We have all heard how a restaurant business plan is very important for an effective marketing strategy. However, in many cases, this document is still so often underestimated.
As Small Business Trends reveals, a restaurant business plan doubles your chances for success. Sounds pretty impressive, does it not?
Now you are probably more interested in learning how to actually create a valuable restaurant business plan, bear in mind that it’s a complex document which demands a lot of work and effort. Let’s start with answering the six main questions which you can get familiar with below.
1. Why should you write a restaurant business plan?
There are many reasons why entrepreneurs do their best to prepare this document. Among others, you will need a business plan in order to:
- gather investment capital,
- get a loan,
- find a property for rent,
- get in touch with specialists which will help you with restaurant management,
- estimate how much money you will have to invest and when the business will start being profitable,
- see whether your overall idea for a new food business actually has a chance of turning into a real success.
2. Where to start a restaurant business plan?
The business plan is especially helpful for entrepreneurs who want to open their first restaurant. Sometimes, the vision in our heads may seem flawless. However, after putting the idea down on paper, we are often able to notice some new important aspects which we missed before.
Start by describing your vision in a clear, understandable way. It is supposed to be appealing to the bank, investors, managers, and also your friends or family. Of course, you could hire some restaurant marketing specialists to prepare the document for you but keep in mind that no one knows your idea as well as you do.
3. When is the right time to prepare business plan for a restaurant?
Write this document after you come up with the idea but before you start realizing it. It will let you know what the odds of success really are.
Do not give up too easily when something doesn’t go as you would like it – think outside the box instead. Look for unconventional solutions and there will be a good chance that you find them.
4. What should you pay attention to?
What is the most important thing when it comes to creating a business plan? Get familiar with the KISS (Keep It Simple Stupid) principle. According to this rule, most systems work best when they are simple rather than too complicated.
Make sure that your document is well-organized. To achieve this, remember to include the table of contents and use paragraphs.
How often should you update and re-read your restaurant business plan?
Your restaurant marketing strategy should be updated after 3, 6, and then 12 months after writing the first draft. Doing this will give you a good opportunity to verify whether previous ideas have worked and include some fresh solutions.
Successful restaurant business plan
The main core of a business plan should consist of following elements:
- Summary (description of your restaurant business idea).
- Market and competition analysis.
- Operating and investment costs.
- Financial forecast.
- Sensitivity analysis.
- SWOT analysis.
- Planned employment description (restaurant management specialists, cooks, waiters, etc.).
- Restaurant marketing plan (include things like a professional website or online food ordering system).
- Further development strategy.
3 in 4 people believe that going to a restaurant with friends or family is a better use of their time than cleaning or cooking at home (source). Therefore, a business in the restaurant industry definitely has a high chances of success. However, you cannot start it without preparing a good business plan for a restaurant at first.
Let’s take a look at 5 important elements of restaurant business plan now.
1. Summary (description of your restaurant business idea)
The first 1-4 pages of every restaurant marketing plan should include a well-planned introduction. It should be a summary of the whole business (main idea, strengths, weaknesses, costs, expected revenue, competition analysis, target group, etc.).
Details are not too important here. Just put key information which is crucial for the success of your business.
As you can see, this part of the document consists of many different questions. This is the reason why you should write it at the very end. Some people will read only this part of the document so, it should be very clear and appealing.
2. Market and competition analysis
At this point, you need to take a look at a bigger picture – the entire business environment which you are about to enter. In order to properly understand the market, focus on three main things:
Find your target group and create a customer profile
Even the best restaurant marketing idea will not work without customers. Use available statistics and reports to learn as much as you can about the demographic structure, preferences, and habits of people in the local community. For example, a city with a college would be the perfect place for a restaurant which targets young people.
Analyze where your potential customers live, work, and study. Next, choose the location which will be the most convenient for most of them.
Opening a pizzeria next to an already existing Italian restaurant could clearly be a bad idea. Make sure that your business has something special which will enable you to overcome the competition.
3. Operating and investment costs
Investment costs include, among others: kitchen equipment, staff clothing, elements of restaurant marketing – logo, menu, website, music and liquor license. Operating expenses: the team of workers, products needed for meals preparation.
4. Financial forecast
If you hope to receive a loan or some grants, a restaurant business plan will probably have a deceive role. You will have to analyze the chances of success and present them in a convincing way. Moreover, remember to also figure out what you will do if things don’t go as planned in the future.
It is also important to regularly check whether your financial calculations check out when the business already functions.
5. Sensitivity analysis
Sensitivity analysis may help you establish what will happen to your restaurant in case of a negative scenario – for instance, if the whole restaurant management team quits or sales drop by 20 percent.
Thanks to this, you will be better prepared if a crisis appears. Your team will be able to recover more quickly and without unnecessary stress.
Your new business plan for restaurant
You probably noticed that this is the trend nowadays: to minimize everything (and this includes restaurant marketing, too). The same goes for creating a business plan. Nobody wants to have to go through something that (by its size) could easily be interpreted as a book. Make it short, lean, canvas style.
What’s lean canvas?
Lean canvas is a kind of table that substitutes a regular business plan. The idea is based on the Business Canvas Model and is dedicated to startup creators – so you too. It’s simplicity will help you point out what the most important elements are and allow you to focus on developing every detailed matter separately, for example, your restaurant marketing strategy and restaurant management plan.
Why not a regular business plan?
Once you start writing it the old-fashioned way, you will find out it’s a never ending story. You will have to jot down every little detail of your restaurant marketing strategy, put in all the formalities – simply everything. By choosing lean canvas, you’re making this all easier not only for yourself, but also for your partners.
What are the advantages?
Did we already mention the simplicity? Sure we did, because it’s amazing! You only put what’s most important on your lean canvas, but it’s not like you leave out all the rest – you can always discuss it with whomever you want.
What’s the difference?
Well, length, obviously. And the amount of details. Clarity is also a plus of lean canvas. All these features make it less confusing than a regular business plan might be. It’s hard to comprehend all the specifics written down in a traditional business plan – a lean canvas is much less overwhelming. If simplifying your work is your future restaurant marketing strategy, you should start implementing it in your business plan.
Lean canvas elements
There are some integral elements of lean canvas, in the same way as there are some parts of the restaurant marketing strategy that you cannot leave out. The main elements of lean canvas are the following: problem, customer segments, unique value proposition, solution, channels, revenue streams, cost structure, key metrics, and unfair advantage.
How to create one of your own
Some of the lean canvas elements are easy to fill in, some are head scratchers. Think the whole thing through and make some drafts before actually creating one on your own. Ponder each element separately, get to know more if you feel like you have to. Find some examples online, maybe one of them will inspire you.
Don’t be afraid to abandon old-fashioned schemes
Some people might not be convinced by lean canvas. Isn’t it just too simple? And why change the thing that served us so well for so many years? Well, the best is always the enemy of the good. If we were all afraid of making changes, we would still be using pigeons instead of Messenger. Dream big and use all the tools that you can to help you, i.e. lean canvas and an online food ordering system, just like UpMenu.
If you are wondering how to start a business plan for a restaurant, you should prepare a plan that features all key elements:
Summary where you describe the idea for restaurant establishment.
Market and competition analysis to determine which locations are most suitable for your business, how the competition will affect you, and what customers group target.
Operating and investment costs estimation will help you predict expenses and prepare accordingly to them.
The financial forecast will be a significant factor if you apply for a loan or grant from a bank. Furthermore, check frequently whether your calculations are performing properly.
Sensitivity analysis helps to establish how your restaurant will perform under negative circumstances, and prepare for such incidents.
SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats of your business concept. Determining these aspects will help with employing your assets to full potential and diminish shortcomings.
Planned employment description assist with forecasting employee wages costs and organize recruitment process.
A restaurant marketing plan is a significant element that will help you determine operating costs and forecast how many customers you will have to accommodate.
Further development strategy helps to plan future endeavors and when to implement them.
When preparing a business plan for a new restaurant establishment, it is essential to list your ideas and goals clearly and appealingly.
Although you have a clear vision of your business concept, potential investors should have a comparable image. Present your ideas in clear points that list all advantages of your venture. Don’t hesitate to point out potential risks, the well-thought plan looks more appealing than a one-sided perspective.
According to Original Review, Americans pay more and more for their food experiences at many different restaurants. They currently spend almost 50 percent of their total food expenses on eating out (compared to just 25 percent in 1955).
Do you want to offer hungry customers a brand new restaurant to enjoy? Go for it – just remember to start with creating a professional restaurant marketing strategy.
40 percent of survey responders claim that visiting a restaurant is an important part of their day (source). Offer them a fabulous food experience and they will likely choose your place again for dinner.
Remember to have everything well-planned before you engage in the new project. Everything starts with just an idea; however, this idea will not bring you any benefits if you don’t work hard on putting it into a clear and readable format.