You could fill a small galaxy with the number of restaurants that have failed because the owners didn’t have a good plan in place. If your dream is to open a restaurant, you can avoid a similar fate by creating a restaurant business plan that serves as your road map to success. A thorough and well-researched business plan has a number of important benefits. First, you’ll typically need one if you require financing to get your restaurant up and running. Second, a business plan provides a valuable guide of practical steps you can take before opening. And third, if you ever feel as if your restaurant has gone off-plan, you can always refer to your business plan to recalibrate and figure out your next step.
A restaurant business plan is similar to any other business plan, at least in terms of the actual business plan format. With few variations, you’ll want to include the same sections and much of the same information, whether you plan to open an upscale steakhouse, a small diner, a catering business, a cafe, a bakery, a takeout joint or a food truck. It's critical your plan covers plenty of territory — it should include everything from the concept and business structure to the restaurant’s sample menu, marketing strategy and operational plan. The U.S. Small Business Administration (SBA) notes that a good business plan “guides you through each stage of starting and managing your business.” See: 10 Tips for a Better Business Plan
Any business plan should include industry-specific information that shows you have a thorough knowledge of what it takes to be competitive and profitable. In the restaurant business, that means not only having expertise in preparing the types of food that will attract customers. It also means knowing how best to reach and serve those customers, price menu items, manage staff, control costs and operate at a profit. Because the restaurant industry is so diverse, you’ll want to customize your business plan to your restaurant’s individual needs. But just about all restaurant business plans should include the following sections on detail:
The specifics of each section will differ based on factors like the type of restaurant, its size, its staffing needs and location. For example, a French bistro in a pricey urban area will need a different market analysis than a catering business operated from home 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 in their prospective investment plans.
Prior to writing your business plan and approaching lenders for money, do as much legwork as possible ahead of time. This will give you a big head start when it comes time to put your plan into action. Because restaurants have two distinct missions — making money on the business side and preparing food on the creative side — the work you do ahead of time can be divided up into those two categories.
Here are some things all prospective restauranteurs should take care of on the business side before opening a restaurant:
Here are some things all prospective restauranteurs should take care of on the creative side before opening a restaurant:
When you’re ready to move forward with your restaurant business plan, cafe business plan or bakery business plan, put together a template like the one below to ensure it’s structured correctly.
Start with a basic business plan outline and then customize it to your needs. Following are key sections to include:
The executive summary serves as an introduction to your company and its plans for the future. This is where you provide a snapshot of your concept and mission, as well as your performance and growth plans. Because you want to grab the reader’s attention right upfront, it’s important to use catchy and concise language here and get to the point quickly. Ideally, the executive summary will be no more than one or two pages. Let the reader know right away that you’re an expert on how to open a restaurant and have laid out a clear path to success. Related: The Best States to Start a Business
In this section, write about the background of your business, your restaurant experience, and your ownership and management structure. Use this section to provide more detail on your mission, concept and brand. Also, provide specifics on the restaurant itself, including its culinary focus, service style, layout, design, location and desired customer experience. Find Out: Business Line of Credit vs. Loan — Which Is Right for Your Startup?
The industry analysis is a critical part of the restaurant business plan because it’s where you get to impress potential lenders and investors with your market knowledge. They’ll want to know that you have a firm grip on industry trends, market demand, consumer spending, labor availability and what works well in your area food-wise. Be sure to gather plenty of data to back up your points. Good sources include local and state restaurant associations, chambers of commerce and commerce departments. Your industry analysis should include the following:
In the competitor analysis section of the restaurant business plan, you'll provide an extension of the industry analysis, only with a focus on the local restaurant landscape and how you intend to win market share. Again, you’ll want to demonstrate a deep 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. Be mindful of who your real competitors are. If you plan on opening a small sandwich shop with affordable prices, your competition won’t be upscale steak or seafood houses. Instead, focus on other eateries in the area that offer similar menu items at similar prices. Explain how you plan to stand out from the competition in terms of menu options, food quality, service, opening hours and price.
The marketing plan describes your strategy to spread the word about your restaurant and reach potential customers. Provide details on how you plan to promote the business before opening and then build a loyal customer base once it’s up and running. Be specific in terms of how you intend 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 open, you might consider using a two-tiered approach with your marketing plan:
Outline the day-to-day operation of your restaurant in this section of your restaurant business plan. Provide details on all aspects of how you plan to conduct business, including;
This is also where you’ll provide details about staffing. For example, you might outline who you plan to hire first and why — then go into detail about the next stages of hiring. You can also include information on training methods you plan to use as well as specific duties and daily checklists for managers, kitchen staff, waitstaff 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 it’s where you show lenders and investors how you plan to spend their money — and eventually repay it. It’s important that you provide as much detail as possible here, beginning with basic financial documents such as a balance sheet, projected profit & 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, go into greater detail on the following:
Next, provide projected costs to run the business during 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 on what these costs should be based on the amount of business you expect.
Also, provide details on how you intend to price your food, how those prices compare with competitors and what kinds of margins you’ll need to operate on to turn a profit.
This section is where you’ll provide details on the financing requirements needed to open the restaurant and keep it operating at full strength until you’ve built up enough business that it can operate on its own. Provide specifics on the amount of money needed over the next few years and how it will be spent. Also, specify whether you will require debt or equity, for how long and at what terms.
With your restaurant business plan completed, the next step is to seek funding. One obvious step is to approach traditional lenders such as banks and S&L’s, but they might not be willing to work with new businesses. If you’re looking for a Small Business Administration loan you might be out of luck, too, unless you have three years of business tax return to show them. As an alternative, consider contacting Seek Capital , which helps startups and new businesses get the funding they require to get their operations off the ground regarless of how new your business is. To get pre-qualified for a restaurant loan, or simply find out more about the choices available, contact Seek Capital today . Learn which habits help you get more business financing . More From Seek
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