A restaurant's success heavily relies on having a well-crafted business plan. From concept to investment to the restaurant opening, your business plan is a compass guiding you through uncharted territories and the map you can refer to constantly to keep you focused.
Without a restaurant business plan, securing financial support from investors or banks can be a difficult task. In this guide, we’ll take you through seven essential sections that your restaurant business plan should cover.
1. Executive Summary
At the forefront of your restaurant business plan, the executive summary takes center stage, captivating readers from the start. It's akin to a tantalising trailer, offering a sneak peek into the feast of ideas that will unfold.
This paragraph is a summary of the restaurant — where you sell your restaurant’s unique offerings, how it’s bridging your restaurant with a community’s wants or needs and the reasons for its success.
If you’re planning to use your business plan to seek investments, it should also be crafted to encompass not only your mission and concept but also a preview of potential growth and anticipated expenditures1.
Your executive summary should include the following financial information and high-level growth plans2:
- Mission statement: A concise declaration of your restaurant’s purpose and values.
- Proposed concept: The core idea and theme behind your restaurant.
- Execution: The practical implementation of plans and strategies.
- Potential costs: The estimated expenses throughout a project's lifecycle.
- Anticipated ROI: The expected profitability from your restaurant.
Think of your summary as your opportunity to captivate your reader. Numerous investors may form a swift judgment solely from the executive summary. Thus, if this is their sole point of engagement, ensure each word holds significant impact.
2. Business Overview
Let’s now dive into the core of your restaurant’s blueprint — your business overview. In this section, you will learn how to craft the details and concepts of your restaurant.
A. Details of the business
In your business overview, it should unveil the essential framework of your business such as the ownership structure, location, and type of restaurant, and then outline the vision.
Once you’ve established the company overview, you can delve into the details of your business including your target audience, and any other factors that could convince investors. These can be experts you’ve brought on board as advisors or mentors or a location that you’ve already secured.
To strengthen your case, you should also include the legal structure of your business (e.g., sole proprietorship, LLC, etc.) and list existing management and their roles (including your own).
B. Restaurant concept
After you’ve laid the groundwork for the technicalities of the business, it’s time to share the secret ingredient to your restaurant — the restaurant concept.
This journey to define your identity is a strategic art. Identify what sets you apart (your USP), the reason behind it, why it would work and the plan for success. Reveal your target audience and their preferences, shaping the flavours and experiences they'll enjoy3.
The restaurant concept should ignite the spark that drives your business, while the details of the business clearly outlines the business overview and anchor your restaurant business plan.
3. Market Analysis
Conducting thorough market analysis lays the foundation for informed decisions, ensuring your restaurant aligns with local trends and demands for a successful launch.
This section should outline the current landscape of the market sector where your restaurant is set to thrive, both in the broader context and within the precise location you intend to establish your venture.
It should also cover factors such as the trajectory of the local economy and industry, the presence of established eateries in the vicinity, neighboring commercial and residential zones, ongoing or anticipated infrastructure developments and the type of and quantity of traffic counts in the area1.
Let’s talk about the 3 main factors to consider in your market analysis.
- Target audience: When you craft your target audience, you will require a keen understanding of the patrons who will grace your tables. Detail the nuances of your target customers' personas, sketching a vivid portrait of their dining habits — their preferences, behaviors, needs. Be sure to include their geographic locations, income ranges, and pain points that your restaurant can alleviate2.
- Location analysis: In this section, you should zoom in on the surrounding areas of your business and explain why that location was chosen. Navigate the geographical context of your chosen locale by evaluating its accessibility, potential foot traffic, vehicular movement, demographic statistics, local economy, and proximity to commercial and residential zones4.
- Competition: Do thorough research on your local competition, both in terms of proximity and for those who have similar concepts to you. Dissect their strengths, weaknesses, and unique propositions. Delve into their menus, pricing strategies, operating hours, interior design, and customer reviews4. By navigating this competitive terrain, your restaurant business plan gains a strategic edge, and you can make informed decisions to stand out amidst the vibrant array of dining options.
4. Menu Pricing Plan
A sample menu within your restaurant business plan serves as a flavourful teaser, offering a taste of the culinary journey you're preparing to embark upon. This allows you to showcase your delectable offerings and provide a sneak peek into your restaurant's unique personality and gastronomic flair.
Be sure to include the estimated cost and price of each menu item as well to determine your estimated check value and create financial projections5.
By including a thoughtfully curated sample menu, you offer potential investors, partners, and stakeholders a sensory experience that goes beyond words, igniting their appetites for both your venture and your vision.
Here’s how you can curate your sample menu:
- Set menu prices
You can determine each menu item by doing a detailed cost analysis. Here’s a simple calculation method. You begin by calculating the raw food cost of the dish which excludes labor costs, delivery costs, or rent. Thereafter, you multiply your raw food cost by 140%, as the ideal cost percentage is 40%. While some restaurants employ this method, certain establishments opt for a more comprehensive approach, factoring in additional expenses like rent and ongoing business overhead. - Create menu descriptions
It is important to paint a vivid picture of each dish, using enticing language that highlights flavours, textures, and unique ingredients to evoke excited anticipation from your customers. For example, “succulent tea-smoked duck with anise-scented plum sauce” sounds more delectable than “duck with plum sauce”. However, do remember to keep your descriptions concise while capturing the essence of the dish's culinary journey. - Menu design
There is a science to menu design where it should be visually appealing yet functional. Employ a clean and organised layout that is easy to navigate, ensuring each dish stands out distinctively. Utilise typography, colours, and imagery that align with your restaurant's brand identity, evoking the desired ambiance. Sections and categories should be logically grouped, and pricing should be presented in an organized manner. You may also refer to menu psychology when determining and placing pricing.
5. Operations
The operations section is the backbone to your restaurant's success. Here, you will portray the day-to-day functionalities of your restaurant operations — from planning your business structure to introducing your management team to showcasing your different staffing strategies4.
While investors glean insights into your operational plan, this comprehensive plan serves as a guiding compass for your dedicated team, equipping them with the tools to execute seamless service.
Here are some important questions for you to answer in your operations section1.
- Staffing
- What roles will you need and what will be the anticipated staff count for each position?
- How will you distinguish yourself as an exceptional employer?
- What salary range is envisioned for each role?
- How will you approach staff recruitment and what specific qualifications are you seeking for each role?
- Customer service
- How do you envision ensuring a remarkable and consistent customer experience?
- What are the specific service values, policies, and procedures you would educate your staff and how will they be adhered to or encouraged?
- What are your service recovery strategies?
- Suppliers
- Who are your primary food and beverage suppliers and where will you find them?
- How do you plan to ensure the quality and consistency of your supplies?
- How will you manage potential supply chain disruptions or shortages?
- What strategies will you employ to build strong and lasting relationships with your suppliers?
- Where will you buy equipment, including the one-time purchases and the things that’ll need to be regularly replenished?
- Daily operations and production
- What will the restaurant's daily operating hours be?
- How will you manage the daily opening and closing procedures?
- What is your plan for staff scheduling and shift management?
- How will you ensure a smooth flow of operations during peak and off-peak hours?
- What steps will you take to maintain consistent food quality and presentation?
- How will you handle food preparation, cooking, and plating processes?
- What system will you use for tracking and managing inventory levels?
6. Marketing Strategy
A marketing strategy is more than a mere promotional blueprint; it's a symphony of digital presence, outreach, and compelling narratives that resonate with your target audience. By showcasing a robust marketing strategy, from social media to promotional events to paid ads, it makes it a compelling point of interest for investors seeking insight into your strategies2.
Here are 3 marketing tactics you should consider and explain in your plan:
- Website: Your website is the digital doors to your restaurant. It is arguably the most important channel for your marketing, so it is essential to create a restaurant website right. The stronger the impression your website garners, the more publicity you'll get from food review websites and media outlets, ultimately driving more website traffic.
- Social media: In this digital age, having a social media presence for any restaurant is key for attracting customers. Not only do you increase awareness for your business, you can clearly communicate promotions, events, announcements, loyalty programs and build a community for your brand. Learn all the tips and tricks for your restaurant's social media success.
- Email marketing: This digital medium offers a direct avenue for tailored communication, fostering loyalty and engagement among customers3. You can also use this opportunity to express gratitude to new subscribers by offering a discount code for their upcoming visit.
7. Financial Projections
While the financial plan is often one of the last parts of a restaurant business plan, it is the most critical part. This segment unveils the quantitative essence of your venture, mapping anticipated expenses, revenues, and profitability. In addition, your potential investors expect to see the breakdown of how you intend to spend their money in the first year — from starting your business to running it1.
Let’s go through the key financial projections you need to include in this section.
- Pro forma Profit and Loss (P&L) Statement
You will need to project all the different expenses and sales figures included in a P&L statement spanning the initial three to five years of operation. These projections hinge on factors such as your restaurant's size, target audience, and the existing market in your chosen area1. This section offers a snapshot of your restaurant's financial health over a defined period, allowing investors and stakeholders to gauge the sustainability and growth prospects of your restaurant.
- Break-even analysis
By dissecting all your fixed and variable costs, you can then calculate the revenue you need to bring in each month, of which your establishment transitions from covering expenses to generating profit1. This analytical insight empowers you to determine the minimum sales volume required to sustain your venture and reassure your stakeholders and/or investors of your financial stability.
- Capital requirements budget
This section should include all the funds required to open your restaurant — equipment, furniture, initial inventory, technology infrastructure, licenses and permits, rent, build-out costs, architect fees, insurance, and labor6. On top of that, you should account for an additional 10% as buffer for contingencies, or unexpected cost overruns. This section provides a tangible representation of your commitment and preparedness, giving stakeholders confidence in the solid foundation upon which your restaurant will be built.
Crafting a well-structured restaurant business plan is the foundation for your success in the competitive F&B industry. It may be tedious and time-consuming, but it is the secret ingredient to prove the viability of your restaurant concept to potential investors.
Your plan should be comprehensive, realistic, and reflect your passion for creating an exceptional dining experience. Remember that the restaurant landscape is ever-evolving, so be prepared to adapt your plan as needed.
References
- https://pos.toasttab.com/blog/on-the-line/key-elements-of-a-restaurant-business-plan
- https://get.grubhub.com/blog/restaurant-business-plan/
- https://www.posist.com/restaurant-times/resources/the-complete-guide-to-a-winning-restaurant-business-plan-2.html#b_Sample_Menu
- https://www.restaurantowner.com/public/How-to-Create-a-Winning-Restaurant-Business-Plan-2.cfm
- https://www.lightspeedhq.com/blog/11-things-you-need-in-your-restaurant-business-plan-restaurant-growth-to/
- https://hoteltechreport.com/news/restaurant-business-plan
