No matter how creative, innovative, or simply good your idea for a restaurant is, you will need to have a business plan. Even if you have the money to get started on your own without the help of investors (lucky duck!), you should still always, and we do mean always have a business plan.
Seeing the cold hard numbers may seem like a bit of a downer to someone whose mind is filled with excitement, but the truth is everyone needs to take a step back and think rationally for a moment before making a decision as big as this. Our brains are designed to gloss over potentially uncomfortable details when we are excited about doing something, but that doesn’t mean the bills will pay themselves. Being prepared is always better than being unpleasantly surprised, and a good business plan will help you manage your expectations. Any experienced restaurateur will tell you the first year is the hardest, and you’re unlikely to turn a profit before year three (!) – the better prepared you are to deal with the challenges you’ll most definitely face, the better your chances of surviving and blooming.
So since you have to do it anyway, let’s take a look at the process of creating a restaurant business proposal or plan so you can get an idea of what needs to be in it. Turns out there are a few standard elements that are a must, and a couple that are optional, and we’re going to get into each one here.
Model restaurant business plan 101: the executive summary
The executive summary is the introduction of a restaurant business plan – sample introductions are a dime a dozen on the internet, but the general point of the executive summary is to introduce the key elements of your restaurant business proposal that will be discussed in detail later on. It is the first thing potential investors will likely ever read about your restaurant, so it should be a concise and well-written summary of your concept and mission.
Company overview
All good business plans for eateries need a detailed company overview. This is where things start getting a little more specific – what your restaurant’s image and identity are planned to be, and what you have to do to make your vision a reality. This includes of course menu items – you will need to prepare an entire sample menu, in fact – but also aspects such as how you’d like to decorate your interior, from the walls to the plates and cutlery. This part of your restaurant business plan is for letting potential investors know what the atmosphere in your establishment is going to be, and what steps you need to take to make it so. Feel free to go into some detail, really sell it!
Industry analysis: another model restaurant business plan must
Even a simple business plan for a small restaurant needs an industry analysis section. This section is actually typically made up of several parts and includes information on the target customer group, location and local competition.
This part of your restaurant business plan is an overview of who you will likely be selling to in the area you’ve chosen to open up in, and what their needs and financial capabilities are. Remember, local customers are the lifeblood of most restaurants, so looking to save on rent by opening up in a run-down part of town is not necessarily a good idea. To get this part of your restaurant business plan right, you need to figure out what kind of people live in that area, and whether they are likely to be interested in the kind of dishes you want to serve. Are there a lot of senior citizens? Young families with small children and no time to cook proper meals? Broke students whose favorite dish is dollar store ramen? Trendy, health-conscious thirty-somethings who enjoy the finer things in life? All of this information is sure to be invaluable, so research the area’s demographics and other statistics and include relevant information in your industry analysis.
Next up, competition. Are there already 3 other Indian restaurants virtually indistinguishable from yours on the same block? If so, do you have an idea for how to stand out, or should you consider a different location? No matter how tasty your dishes are, stiff competition, especially at the beginning, could be risky.
Marketing plan: no restaurant business plan should exist without it
No matter how good your food is, nobody will eat it if they don’t know it exists. It’s okay to toot your own horn sometimes, and at the beginning, it could be a matter of life and death for your restaurant!
That brings us to the next question, of how you plan to market your business, how much money you plan to invest in your marketing efforts every month, and whether you will be doing the lion’s share of the work yourself or delegating it to an employee. Your marketing plan should also depend on the demographics of your target customer group – the younger they are, the more you should invest in social media marketing. Older people, on the other hand, might react better to TV or radio advertisements. Either way, this is yet another reason why industry analysis is so important!
Operating plan
Another thing even a simple business plan cannot be without is an operating plan full of the nitty gritty details of how your business will run on an everyday basis.
How many employees will you need to fill all of the positions that need to be filled? How much are you able and willing to pay? Will you be working there yourself? If so, what positions will you be filling? Management? Recruitment? Doing the actual cooking? What equipment will you need to cook the dished you’ve envisioned on your menu? Who will deal with disgruntled customers, and what will your policy for that be? How will you inspire both employee and customer loyalty? Will you be delivering, or just offering takeaway options? And if you will be delivering, will you being doing it yourself or outsourcing deliveries to Uber Eats and the like? How much will that take off your profits? Speaking of money, what kinds of payment options do you want to offer your customers? Keep in mind it may take weeks to get a credit card terminal, so the sooner you order, the better. Where will you be ordering your supplies? Do you plan on selling alcohol, and if so, what kind? Getting a wine and beer license is relatively easy and affordable, but hard liquor licenses can cost a small fortune!
All of these things and more need to be included and calculated into the amount that you will need to obtain from investors.
Financial analysis
No business plan for an eatery can exist without some solid financial analysis. Now that we’ve thought about all of the different things you’ll need to buy and otherwise pay, time to add all that up! Remember to calculate salaries, rent and other bills for the first year or so into this as well, because it might take a while to start turning a real profit.
Long story short, potential investors will also want to receive a projected Profit and Loss Statement (P&L) and a Break Even Analysis, and an Expected Cash Flow analysis.
Charity involvement – the desirable but optional part of your restaurant business plan
A charity involvement section is an optional but supremely nice touch to any business plan for starting a restaurant. Any kind of charity work is good for obvious reasons, but for businesses they carry the added benefit of being great publicity – the ultimate win-win. Charity work could be anything from sponsoring the local animal shelter to donating leftovers to a local soup kitchen. Whatever cause is important to you, helping out will benefit everyone involved. Just make sure the cause you do choose is not just a cynical investment in your image,because people tend to be good at sniffing things like that out, and you may do your brand more harm than good.
Writing a business plan for your restaurant is a time-consuming effort, but it will be well worth your time in the long term. Realistic expectations based on hard data are the best foundation to build your wonderful dream of owning a restaurant on. So what are you waiting for? Time to get started!
