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So you want to open a restaurant? Then you need a business plan.
A restaurant business plan is your roadmap to success. It outlines and forecasts every aspect of your restaurant’s operation and management—from menu design and location to financial planning and staff training. A comprehensive restaurant business plan demonstrates professionalism and a clear understanding of goals, increasing your chances of achieving long-term success in the competitive restaurant industry.
Why is a strong business plan important? Because it turns your restaurant idea into reality. According to the National Restaurant Association, having a business plan increases your chances of success by preparing you for problems before they arise and attracting investors and partners.
Planning is the key to restaurant success. Without a plan, you risk being part of the 30% of restaurants that fail in the first year. To make sure your restaurant succeeds, you can start by creating a business plan. Financial projections are a crucial component, helping to secure funding and plan for the future. Here’s how to get started.
The importance of a restaurant business plan
Think of your business plan as your ultimate guide, showing business owners, stakeholders, and investors how you’re going to turn your vision into reality. It ensures nothing is overlooked as you grow your restaurant. When you’re deep in the chaos of construction, licensing, staffing, and other challenges, your business plan will keep you on track and focused. Without one, navigating the complex world of opening a restaurant becomes much tougher.
A solid business plan is also key to attracting investors. Most new restaurants need some outside capital from hospitality investors or silent partners. Before they invest in your dream, they need to see that you’ve got a solid, thought-out plan for success. Your business plan shows investors that you’ve considered every expense and every possible scenario. It provides a complete description of your strategy, highlights the experience and skills of your management team, and explains why and how it will succeed.
Every business should have a business plan, whether new or existing. Business plans help you focus on your goals and can help get back on track if you stray from them.
How to write a restaurant business plan
Whether this is your first business plan or your 10th, using a template specifically designed for the restaurant industry can be incredibly helpful. Our restaurant business plan template includes all the necessary sections you need. You can download a customizable copy of the business plan template here.
Conducting a thorough market analysis to understand customer demographics and competition is crucial for the success of your restaurant. Keep reading to learn about the key elements that make a restaurant business plan successful.
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Essential elements of a restaurant business plan
Design a branded cover page
Start with a branded cover page that showcases your logo, brand fonts, and all relevant contact information. This sets a professional tone and makes your business plan easily identifiable.
Write the executive summary
Begin your restaurant business plan with an executive summary. This section introduces and sums up your entire vision, making sure to grab the reader’s attention. It should make investors feel invested in your idea and eager to read more.
Key elements to include are your restaurant’s mission statement, proposed concept, how you’ll execute the plan, an overview of potential costs, and the anticipated return on investment. Describe your restaurant concept, detailing the type of food being served, service style, design elements, and unique features. This is also a great spot to highlight your business’s core values. A strong executive summary sets the tone for your business plan and helps attract investor interest.
Additionally, include a management team write-up to highlight the credentials and past experiences of your management team, demonstrating their ability to run a successful establishment.
A well-conceived mission statement can provide a guiding light to keep your restaurant moving in the right direction. It helps ensure that every decision you make and every interaction you have is in line with your core values and goals.
Create the company overview
In this section, you’ll lay out the foundational details of your restaurant. Start by introducing the basic information: the restaurant’s name, address, and contact details. Include information about the owner and their background, showcasing their experience and passion for the industry. This sets the stage for your business’s credibility.
Next, describe the restaurant’s legal standing and its short- and long-term objectives. This helps potential investors understand the structure and vision of your business.
Highlight your understanding of the local food industry with a brief market research summary. Explain why your restaurant will succeed in this market by demonstrating awareness of local dining trends and consumer preferences. Crafting your own restaurant business plan is crucial to showcase your dedication and strategic planning, learning from others' mistakes to ensure success.
Here’s a sample layout for this section:
Company description
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Restaurant Name: [Restaurant Name]
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Location: [Restaurant Address]
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Contact: [Restaurant Phone Number] | [Restaurant Email Address]
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Owner: [Owner Name]
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Experience: [Owner Name] has over [Number] years of experience in the restaurant industry. They have worked in various roles, including [List of Roles]. They are passionate about food and creating a memorable dining experience for their guests.
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Legal Standing: [Restaurant Name] is a [Type of Legal Entity] registered in [State/Province].
Include an industry analysis
First describe the current state of the market sector your restaurant will be in and the specific area you will be in. This should include local economic growth, existing restaurants, infrastructure projects, nearby businesses, residential areas and foot and car traffic counts.
To create an effective and professional business plan, it is important to study restaurant business plan samples.
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1. Review your target market
The restaurant industry is competitive so you need to find your niche. What will make your restaurant different? Who will your restaurant attract and who will be your repeat customers? Describe your target market and compare it to the overall restaurant industry in terms of diner demographics, characteristics and behaviour.
2. Location analysis
Even if you don’t have a specific location yet, focus on the general area or city where you will be opening your restaurant and explain why. Include local economic growth, major events and nearby infrastructure projects. Compare the current market conditions to your target market to show the proposed location fits your ideal customer profile. Investors will be looking closely at this section to make sure the location is right for your concept.
3. Competitive analysis
Get into the competitive landscape around your proposed location. Detail the number of other restaurants in the area, especially those with similar concepts. Investors want to know what will make customers choose your restaurant over the competition. What will make your food and service stand out and what other advantages do you have, like longer hours? Use a competitive matrix to show you understand your niche in the market.
Put together a restaurant marketing plan
The marketing section outlines how you’ll promote your restaurant before and after opening. Not sure where to start? Check out our guide here. A well-thought-out marketing plan is crucial to grow a successful restaurant and distinguish it from competitors.
Start by listing out specific tactics you’ll use pre and post-launch. Will you work with a PR manager? Launch a social media account to document the build-out and generate buzz. Share those details. If you already have a large social media following, make sure to mention it.
Once the restaurant is open, which channels will you use to keep the momentum going? Email marketing? Regular social media posts? Charity partnerships? Local TV and radio ads? Will you invest in customer relationship management software to keep in touch with regulars or implement a loyalty program?
This section should give a clear picture of your promotional strategy and how you plan to engage with potential customers from the start.
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Outline your operation plan
Here’s how to outline your restaurant’s day-to-day operations once the doors open. Cover these key areas:
Clearly defining the service style of your restaurant, whether it is fine dining, quick-service, self-service, or another type, is important to ensure a consistent customer experience.
1. Staffing
Think about the positions you'll need and how many people you'll need for each role. What will make your place a fantastic workplace? Outline the pay for each position, how you'll recruit the right people, and what the hiring criteria will be.
2. Customer service policies and procedures
How will you ensure an exceptional and consistent guest experience every time? Detail your service values, policies, and procedures, and explain how you'll enforce or encourage them.
3. Restaurant point of sale and other systems
How will you keep track of sales and inventory, manage takeout and delivery, control labor, handle cash, process payroll, and accept various payment types? Cover the systems you'll use for all these tasks.
4. Suppliers
Where will you get your ingredients? Think about both one-time equipment purchases and items that need regular replenishment. Detail your plans for sourcing these essentials.
Nail down your financial game plan with first-year projections
The financial analysis usually wraps up your business plan, and it’s where investors really focus in. They want to see exactly how you’ll spend their money in the first year and how you expect costs and revenue to stack up. Make sure to hit these key points in this section.
1. Your investment plan
Here’s where you put in the initial investment and how you’ll use it in the first year. Think kitchen equipment, furniture, decor, payroll, legal fees, marketing, and a bit of working capital.
2. The projected profit and loss (P&L) statement
Since the business plan is done way before you open your restaurant you’ll need to make some educated guesses for your P&L statement. Estimate costs and sales based on your restaurant’s size, target market and the local competition. Use this P&L template and guide to dive deeper into P&L statements and create one for your future restaurant.
3. The break-even strategy
This is where you show investors how much monthly revenue you’ll need to cover all your overhead and operational costs. Remember there are always variable costs so highlight what you think those will be. How will you hit that revenue target during slow months?
4. Cash flow prediction
Your cash flow expectations hinge on your inventory purchases, staff size, payroll, and payment schedule. Some months will be better than others once your restaurant is up and running. This cash flow analysis will show investors that, based on your forecasts, your restaurant can sustain itself during leaner months without needing extra investments.
How to sell a restaurant idea and master your business plan presentation
Once your business plan is polished and ready, it's time to become its number one expert. Investors want to see that you know every nook and cranny of your business and are confident you can make it happen.
When you're ready, email your business plan to anyone in your network who might be interested in investing. With any luck, you'll get some interest, and investors will want to meet to discuss your restaurant.
Some investors might want a pitch presentation alongside the printed business plan. Use a professional template from Google Sheets or PowerPoint, and practice until you can nail the presentation without notes.
Be prepared for any questions—both the expected ones and those that come out of left field. If you don’t know an answer on the spot, it’s fine to say you’ll find out and get back to them quickly.
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Takeaways
A well-crafted restaurant business plan serves as a roadmap to success, guiding every aspect of the venture from menu design to employee training.
By carefully considering each component of the plan, aspiring restaurateurs can increase their chances of securing funding, attracting customers, and achieving their long-term goals. Including a sample menu in the business plan is necessary to showcase planned dishes and prices, which helps in selling the restaurant concept to potential investors and customers.
Remember, a restaurant business plan is not just a document to satisfy investors; it is a living tool that should be revisited and updated regularly as the business grows and evolves.
By staying committed to the plan and adapting it as needed, restaurateurs can ensure that their culinary dreams have a solid foundation for success.
FAQs
How much profit does the restaurant make?
When it comes to restaurant profitability, the numbers can widely vary. On average, restaurants report profit margins between 3% and 5% annually.
Fast-food establishments often have lower margins but benefit from a high volume of customers and quick turnover rates. In contrast, fine dining venues, although charging higher prices, see fewer customers and slower turnover, which influences their profit margins differently.
Our research indicates that, regardless of the type of restaurant, the average monthly profit usually falls between $15,000 and $25,000.
How to open a restaurant without money?
Starting a restaurant can be a daunting task, especially when funds are tight. However, with some creativity and determination, you can turn your dream into a reality. Here’s how:
Innovate Your Restaurant Concept
Consider a unique, low-cost restaurant concept. Instead of a full-scale establishment, perhaps a pop-up restaurant or a delivery-only kitchen could better fit your budget. Flexibility in your concept can significantly reduce initial costs.
Seek Funding Alternatives
Traditional bank loans aren't the only option. Look for investors who believe in your vision or explore crowdfunding platforms like Kickstarter or GoFundMe. Sometimes, you can even find grants aimed at small business startups.
Leverage Online Platforms
Start by building a strong online presence. Create a website and utilize social media to attract and engage customers. Online marketing can be a cost-effective way to generate buzz and gather a customer base before you even open your doors.
Collaborate with Other Businesses
Partnerships can pave the way for mutual growth. Collaborate with food suppliers, local farms, or even other small businesses to share costs and resources. This strategy can also expand your network and increase visibility within your community.
Start Small: Food Trucks or Catering
Consider launching your concept through a food truck, catering service, or pop-up stand. These options require significantly less capital than a traditional sit-down restaurant and can help you build your brand and customer base.
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