How to write a Restaurant Business Plan: An Insider’s Step-by-Step Guide
Many entrepreneurs do not take the time to put together a well thought out restaurant business plan. While the entire process of writing a restaurant business plan may be time-consuming and frustrating, it yields excellent results once you complete the business plan. Why? Because no investors will fund your restaurant unless you have a great restaurant business plan.
Your restaurant business plan will be a clear roadmap of what you intend doing, how you are planning to run the restaurant, and how the numbers are projected to be.
Putting little time and effort to write a proper restaurant business plan is very well worth the rewards and results in the long run.
The following are the broad sections of a good restaurant business plan:
1. Executive Summary
The first section of a restaurant business plan is the executive summary. Write your executive summary after you complete the whole plan. It is essentially a high-level summary of the entire business plan.
Investors are often bombarded with thousands of business plans every year. A well written executive summary can make it stand out in the crowd, attracting the attention of the investors.
Executive summary of a restaurant business plan usually covers:
- Concept/theme of the restaurant
- Market potential
- Business and marketing strategies
- Potential costs and return on investments
2. Company Description
In this part of your restaurant business plan, you introduce the reader to your company, how it is structured, the location, and the mission and vision statements. You should also include the ownership information, the cap table, and a brief description of their experience.
In this section, you should also discuss the restaurant’s short-term and long-term goals and how they are in sync with the local trends in the food industry.
3. Market Research
In this section of the business plan, start with an analysis of the industry. Typically, the market research section of the restaurant business plan should answer the following questions:
a. Who is your ideal customer
b. What is your target market?
c. What demographics will you cater to?
d. What makes your restaurant different from other similar players in the region.
Apart from the above, you should also cover the market size, the regional and local trends in the food industry, industry cycle analysis (you could use Porter’s Five Forces Analysis)
4. Competition Analysis
You should also cover the competition in the area. It is easy to assume that everyone will visit your restaurant. However, you should take a step back and analyze the other players in the region, their strengths, their weaknesses, and how you will stand out from the competition.
5. Marketing Plan
One of the key aspects that your investors would want to know is how you plan to market your restaurant. What online and offline marketing techniques will you use? How do you plan to secure your target market?
A critical part of your restaurant business plan is the menu. Without the menu, you have nothing to serve. Although you might not have the final version of the menu, for your restaurant business plan, you should at least have a mock-up. Ensure that you choose a good design to go in line with the theme of the business plan and your logo.
Ensure that you have got your pricing strategy right. The prices that you list on the menu should be based on how you position your restaurant. The pricing will give investors a better understanding of your target price point.
6. Operating Plan
This section of your restaurant business plan will discuss the following items:
a. Staffing: The investors do not expect you to have the entire team joining on the first day itself. You should alt least have a couple of your employees on board. Besides, you should also have a detailed staffing plan for the next five years (including a plan for the first twelve months)
b. Restaurant Design
The design is one of the most critical aspects of your restaurant business plan. It will be useful to have a professional mock-up of your restaurant so that readers get a perspective of the entire restaurant. You should include everything from aesthetics to kitchen equipment
c. External Help and Advisors
To make your dream a reality, you are probably going to need much professional help. In your restaurant business plan, ensure that you list any external advisors and companies that are going to help you build your dream. This section should include everything from accounts and lawyers to suppliers.
7. Financial Plan
The most important part of your restaurant business plan is the financials section, and as a result, you should make sure to hire professional help. The financial plan should contain the following documents:
a. Sources and Uses of Funds
b. Projected Income Statements
c. Projected Working Capital Statements
d. Projected Cash Flows
e. Projected Balance Sheets
It would be best if you also showed the ratio analysis based on competitor benchmarking, along with the discussion of key assumptions behind the projections.
In addition to this, it would also help if you can do rough food cost calculations for various menu items.