great Food Truck Race winner Grill ‘Em All is now a Southern California restaurant. Multiple Masterchef contestants have gone on to open restaurants in markets from Houston, Texas, to Las Vegas, Nevada.
You don’t even have to win the competition to get the necessary boost, just do well enough to stick around for several episodes. British Baking Show semi-finalist Flora Shedden opened Aran Bakery in Perthshire, Scotland, after her appearance on the popular show.
There are cooking competitions of all sorts, from the friendly competition at your state fair to the Pillsbury Bake Off and reality show competitions like Masterchef and the Great American Recipe. The first step to entering a food competition is finding the right one. From there, the process varies if you are entering an in-person or televised competition.
- Complete the contest application form (or submit a video, if requested).
- Submit your entry on the designated competition (or audition) day.
- Prepare yourself for feedback (both positive and negative).
Take it from this former Great American Baking Show candidate (who made it through multiple rounds of casting, but, alas, never the final cast)—the best way to stand out in a cooking competition is to cook what you know. If you’re waffling between entering your crowd-pleasing apple pie or “ambitious” matcha tea cream horns, go with the pie.
You can find in-person or online cooking competitions on sites like Cooking Contest Central. Nearly every state and county fair has a cooking competition (though most cash prizes are nominal, around $100). If you have your sights set on a televised competition, it’s best to set a Google alert for your desired show with the word “casting.” Many cooking competition shows also have a form on their website where you can register interest and get an email about upcoming casting sessions in your area.
Most of the strategies for starting a restaurant with no money involve starting a smaller footprint food business and leveraging restaurant industry experience. Though performing well in a high-profile cooking competition or running a successful crowdfunding campaign are also strategies for cash-strapped culinary visionaries.