4 Steps To Write A Successful Restaurant Business Plan [+ Free Template]
You can take a road trip without a map, but you might not end up where you’d hoped.
In the same way, you don’t start a business playing it by ear as you go along. The restaurant industry, in particular, needs a good business plan. Unpredictable events, labor markets, and consumer preferences will shipwreck any restaurant that hasn’t taken the time to understand their own market.
Consider how much has changed since the pandemic started. 86% of restaurants are reporting lower profits than before the pandemic. 89% of full-service restaurants are struggling to find employees. 25% more people turned to food delivery in 2020 than in previous years. Running a restaurant has always been a challenge, more so than ever before.
New restaurant owners, especially, should have a restaurant business plan in place before they get started today, not just to secure financing, but to help them steer a clear path as they grow.
Without a business plan, you’ll never know when you reach milestones. You won’t know who to market to, and how. You won’t understand the competition. You won’t capitalize on local opportunities.
Writing a restaurant business plan doesn’t need to be overly complicated. It starts with a few key steps to gather the information that you’ll plug into a final report.
#1: Know your restaurant
You might have a great idea of a restaurant, but do you actually know your own idea well enough to describe it?
What will your restaurant look like? What will your menu be? What’s the ambiance and brand you’re going for? What kind of customer experience do you want? What restaurant scheduling software will you use with your employees? What point of sale system will you use? What kind of kitchen equipment will you need? What will your customer service policies be? Who are your suppliers?
In order to understand and describe your company, you have to be ready with detailed answers as well as understand the overall concept. Can you answer any question from an investor, but also give an elevator speech about your restaurant?
You should be familiar enough that you could succinctly describe your restaurant to investors if needed, paring it down to the name, a phrase that sums it up while setting it apart from the competition, and/or its location. That description should feed interest that instigates more detailed questions.
#2: Know your ideal employee
The people you hire will be the face of the restaurant. All the branding in the world won’t matter if your employees don’t sync with the target market you’re trying to reach.
Who you hire is part of how your restaurant is understood by your customer base.
What kind of experience should your team have? What kind of training and knowledge will they need to reflect your brand? What kind of hours? Shifts? What will the management structure be?
If you can define the structure of your team, what skills you want members of your team to have, and the culture you want to cultivate in your restaurant, you’ll know better who to hire and how to train.
Who you hire can change the customer experience, and that is everything.
#3: Analyze your market
Your restaurant won’t exist in a vacuum, but if you don’t analyze your market, you’re behaving as if it does.
Your target market is the kind of customer you’ll attract. Your menu, your location, your ambiance, your marketing, your price point—all of this is about who is attracted to your restaurant. If you know your customers, you’ll know how to keep reaching them through all of these things. You should be able to describe the behavior and demographics of your target market.
It’s more than just knowing who your target market is, but also your place in the market. That means including your competition and the impact it could have on your restaurant, as well as local economic trends.
It also means understanding the optimal location for your restaurant.
Different locations, even in the same city, don’t have the same infrastructure, public transportation, parking, client draw, or nearby events. Those all have an effect on your restaurant. Even if you don’t know your exact location, you should know a general area that you can provide analysis on.
Is your menu unique? Do your prices reflect local standards? Is someone else already doing what you’re trying to do? What sets you apart from other restaurants with the same target market?
#4: Gather professional financial analysis
Your restaurant business plan benefits you, but it’s also how you attract investors and financing. They are going to be concerned about the numbers.
Hire a professional accountant. Work with small business organizations who have experience helping new businesses get started in your area. You’ll find that in order to get detailed financial analysis, you’ll be forced to find answers you may have neglected to get in other areas.
How many customers will your restaurant hold? What would the average meal cost? What will be on your menu and what will the food and supply costs be to support that? What about rent, professional cleaning services, taxes, and so on? What other professional costs will you incur (e.g. attorneys, contractors, etc.)?
Look for someone experienced in building a business plan to help you get the numbers, ideally providing you with first year projections, cash flow estimates, a profit and loss statement, and what it will take for you to break even each month.
Assemble your restaurant business plan
At this point, you’re ready to assemble the final plan.
For presentation, your plan should be sandwiched in your brand. Literally.
The cover should use your logo and brand colors. The overall design of your business plan should fit the look and feel of your restaurant, being both professional and thoughtful. Your potential investors are “experiencing” your restaurant first, through your business plan.
From there, using what you’ve gathered, you’ll write an executive summary.
It’s a kind of overview that functions like the description on a book jacket, presenting a problem that exists and how your restaurant is the solution. It’s meant to draw in the reader or, in your case, investors. It’ll include your mission statement, and a summary of your restaurant’s concept as well as the projected financial costs and ROI.
Once you’ve summarized your restaurant, you’ll follow a pattern of brief overviews that lead to more details.
- Executive Summary
- Restaurant Description
- Market Analysis
- Financial Plan
To make this easier to put into place, we’ve created a template for you to use. The above steps have helped you gather all the info you need to plug into the template. Now it’s time to put it all together.
Free restaurant business plan template
- Define the problem your restaurant is solving. Example: Minneapolis consumers love ethnic food, and there are many options, but six months of cold makes it easier to stay home.
- Offer the solution, emphasizing how it’s unique. Example: Built on the idea that eating out should be as easy as eating in, we’ve built subscription delivery into our business, as well as providing a physical location that has an enclosed walkway from the parking garage.
- Provide market analysis. Include details about how your menu, portion sizes, and overall experience clicks with your target market. You may include broad financial summaries.
- Contrast the competition. Acknowledge the competition, but show how your restaurant will stand out.
- Describe the experience of your restaurant.
- Define the vision and statement of purpose.
- Give an overview of the menu. If you don’t have a detailed section later, you may want more detail here.
- Provide information on things like catering or events your restaurant will engage in.
- Describe an ideal customer experience.
- Describe your ideal staff.
- Describe your restaurant operation, including inventory controls, hours of operation, management principles, software, training programs, and so on. Your investor will see whether you’ve carefully thought of everything in this section.
- In detail, describe your target market. Include demographics, and list the habits and preferences your target market has. These should mesh with what your restaurant has to offer.
- Provide information on location and competition, and how this affects your restaurant.
- Outline your marketing strategy and branding.
- Define revenue requirements.
- Provide a summary of financial highlights that gives an overview of several years of operation. This is followed by a detailed estimate of revenue and a potential balance sheet based on those revenues. You will also want to include an estimated income statement and a cash flow statement.
Work through your restaurant plans enough that you are confident in your idea. Have people ask you questions about it so you thoroughly vet your own ideas and adjust as needed. And then, begin working with professionals who have experience in pulling together financial and market analysis, using every available resource and small business organization in your area.
A great restaurant business plan isn’t just for others. It gives you the confidence to take the leap towards owning your own business.