You could fill a small galaxy with the number of restaurants that failed because the owners didn't have a good plan. If opening a restaurant is your dream, you can avoid a similar fate by creating a restaurant business plan that serves as your road map to success.
A thorough andwell thought out business planhas a number of important benefits. First, you'll usually need one if you need financing to get your restaurant up and running. Second, a business plan provides a valuable guide to practical steps you can take before opening. And third, if you think your restaurant has gone off the rails, you can always refer back to your business plan to recalibrate and figure out the next step.
What to Include in Your Restaurant Business Plan
A restaurant business plan is similar to any other business plan, at least in terms of the actual business plan format. With a few variations, you'll want to include the same sections and much of the same information whether you plan to open an upscale steakhouse, small restaurant, catering business, coffee shop, bakery, takeout, or food truck.
It's critical that your plan covers multiple areas – it should include everything from the business concept and structure to the sample restaurant menu, marketing strategy and business plan.
The US Small Business Administration (SBA) notes that a good business plan "guides you through every step of starting and running your business."
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show your experience
Any business plan should include industry information that shows you have an in-depth understanding of what it takes to be competitive and profitable.
In the restaurant business, this means that you don't just have expertise in preparing food items that will attract customers. It also means knowing how to best reach and serve those customers, price menu items, manage staff, control costs and operate profitably.
Because the restaurant industry is so diverse, you'll want to tailor your business plan to your restaurant's individual needs. But almost every restaurant business plan should include the following detailed sections:
- Summary of highlights
- Company overview
- Industry Analysis
- Competitor Analysis
- Marketing plan
- business operation
- Funding request
- Economic analysis
The specifics of each module will vary depending on factors such as the type of restaurant, its size, staffing needs and location. For example, a French bistro in an expensive urban area will need a different market analysis than a home catering business in the suburbs.
As a general rule, each section should contain detailed information that lets potential lenders and investors know you've done your homework on what it takes to succeed in the restaurant industry and makes them feel confident about your potential investment. designs.
Steps to follow before writing your restaurant business plan
Before you write your business plan and ask creditors for money, do as much work as possible in advance. This will give you a huge head start when it comes time to implement your plan.
Since restaurants have two separate missions – making money on the business side and preparing food on the creative side – the work you do in advance can be divided into these two categories.
Restaurant To-Do List: The Business Side
Here are some things that all aspiring restaurateurs should be aware of on the business side before opening a restaurant:
- Make it official:register your companyas a sole proprietorship with a DBA, limited liability company (LLC) or corporation. This will require you to choose a name for your business that is not necessarily the same name as your restaurant. For example, your company name could be "Jones Restaurant Group Inc." while the name of your restaurant will be something catchier. Make sure your company and restaurant names are not already registered trademarks.
- Get permission:Obtain commercial licenses and permits. Most restaurants need a General Business License, Alcohol License (for those serving alcohol), Food Service License, Employee Identification Number (EIN), Food Operator License and Signage License, an agreement withfood news feed.
- Get coverage:Restaurant insurance research. Insurance is a key part of opening a restaurant because of the potential for kitchen fires, food poisoning, workplace accidents, and liability associated with customers who receive alcoholic beverages and then have accidents. The types of insurance you should be aware of are general liability insurance, commercial property insurance, workers' compensation insurance, and liquor liability insurance.
- To be set:Research federal, state, and local food service regulations governing food preparation, safety, and inspections, as well as product labeling.
- Create agreements:Create shareholder and partnership agreements if you plan to operate as a corporation.
Restaurant To-Do List: The Creative Side
Here are a few things any aspiring restaurateur should take care of on the creative side before opening a restaurant:
- Define your vision:Choose a restaurant concept and brand that includes the type of restaurant (full-service, fast-casual, cafe, etc.), as well as the food you'll specialize in, ambiance, service style, and target market.
- Here is the menu:Create a menu of staple foods you plan to serve at each meal. Deciding what will be on your menu is important for obvious reasons, as well as determining equipment and staffing needs. Furthermore, defining the menu is closely aligned with determining what kind of clientele you want to attract and how you will market to them.
- Find a location:Look for locations that best suit your restaurant's concept, menu, clientele, and budget, and also give you the best chance of being competitive with other restaurants in the area. Note the site's access to roads, public transportation, parking, and nearby neighborhoods.
- Create a group:Review staff must ensure you have the correct combination and number of people to properly execute your menu and service. If you plan to open a food truck that just prepares and serves the food, this is not so important. But if you have a sophisticated concept with an emphasis on complex dishes and high-quality service, then you will need to make a list of all the types of workers needed to make it happen. This may require the services of a management team, executive chef, sous chef, cooks, bartenders, waiters, food delivery workers, servers and dishwasher.
How to write a restaurant business plan
When you're ready to move forward with your restaurant business plan, coffee shop business plan, or bakery business plan, create a template like the one below to make sure it's properly structured.
Restaurant business plan sample
Start with a basic business plan outline and adapt it to your needs. Here are the main sections to include:
Summary of highlights
The executive summary serves as an introduction to your company and your plans for the future. This is where you provide a snapshot of your concept and mission, as well as your plans for performance and growth.
Since you want to grab the reader's attention early on, it's important to use engaging, concise language here and get to the point quickly. Ideally, the summary should be no longer than one or two pages. Let the reader know right away that you are an expert on how to open a restaurant and have a clear path to success.
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In this section, write about your business history, your restaurant experience, and your ownership and management structure. Use this section to provide more details about your mission, concept and brand. Also, provide details about the restaurant itself, including culinary focus, service style, layout, design, location and desired customer experience.
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Industry analysis is a critical part of your restaurant business plan because it's where you impress potential lenders and investors with your knowledge of the market. They'll want to know that you have a firm grip on industry trends, market demand, consumer spending, labor availability and what's working well in your area when it comes to food.
Make sure you collect a lot of data to back up your points. Good sources include local and state restaurant associations, chambers of commerce, and trade departments.
Your industry analysis should include the following:
- Market description and outlook:Provide data on the size of the restaurant industry in your city in terms of dollars spent and number of restaurants. Track how this number has increased or decreased over the past few years and which types of restaurants are performing the best. Include information about which parts of the city have seen the greatest growth/decline in restaurant spending. Additionally, provide data on how the restaurant industry is expected to grow and evolve over the next five to ten years based on population and economic trends.
- Target market:Here you will provide more details about the types of customers you want to attract, the size of your customer base and where they tend to be most concentrated. Add details about the locations you explored and how those locations match your target market in terms of nearby businesses and residential areas. For example, if you want to open a restaurant specializing in authentic Indian food, investors will want to know how many people of Indian origin live or work nearby, as these people could be the core of your customer base. You should also include information about whether your restaurant will be ordering takeout or delivery, and if so, what apps you'll be using and what percentage of your business you expect to be delivery rather than food.
- Regulatory environment:The restaurant industry is heavily regulated at the federal, state and local levels regarding how food is labeled, sourced, stored, handled and prepared. There are also a number of regulations governing cleanliness, workplace safety, employment and the sale of alcohol. Describe the regulations under which you will have to operate and how you plan to comply with them.
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In the competitive analysis section of the restaurant business plan, you will provide an extension of the industry analysis, focusing only on the local restaurant landscape and how you plan to gain market share. Again, you'll want to demonstrate in-depth knowledge of the market by providing data on the number of competitors, their names and locations, their concepts, their clientele, and their strengths and weaknesses.
Know who your real competitors are. If you're planning to open a small, affordable restaurant, your competition won't be steakhouses or seafood restaurants. Instead, focus on other restaurants in the area that offer similar menu items at similar prices. Explain how you plan to differentiate yourself from the competition in terms of menu options, food quality, service, hours of operation and price.
Your marketing plan outlines your strategy for marketing your restaurant and reaching out to potential customers. Provide details of how you plan to market the business before you open, then build a loyal customer base once it's up and running. Be specific about how you plan to use advertising, social media, public relations, loyalty programs and promotions to market your restaurant to potential customers.
Depending on the type of business you plan to start, you may want to consider using a two-tiered approach with your marketing plan:
- Marketing strategy: In this section of your restaurant business plan, you will describe how you plan to use traditional marketing methods to promote your restaurant, such as newspaper or radio ads, social media, direct mail, and email marketing. Provide details about your website (yes, you will) in terms of its design, layout, content and functionality, and how you intend to display menu items, market offers and accept bookings or takeaway orders. Also, provide details on alternative marketing avenues, such as leveraging local restaurant reviews and food bloggers or partnering with local distribution companies.
- Sales strategy: Catering services often use direct sales to local customers, as do restaurants with separate rooms dedicated to private events. If this applies to your business, you will need to describe the type of sales business you intend to create. If you plan to use your own sales team, provide details on who will do the work, how they will be paid, and what kind of sales quotas you will apply. Also, detail your strategy for finding and calling leads. If your plan is to use third parties, determine which companies you can use and how much to budget for.
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Describe the day-to-day operation of your restaurant in this section of your restaurant business plan. Provide details of all aspects of how you intend to do business, including:
- When will the restaurant be open for customers?
- When you plan to order food, beverages and supplies
- Which suppliers you plan to use and approximate recurring costs
- When will you accept deliveries and how will you check in?
- How will you track sales and inventory?
- Which POS system do you plan to use?
- What types of equipment, cookware and other tools will the business need
- When and how you will pay suppliers
- When and how you will bill accounts receivable
- When and how you will review features to make improvements as needed
This is where you will provide team details. For example, you can describe who you plan to hire first and why – then go into detail about the next stages of recruitment. You can also include information about the training methods you plan to use, as well as specific tasks and daily checklists for managers, kitchen staff, waiters and bar staff.
When it comes to a restaurant business plan, the financial analysis section is another critical part of a well-written business plan because this is where you show lenders and investors how you plan to spend your money – and ultimately pay it back. It's important to provide as much detail as possible here, starting with key financial documents such as the balance sheet, projected profit and loss statement (often called a P&L) and cash flow statement. Include a break-even analysis that estimates how long it will take to break even on the investment.
In addition to these documents, see more details on the following:
- Court fees:Start by detailing your projected costs to operate the restaurant, including:
- Buy or rent space
- Buy equipment and supplies
- Pay for licenses and permits
- Staff recruitment and training
- Food and beverage market
- Pay for advertising/marketing
Next, give the projected operating costs of the business in its first year of operation. For most restaurants, the biggest costs will be payroll and food, so it's important to provide as much detail as possible about what those costs should be based on the size of business you expect.
- Income:This is where you will provide estimates of how much revenue you expect to generate each week and month based on your market analysis. Break down how much you expect to generate via:
- Food and beverage sales
- alcohol sales
- private events
- Accessories (e.g. hats, t-shirts, souvenir glasses)
Also, provide details about how you plan to price your food, how those prices compare to competitors, and what kind of profit margins you'll need to make a profit.
This section is where you will provide details of the funding requirements needed to open the restaurant and keep it running at full capacity until you have built enough business to be self-sustaining. Give details of how much money is needed in the coming years and how it will be spent. Also, determine whether you will require debt or equity, for how long, and on what terms.
how to get financing
After your restaurant business plan is complete, the next step is to seek financing. An obvious step is copingtraditional lenderssuch as banks and S&Ls, but may not be willing to work with new businesses. If you're looking for a small business management loan, you may be out of luck unless you have three years of business income tax returns to show for it.
Alternatively, consider getting in touchGet Funds, helping startups and new businesses get the funding they need to get off the ground, no matter how new your business is. To qualify for a restaurant loan or simply learn more about the options available,contact Seek Capital today.
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