A restaurant business plan is an opportunity to bring your concept to life on paper. It provides an outlet to express your passion for your idea and sell others on it, too. A business plan has two primary purposes: to attract potential investors and to provide a guideline for opening and operating your restaurant.
Restaurant business plans can be as simple as an idea written on the back of a paper napkin. However, if you are going to present your business plan to potential investors, you want to supply them with as much information about your restaurant concept as possible.
Essentially, a business plan should tell the story of your restaurant and include several key components: an executive summary, a description of your business, market strategies, a competitive analysis, development plans, operations and management plans, and financial estimates. We recommend you join a business coaching program, their experts can help you formulate a better business plan.
An executive summary is a concise presentation of your idea. It should bring to life your passion for your restaurant concept and highlight your concept’s potential for success in the marketplace.
Oftentimes, an executive summary will be the document that gets your foot in the door with an investor and will afford you an opportunity to put on an investor presentation. An executive summary is your chance to clearly and concisely state your objectives, the potential for your concept and the amount of funding you will need.
This section of your restaurant business plan should describe the current state of the restaurant industry and how your restaurant fits into it. How would you categorize your restaurant — casual, quick-casual or fine-dining? Is it an upscale Italian restaurant, a pizza parlor or an ice cream shop?
Your business description should showcase the elements of your restaurant concept that differentiate it from every other dining establishment. Explain how you plan to gain a competitive edge and why your restaurant will be profitable.
This may require some research on the current and future restaurant industry trends. A restaurant consulting firm with a skilled research department can help you identify these trends.
The market strategies section of your business plan should reveal how you will position your restaurant within the market. To do this, you will need to define your restaurant’s target market, pricing and promotional strategies.
When defining your positioning, don’t try to be all things to all people. Don’t strive to be the best at what you do; be the only one who does what you do.
As part of the competitive analysis, you should outline who your competitors are and why, and identify your competitor’s strengths and weaknesses. Using this information, you can develop a competitive strategy for your restaurant.
Because you will be competing with all different types of companies for funding, you must provide a convincing reason for pursuing a restaurant venture.
The most compelling reason to launch a restaurant concept is to capitalize on increasing consumer spending in that market. Restaurant sales are expected to reach $632 billion this year, according to the National Restaurant Association report.
Your restaurant business plan must explain how you will allocate funds during the development stages leading up to your restaurant’s opening. Include a detailed explanation of the use of funds for pre-opening, leasehold improvements, furniture and fixtures and other costs associated with starting a new business. Pre-opening costs must include labor, sales and marketing, public relations, menu design and development.
Operations and Management Plan
You must also create a detailed plan explaining how your restaurant will function on a continuing basis once it has opened its doors. Outline the organizational structure of your restaurant, the responsibilities and tasks assigned to your management team and any associated operational expenses.
This section of your restaurant business plan should introduce your partners and key staff members, explaining how each will contribute to your restaurant’s success. Consider including biographies of your team members, especially anyone who has an extensive business or restaurant background. This will help establish credibility for your concept in investors’ eyes. When you have your business up and running, you should consider tracking internet activity of your employees to ensure that they’re doing the correct work.
Though you would probably prefer to focus your efforts on opening your restaurant rather than crunching numbers, investors will expect your business plan to include a five-year forecast of financial results. Include cash flow statements, balance sheets, profit and loss statements and debt or equity payment schedules.
It is crucial to provide realistic projections. A tiny coffee and pastry shop slated to open in West Palm Beach isn’t likely to generate $5 million in yearly sales if the local Starbucks is only making $2 million. Be sure to do your homework by researching typical finances for similar concepts in your area. The numbers must match your story.
Working with a consultant or firm to develop your restaurant business plan is the easiest way to develop realistic financial projections, especially if the consulting firm specializes in the restaurant industry.
The best restaurant business plan in the world needs to be backed by a great operation. A consultant can also help you create sensible goals that your restaurant will be able to execute from an operational standpoint.
A business plan is like a promise. If you don’t live up to your business plan, you run the risk of shattering investor’s faith in your restaurant concept.