How to Open Your Own Nonprofit Restaurant

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Your volunteers will become the heart and soul of your nonprofit restaurant.
Your volunteers will become the heart and soul of your nonprofit restaurant. (Image: Brand X Pictures/Brand X Pictures/Getty Images)

It may take a village to raise a child, but if you’re getting ready to open a nonprofit restaurant, you’ll need more than a village of volunteers to help keep it running. The idea isn’t new, and like retail white elephant shops sponsored by charities, an ongoing enterprise that fills coffers is a great way to keep a solid revenue stream flowing into the organization. That stated, if the restaurant is a new start-up and it's not an extension of an existing charity, the first thing you must do is to establish yourself as a 501(c) 3 corporation.

Check with your charity’s attorney and accountant to make certain no bylaw or charter language prevents your nonprofit from venturing into the restaurant business. Ask for tips on approaching this project from your advisers so you short-circuit legal and financial dilemmas before you launch the project. Importantly, ask these folks to help you set up a system that differentiates the nonprofit's funds from those of the proposed restaurant so the IRS doesn’t come knocking on your kitchen door down the road.

Commission a separate board of directors to administer the proposed restaurant. It's okay to allow some members to serve on both, but since the restaurant board is responsible for shepherding the project from start to finish, it's wise to have a few restaurant-only members. Once impaneled, give board members a list of steps that must be taken to get the nonprofit restaurant off the ground, including appointing a staff liaison to act as an intermediary between the charity and the restaurant.

Find the right retail location. If there’s already a charity in place and the restaurant will be run as a physical auxiliary to those offices, you may already have the ideal venue in mind. Alternately, find the best location for your restaurant based on traffic patterns and your existing budget. A commercial realtor can help you winnow down options. Location is critically important, so get input from the board, staff, donors and patrons -- you never know who might be in a position to help you negotiate a lease or equip the facility. If you can assume the lease of an existing eatery, you’ll save a huge amount of time and effort.

Acquire licenses and permits you’ll need to operate your nonprofit restaurant as soon as you’ve nailed a location and signed a lease. While you’re waiting for this paperwork to be processed, it’s time to call in favors from everyone on your donor rolls: whether you need nothing more than some volunteers to spruce up, paint and clean the facility you’ve acquired or you require an army of volunteer carpenters, electricians and plumbers, keep your expenses to a minimum by relying upon the good will of people who support your efforts.

Create a menu, draft operational policies, contract with food purveyors and complete the cosmetics your nonprofit restaurant needs to ready it for your grand opening. Set up a cash register system that’s computerized so you can track daily sales figures and keep your accounting records in a central place. You’ll need a system that tracks supplies and provisions so you don’t run out of items on your menu, and a volunteer force that’s big enough to make a difference in the lives of those who benefit from this adventure.

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