Small restaurants give operators the opportunity to trim away excess and overhead while focusing on serving a great product. Chefs can flex their culinary creativity with fewer distractions and more freedom.
But the motivation doesn’t just come from the operator side; small restaurant business concepts answer consumer demand. How customers interact with restaurants has progressed. For example, the demand for delivery has led to the advent of app-based services such as Grubhub and Uber Eats. And while many people still go out to eat, new dining trends are evidence that they’re doing it differently.
Here is a look at nine smaller-sized restaurant concepts that require relatively low startup costs, with pros and cons of each. And, regardless of which type of restaurant concept you choose, be sure to consult this handy opening-a-restaurant checklist.
Food Truck or Trailer
Few food and beverage concepts are as fun and freewheeling as the food truck, or as appealing for an aspiring chef with a menu to share who isn’t quite ready to invest in a full-service restaurant — or has no desire to.
Pros: A food truck can produce a small, focused menu, for high efficiency. It can move from location to location, serving multiple neighborhoods and areas. Creative chefs can evolve the menu on an ongoing basis. Owners can capitalize on opportunities to serve food on-site at events.
Cons: Financing can be difficult to obtain. Regulations and ordinances may not be friendly to food trucks, depending on the city. Fans of the truck may have to figure out where the truck is doing business on a given day.
Kiosk in a Food Hall
A food hall brings together a number of small restaurant concepts under one roof, offering a variety of kiosk-style dining options. Local, artisanal menu concepts are the hallmark of the individual restaurants in food halls.
Pros: Food halls boast a communal atmosphere, fast service, and ease of dining for customers.
Cons: At least some in the industry say that food halls are no longer as trendy as they once were.
Small Bistro or Cafe
Think coffee-centric here. While some coffee businesses may follow other models in this list (drive-thru, grab-and-go, or kiosk), a small bistro or cafe is more of a sit-down restaurant with a limited menu that also offers customers the option to grab something to go.
Pros: Coffee remains popular and top-of-mind for American consumers, so demand stays strong.
Cons: May not be as quick and convenient for customers as some other small restaurant concepts, and the most successful small cafes or bistros are usually found in areas with heavy foot traffic.
Pop-Up Restaurant
A descendant of supper clubs, popularized during the 1930s, the pop-up restaurant can be a fun, exciting way for chefs to reach new demographics. A pop-up can also be a good jumping-off point for attracting interest from potential investors — and consumers — on the way to building a more substantial restaurant.
Pros: The limited menu of most pop-ups makes them efficient, and they are a great way to create excitement and market a chef or restaurant concept.
Cons: Whether it lasts a day or a week, guesting at an existing restaurant or setting up for a fundraiser, a pop-up is usually a one-time event — not necessarily a viable option for an entrepreneur looking for a longer-term investment (unless it is followed with a full restaurant opening).
Snack Bar
Of all the restaurant ideas on this list, a snack bar may the least restaurant-ey. A snack bar is a food counter that sells snacks, drinks, and other light menu items. Some may feature prepared foods made elsewhere and brought to sell for the day, while others may have a limited kitchen setup to make hamburgers, hot dogs, and similar items.
Pros: A snack bar is a great option as part of a larger operation — such as a poolside nosh spot at a hotel property.
Cons: Even in the realm of small restaurant ideas, most entrepreneurs have bigger aspirations than a snack bar.
Ghost Restaurant
With restaurant delivery rising in popularity and predicted to increase between 2018 and 2023 to three times the volume of dine-in sales, the ghost restaurant concept may be attractive. There is no dining room; all orders are delivered.
Pros: Costs are very low for physical aspects, needing only a commercial kitchen, and because a ghost kitchen needs only cooks and management. Some may use a shared kitchen.
Cons: Promotion and marketing can make or break a ghost restaurant — since there is no storefront.
Tiny Fine-Dining Restaurant
This kind of eatery isn’t as low-cost as the others on this list, but in the realm of fine dining, it’s a much lower investment, relatively speaking, due to the small footprint. Here are some examples of very, very small fine-dining restaurants.
Pros: Small footprint means much lower rent/overhead. It’s almost like a permanent pop-up.
Cons: Because the cuisine is typically higher-end than it may be at other types of small restaurants on this list, ingredients, decor, and talent may spike overhead costs.
Fast Food
Fast food needs no introduction. It is fast, efficient, and reliable. These restaurants do big business with drive-thru windows and simple interior appointments.
Pros: Very convenient for customers who do not even have to get out of the car like they would at a food truck or other restaurant, which is a unique draw for hurried commuters. And most fast-food restaurants are part of a franchise system, making operation streamlined, efficient, and profitable.
Cons: Fast-food restaurants offer a poor atmosphere for dining; it’s more about grabbing the food to go. Food is lower in quality, thus also giving a lesser experience. Moreover, the cost to open some of the most sought-after fast-food franchise brands can be upwards of $1 million.
Fast-Casual
Fast-casual is best described as a hybrid between fast-food and casual dining. The food and drink are typically of a higher quality than in fast-food. The ordering process is much like that of a fast-food restaurant, from a menu board at the counter, but fast-casual restaurants often do not feature a drive-thru window.
The decor and atmosphere inside are a bit more upscale than in fast-food, with comfortable seating and softer lighting.
Pros: The fast-casual sector has been on the rise for several years and continues to lead restaurant industry growth. Startup costs are relatively low and comparable to some fast-food brands. And, with most fast-casual franchise brands, franchise owners can count on guidance and support from the franchisor, both during startup and ongoing operations.
Technological evolution is enhancing business for fast-casual restaurant brands, such as Wayback Burgers, which has an app for customers and recently introduced a compact, electric delivery vehicle, cooking burgers made to order on-site with a mobile kitchen.
Cons: Not always quite as convenient for customers, due to lack of a drive-thru window, though customers usually prefer a higher quality product to the convenience of a drive-thru.
Wayback Burgers is a fast-growing, fast-casual brand with a small footprint and a big upside. The team behind the brand works diligently on finding innovative ways for franchisees to increase revenue while adding value to the customer experience.