When it comes to starting a restaurant business, there are a lot of things to consider, from equipment to employees to marketing. But one of the most essential steps is to determine your NAICS code. The North American Industry Classification System (NAICS) is a standard used by the United States government to classify businesses based on their activities. Here’s what you need to know about the NAICS code for restaurants.
First, it’s important to understand how the NAICS system works. Each business is assigned a six-digit code based on the primary activity of the business. For example, a restaurant may be assigned the code 722511, which is for “Full-Service Restaurants”. This code is used by the government for statistical purposes, such as compiling data on employment and revenue for the restaurant industry.
So why is it important to have the correct NAICS code for your restaurant? For one, it can affect your eligibility for certain government programs and incentives. If your restaurant is classified as a small business under the NAICS code, you may be eligible for loans or grants that are reserved for small businesses. Additionally, having the correct code can help you benchmark your business against industry averages and identify areas where you may be lagging behind the competition.
To determine the correct NAICS code for your restaurant, you’ll need to consider the primary activities of your business. For example, if you have a full-service restaurant that also offers catering services, you may need to choose between several different NAICS codes, such as 722511 for full-service restaurants or 722320 for catering services.
It’s also important to note that the NAICS code for your restaurant may change over time. For example, if your restaurant expands into new areas such as food manufacturing or wholesale distribution, you may need to change your NAICS code to reflect these new activities.
In conclusion, choosing the correct NAICS code for your restaurant is an essential step in starting and running a successful business. Be sure to consider the primary activities of your restaurant and consult with industry benchmarks to ensure you have the correct code. By doing so, you’ll be able to benchmark your business against industry averages, access government programs and incentives, and position your restaurant for long-term success in a highly competitive industry.