Management | Industry News & Trends
Creating a business plan for a restaurant is a critical step in the process of opening a new restaurant. The business plan is essentially a blueprint that outlines an aspiring restaurateur’s entire vision for the new venture. It explains in detail how the new business will take shape and operate once the doors are open.
Creating a restaurant business plan with expert tips in mind provides you with the opportunity to organize your vision for the new restaurant. It will help to ensure that nothing is overlooked. When you're in the weeds with construction, licensing, staffing and other operational stressors, the plan will act as a roadmap and help you stay focused.
Restaurant business plans are also useful for potential investors. In most cases, opening a new restaurant requires attracting some outside capital from hospitality investors. Before they invest in your dream, they need to buy into your vision. The business plan provides them with a complete description of your plan and why it will succeed.
The executive summary is the first section included in any business plan. It acts as both the introduction to, and the summary of, your entire idea. This section should introduce the key elements of what will be discussed throughout the business plan. It should present a complete and concise summary that is designed to catch the reader's attention and entice him to explore the rest of the plan. An executive summary includes things like the mission statement, proposed concept, how you will execute on the plan, overview of potential costs, and the anticipated return on the investment.
In this section, begin to explain the high-level elements of the proposed business. The company overview introduces information about the ownership structure, location, and business concept. Outline the vision for the customer's experience. Describe the brand. Identify the service style, design, layout, general theme and unique aspects of the overall concept.
Describe the existing conditions in the general market and in the specific location or area that you plan to locate the new restaurant. This section could cover things like the growth of the local economy and industry, infrastructure projects, nearby business and residential areas, and average traffic counts in the area.
The restaurant industry is an extremely competitive landscape and finding a strategic niche is imperative. You should have a strong idea of who your restaurant will attract and who will become your repeat customers. Describe the target market and how it compares to the restaurant industry as a whole in terms of diner demographics, characteristics, and behaviors.
In most cases, aspiring restaurant owners do not have a specific location selected before they create and pitch the business plan. If that is the case, focus on the general area or city you plan to locate the new restaurant and why you chose that specific area. Note things like growth of the local economy, large citywide events, and infrastructure projects nearby. Compare the existing market conditions to your intended target market. Potential restaurant investors will look at this section of the business plan carefully to make sure that the market in the proposed location aligns with the ideal customer profile.
What other businesses are in the proposed area? This section should explain the existing competitive landscape - the number of other restaurants in the area, paying particular attention to restaurants with similar concepts. Investors will want to understand the specific aspects of your concept that will give you a competitive advantage.
The marketing plan explains your marketing strategy and how you plan to promote the restaurant both before and after the opening. Identify specific tactics you will rely on before and after the restaurant is operational. Perhaps you will rely more on public relations and advertising before the restaurant opens and focus on things like social media, loyalty programs, building a customer database, and four-wall restaurant marketing once the business is operational.
Here you should paint a picture of how the restaurant will operate day-to-day once it is operational. Include in this section:
The financial analysis is often one of the final portions of a business plan. Investors expect to see a breakdown of how you plan to spend their investment in the first year and comparison of the anticipated costs and projected revenue. There are a few major elements you should be sure to include in this section:
Here you explain the initial investment you are hoping to receive and how you plan to spend that investment during the first year. This will usually include kitchen equipment, general supplies, furniture, payroll, legal fees, marketing, and some working capital.
The business plan is created long before the restaurant actually opens, so creating this profit and loss statement will require you to make a number of assumptions. You can make educated guesses about the various costs and sales elements included in a P&L based on the size of the restaurant, your target market, and the existing market in the area you’ve selected for your restaurant. You can use this interactive P&L template and guide to learn more about profit and loss statements and to create one for your future restaurant.
This one is pretty straightforward. Investors will want to know how much revenue you will need to bring in each month in order to break even once all of the various overhead and operational costs are factored into the equation. There are always going to be some variable costs, so make a note of what you expect that to be in your analysis.
Your cash flow will depend on how often you expect to purchase inventory, the size of your staff and payroll, and the payroll schedule. Once your restaurant is operational, some months will be better than others. The cash flow analysis should help investors understand that, based on your expectations, your restaurant will be able to support itself even in the less fruitful months without requiring additional investments.
Management | Industry News & Trends