Do you have a truly original food concept that will blow everyone’s minds? Or maybe you have an idea on how to put a newfangled twist on some old classics? Or perhaps you’ve just decided to be the change you want to see in the world and open up your own mouth wateringly good burger place?
Whatever your motivation, you should have a business plan before taking any other steps towards making your dream a reality. This is true regardless of whether you plan to cover the cost of opening your restaurant yourself or with the help of investors; whether you will be writing a food court business plan, a diner business plan, a food court business plan, a fine dining business plan, or anything in between. A good business plan will help you keep a down-to-earth approach to what you plan to do, manage costs and, perhaps more importantly, manage your expectations. Taking the plunge into the world of business without first having at least a general idea of what awaits is a recipe for failure, or even full-scale financial disaster. And besides, isn’t it just better to know more or less where you’re going?
With that in mind, let’s take a look at how to construct a restaurant business plan so you can get the paperwork out of the way and get down to what you really want to be doing, cooking!
So, what should be in a restaurant business plan? Like every business plan, yours must include a few standard elements to be taken into serious consideration. Take a look at this list to get an idea of what those are.
Executive summary: the most important part of writing your restaurant business plan
This is the first part of your restaurant business plan, and, as such, it serves as an introduction to your entire idea and the key elements that will be discussed later on. It will be the first thing any potential investor reads about your restaurant, so make sure your executive summary is well-written, eloquent and encourages the reader to keep on reading. Without getting into too many details (there will be time for that later on!), give potential investors an idea of your concept and mission, and leave the rest to be continued!
This is the part of your restaurant business plan where you start getting into the specifics. A good company overview section is an outline of what you want your restaurant to be –– its identity and image, who its main target group will be and how you plan to appeal to them.
Get as precise as you possibly can, because only then will you be able to honestly and correctly assess how much all of this is going to cost. Describe the interior design, feel and style of your restaurant, the furniture you want, the plateware, the silverware, the decor. Outline what you would like the guest experience to be like –– do you want your guests to enjoy a cozy, homey atmosphere, or do you want them feeling pampered like rich celebrities?
You should also provide a sample menu and drinks menu, as the approximate costs of dining at your restaurant will be crucial to figuring out how much money you will be able to earn. All of this talk about financial feasibility might seem a far cry from your romantic daydreams about plating your culinary masterpieces, but at the end of the day, a restaurant is a business, and should be treated like one if it is to survive.
Then there’s the kitchen itself, arguably the very most important part of any restaurant. What kind of appliances will you be using –– will your chef need a kitchen robot, a deep-fat fryer, a cold room to store perishables? How many people will be preparing the meals at the same time, and how much room will they need to cooperate comfortably? What kinds of pots and pans do you plan to buy, and how many? What about utensils? Every single one of these elements needs to be thought out and calculated into your plan.
Yet another all-important section of the business plan, the industry analysis section is made up of several smaller parts, including information on the target market, location, and competition analysis.
This part of your business plan should open with a general description of the current conditions on the market in the area you plan to open up in. Many different aspects of the surrounding area can be relevant here, including the development of the local infrastructure –– office buildings chock full of hungry employees would make for very welcoming conditions for a restaurant offering a lunch menu, for example. Areas adjacent to universities are likely bursting with broke students missing their mother’s cooking while they try to survive on dollar store ramen –– here, an unpretentious establishment serving classics like mac’n’cheese or apple pie could turn out to be a huge hit. Long story short, figure out who lives and works in the area you want to open your restaurant in, and whether they are really the appropriate target group. Local customers are, after all, the lifeblood of most restaurants.
Competition matters too, and it matters a lot. No matter how good your food is, don’t expect to make any sort of serious profit selling more or less the same dishes as six other restaurants in a half-mile radius. If that’s the case, you probably need to either find a way to stand out, or pick another location, because no investor is going to want to put their money in a business with little to no potential for a competitive edge. And in all honesty, you shouldn’t invest all your time and money in something like that, either.
Next up, your marketing strategy. What is your ads budget? What marketing tactics do you plan to use? Social media marketing or something more traditional, like TV/radio ads or flyers? Does the age group you want to target actually watch TV or listen to the radio? If you’re going with social media marketing, do you plan to hire a social media marketing manager or do all the work all by yourself, and do you have the skills necessary to do it properly? How often do you plan to post? Figuring out how to build a digital community around your brand will be key to the success of your marketing efforts.
Aside from a basic outline of the direction your marketing will go in, brainstorm with friends or future coworkers to come up with any other ideas for how to market your new business. Will you offer loyalty programs? Research suggests those can increase spending by almost 40%! Or perhaps you plan to organize social media competitions to gain more exposure? All of these questions should be answered in this section.
This is where you get into the details of your team’s everyday work.
Let’s start with your restaurant’s employees. Firstly, how many employees will you really need, and how much will you be able or willing to pay them for their work? Will you be working at the restaurant yourself, and if so, what will your position be? What strategies will you employ to keep turnover down and morale up? How will you go about the recruitment process and perform the necessary background checks? Will you manage the entire hiring process yourself or will one or more of your employees be helping you? What values will matter most to your restaurant, and how will you instill them in your employees –– by leading by example, or offering them material rewards for making your customers feel welcome and cared for?
On the topic of customers, you should also go into some detail on how you plan to deal with any complaints or other issues. What are some customer behaviors you will absolutely not expect your staff to tolerate? And should be done in the event a customer gets too belligerent? How do you plan to offer your customers the kind of positive experience that will keep them coming back?
Next up, takeout and delivery. Do you plan to offer delivery, and if so, will you be using your own car or the services of companies like UberEats? Do you already have a car suited to local deliveries, and if not, how much will it cost to purchase one? How much will the maintenance costs be per year?
Then there are suppliers –– where do you plan to source your products from and why? Will the products be delivered or will you pick them up personally?
And last but not least, payments. What payment methods will you accept, and what devices do you need to purchase in order to make those methods possible? Getting a credit card terminal (POS) can take weeks, so it may be worth it to order one in advance so as to not miss out on any sales opportunities right from the start.
With all of the things listed above in mind, this section is where you start crunching numbers. Like it or not, you and your potential investors need to know how much you would actually need to sell and how many customers you would need to have to cover all of your costs AND turn a reasonable profit. To that end, potential investors will also want to receive a projected Profit and Loss Statement (P&L) and a Break Even Analysis, that is, a breakdown of how much money you would need to make to, well, break even. A model restaurant business plan will also include an Expected Cash Flow analysis.
The good news is that by the time you reach this point in your business plan, you have probably already put so much thought into your costs that all that’s really left here is to add things up.
One last thing that will need work in this section is an investment plan. An investment plan details how much you are hoping to receive from investors and how you would use that sum of money over the course of your first year on the market. Long story short, this would include employee, equipment and marketing costs, as well as rent, gas, and other costs that have already been discussed above. Most importantly, it would also get into some detail on how and when you will be able to start paying them back. It’s called an investment for a reason!
Charity involvement: the little secret to writing a good restaurant business plan
Though perhaps not an absolute must in every business plan, charitable involvement in local causes can be a good way to make a great first impression. Everybody in the neighborhood likes a team player, so it’s a good idea to ask yourself how you plan to contribute to your local area, and what benefits you could reap from doing so. According to research, 72% of consumers would recommend a company that “gives back” over one that doesn’t, and that should give every new restaurant owner something to think about. So, what causes are important to you? Is there an organization in your area that could really use a little bit of extra support? How would you go about partnering with them, and how could you get the word out without looking cynical and calculated? It is also worth checking how charitable activities could help ease your tax burden –– every cent counts when you’re trying to get a new business off the ground! Writing a business plan for your restaurant is a big task, and one that is sure to take time and effort. It might also seem to take a liiittle bit of the wind out of your sails –– looking at cold hard data and accepting the financial reality of what you’re about to do is a little sobering. The truth is, however, that the more detailed your business plan and the more realistic your expectations, the bigger your chances of making it through that first, toughest year. And then you will have a whole lot more resources and freedom to make even your wilder dreams come true.