A restaurant business plan is how you turn your vision of an eatery into a reality. Your plan outlines your concept, menu, market and everything else that makes you different from the 749,000 - 1 million restaurants in the country.
You don't have to be truly unique, but you do need something that attracts customers to your restaurant.
And that's where you'll start with your business plan.
What's Your Restaurant Concept?
Reading a business plan for restaurant entrepreneurs should be exciting. If you hand off your plan to an investor, the concept is what hooks them into reading your content. Items that you'll want to include in the concept are:
- Fine dining/casual/other style restaurant
- Inspiration of the concept
- Anything that makes you stand out
What is it that will make your restaurant different? Putting your ideas into words is challenging, but it will help anyone reading the plan - including yourself - get excited for your vision.
On top of your concept, don't forget to add in a mission statement. Your statement will include:
- What the business will do.
- Why the business exists.
- What the purpose of the business will be.
Describe what your eatery will do and its activities, too.
Don't Forget to Create a Sample Menu
Restaurants are a bit different from other companies trying to create a business plan because you need to create a sample menu. On your menu, make it look as real as possible with your logo, food items, pricing and cost analysis.
If you're trying to secure funding for your idea, be sure to work with a designer who can properly format your menu for you.
Within the menu, you'll want to show the food that you're offering, but you can also use this time to show the financials of your operation. For example, you can show:
- Detailed cost analysis of each item
- Projected pricing and profit margins of each item
Investors need reassurance that you've done your due diligence and are taking your new venture seriously.
Who Will Help You Bring Your Concept to Life?
An enticing food business plan is a good start, and even with the best financial projections, you need a team to bring the vision to life. Your team may be just you at first, which is fine, but you must demonstrate that you have:
- Experience running a restaurant and/or being a cook
- Education in business management if you don't have experience
If you plan on hiring an entire team from the start, describe the strengths of each team member and why they're vital assets in your restaurant's future success. Investors often invest in owners and their teams because they know that they bring the skills and experience necessary to the table to bring your concept to life.
Once you're done with these critical components of your business plan, you can start digging into market research to validate that you have a viable idea.
Research Your Market
Market research is one of the key components of creating a business plan. You need to have a full understanding of your target market and overall demand for your restaurant.
Who is Your Target Market?
Who are the customers that will be dining at your restaurant?
Research your target market to learn more about their demographics, including their:
- Age
- Occupation
- Average income
Once you have a better understanding of your audience, explain how your specific restaurant concept will appeal to them.
What Location is Best?
At this stage of restaurant business planning, you likely don't have a specific location lined up. However, you should have a general idea of the location you want to target.
Identify viable neighborhoods in your desired location and how these potential locations connect to your target audience. Do your ideal diners live in these neighborhoods or travel there frequently for work or entertainment?
Prospective investors need to be confident that your target market will be in the area.
When speaking of location, you may also want to include details about what you envision in terms of square footage, parking, outdoor seating and other location-related information.
What's the Overall Market Overview?
You've identified your target market and potential location, but what about the market? What are the local and regional economic conditions?
- If the conditions aren't great for restaurants, then explain how why yours will succeed
- If other restaurants are doing well, explain how you will stand out in the crowd and compete
Speaking of other restaurants, you'll also want to list your direct competitors and explain your unique selling point that will attract customers to your doorstep.
Create a Basic Financial Projection
If possible, have your accountant guide you through this stage of creating your business plan. Financial projections will be a critical part of your plan, especially if you're seeking financing, so it's important to have expert guidance.
Ideally, your accountant should be someone familiar with running a restaurant and will understand your unique challenges.
Generally, realistic and basic financial projections will be based on:
- The value of your average check
- The number of seats you will have
- The number of covers you plan to do each day
These data points will help determine whether your restaurant concept is financially viable. It's a smart idea to be conservative in your estimates.
When creating your business plan, there are three main projections you will focus on:
- Break-even analysis
- Profit and loss statements for the first 3-5 years
- Capital budgeting
While you can certainly do these projections yourself, it is strongly advised that you work with a financial professional. You want your figures to be as accurate and reliable as possible.
Final Thoughts
Creating a business plan is the first step to building and launching a restaurant. Along with providing you with a roadmap to success, your plan can help you obtain the necessary funding to get your operations up and running.
If you're feeling intimidated and not sure how to start a restaurant business plan, consider using a business plan template for restaurant. A template will help you get started and ensure you're covering all important points.