Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.
Drawing up a restaurant business plan is a fundamental step in growing something strong and viable. When you are starting a restaurant it is the point when you get serious about the mechanics of how you’ll get it off the ground and make money. Investors, co-founders and partners are going to be an important part of the journey. To prove your vision to them and to stay aligned with it yourself, you need a business plan.
Here, we’ve outlined what your restaurant business plan should include. And even better, we’ve added some tips and insights from Tim Felkner, a serial entrepreneur and restaurant consultant from San Francisco.
What is a restaurant business plan?
Your restaurant business plan is the place to outline exactly what you are going to create, what it’ll be like and how it’ll be profitable.
Business plans tend to include a number of standard elements. It’s a document that most lenders or investors will want to see before agreeing to hand over cash so it is worth getting it right.
The plan is the place where you set down all your thoughts and ideas and explore in writing how you have identified an opportunity and how you will be the one to grab it. Creating a business plan helps you as an entrepreneur to ensure you’ve thought everything through, done your research and know what steps you need to take to success.
A restaurant business plan may include:
- Executive summary
- Company description
- Market analysis
- Strengths, weaknesses, opportunities, threats (SWOT) analysis
- Details on menus and sourcing
- Marketing strategy
- Target market definition
- Branding information
- Organisation and management overview
- Financial plan
Let’s take a look at each element in more detail.
The executive summary acts as an overview for your restaurant business plan. “It should be a clear, concise preview of what’s to come, with the flexibility to grow and change,” Tim says.
Executive summaries outline the topics detailed further into the plan. They also include the objectives of restaurant owners, the restaurant mission statement and the key factors that will make your business successful and set it apart from competitors. The pivotal question to answer is: why do people need my restaurant?
What to include:
- A concise but compelling introduction to the business plan
- A brief introduction to the topics covered further on
- Your mission statement
The company description outlines your restaurant’s vision and form. This is where readers get a deeper understanding of how your restaurant will feel, what your goals are, what it will deliver as an experience, which target market you’re aiming at and who will be in charge.
An easy way to kick off this section is by talking about the founding concept — what made you want to be a restaurant owner and to set up this restaurant specifically? Then you can cover the specifics, like the type of food you’ll serve and how you’ll adapt your menu to reflect popular trends.
What to include:
- The name of your company
- Its location
- An explanation of the concept and cuisine
- An outline of why you’re doing what you’re doing
- Your goals
A market analysis explains your industry, competition and geography to help you and the reader understand your restaurant’s position in the market:
An industry analysis is a qualitative and quantitative assessment of the market. Think trends, economic factors (such as ingredient shortages or supplier issues), consumer spending and attitudes and so on. All of these things impact you, so it’s important to explore how you’ll achieve your success in spite or because of them. It is about analysing the restaurant industry as a whole and all the things that impact it.
Your competitive analysis will look at competitors across the market, especially those close to your location. Find out who has the biggest market share and how near competitors’ restaurants are to yours. Once you’ve done your research, clearly explain the advantages you have over these competitor businesses and how you’ll turn disadvantages to your favour.
Include an analysis of your restaurant’s location or potential locations. “Different locations, even within the same neighbourhood, are going to perform differently due to other businesses in the area, the people that live in the area, public transportation and parking. And all of that tends to matter and influences whether your business is going to be successful or not,” says Tim.
Few (if any) businesses have a perfect market position. There’s always new competition, new trends and new local developments that change the landscape you work in – and that is as true of the restaurant industry as of any other. This is why it’s important to be honest about the potential struggles you might face. Not only will it help you prepare, but it will also instil confidence from investors who can see that you take yourself seriously.
You can also put your market research to real use with a SWOT analysis.
A SWOT analysis studies strengths (competitive advantages), weaknesses (shortcomings or lack of expertise), opportunities (that your restaurant can benefit from), and threats (that you’ll need to beat). Splitting these areas out makes it easier to make the most of the good and plan to tackle the bad. It’s an honest view of the potential struggles and wins ahead.
In a SWOT analysis, “You should be really honest about where a business may lack in terms of the team or its competitive advantage,” says Tim.
“I think if a business plan is overly optimistic and says, ‘Oh, we’re going to beat our competition in every category,’ that’s probably not realistic. You’re probably going to be able to beat your competition in some categories and not others.”
What to include:
- A list of your strengths and how you’ll play to these
- A list of your weaknesses and how you’ll get better in those areas
- A list of opportunities you can develop
- A list of threats you need to tackle
Menus and sourcing
Everyone — including investors — wants to know what’s getting served up at your restaurant, so be thorough when writing out a sample menu in your business plan.
This section is designed specifically for you to include menu items, descriptions and the ingredient lists needed to make your food and drinks. Descriptions heavily influence whether people gel with your menu, so they can be used as a marketing tactic. Think of it as “feeding the imagination,” with descriptions, helping the customer visualise how their meal will look and taste.
If you can test the menu ahead of time and add that information in the business plan, all the better. “Testing and making sure your recipes work, and that people are in the market for what you provide can save you a lot of money and headaches, and maybe help your business survive in the long run.” says Tim.
List the places you’ll be doing your product sourcing as well as any vendors and suppliers. And consider how customer tastes and attitudes may affect whether or not you use local, environmentally friendly produce to reinforce a green business approach.
The other — more formal but very necessary — things to cover are how your restaurant will organise stock management, what will be done with food waste and how you’ll tackle safety requirements.
What to include:
- A list of your menu items with descriptions
- Photos of each item
- An explanation of your menu concept
- A list of suppliers and vendors
- A list of any home-grown food sources (such as a herb garden on-site)
The marketing strategy section of your restaurant business plan is designed to explain how you plan to promote and upsell your restaurant. It can be broken down into three subsections: a positioning statement, a description of how you’ll reach your target market and a brand outline.
Your positioning statement explains your restaurant’s proposition — the core of every message that will ever reach people through your marketing.
What to include:
- A description of how your restaurant is different from others and will be enjoyed in ways that set you apart from your competitors
- The one thing everyone needs to know about your business
- The segment or category in which your company competes
- Compelling evidence and reasons why customers in your target market can have confidence in your differentiation claims.
Target market definition
You already mentioned your target audience in the company description, and your market research will also have revealed characteristics of the people most likely to dine in your restaurant. This subsection allows you to look at their personas in more detail and in relation to the marketing messages they want and need to hear.
An important part of understanding your target audience is to find out which marketing channels they interact with most. Students for example, are going to be very active on certain social media sites, whereas older, wealthier professionals are likely to seek new restaurants in trusted magazine reviews and through word-of-mouth recommendations.
Your brand is more than just a logo — it’s your personality and the way people perceive you. A simple branding exercise to get started is to curate a list of words that best describe your restaurant. Then think of the emotions you want people to feel when they visit or receive marketing communications.
With these concepts fully fleshed out, you’re ready to start thinking about colour schemes, fonts, website designs and of course a logo. All of these should be in line with the discoveries you made about your business’s personality. When finalising your business plan’s layout, give these visual assets some space to shine on the page.
Your brand exploration should also translate to your restaurant’s interior design and layout. These two things play heavily into customer satisfaction. “A unique design will help you stand out from the competition and plays into how guests perceive your brand,” Tim says.
Discuss how you will test different marketing strategies and measure their success. “A bit of test marketing is not done nearly enough and can be extremely valuable. Maybe you have good product but does the marketing or the message fit?” says Tim. “Get a lot of feedback from many, many people instead of just one group who are your loyal followers. Try out as many things as possible and track what works and what doesn’t, since there is no one-size-fits-all.”
Marketing to drive traffic
With the core of your marketing approach laid out, you can start planning activity such as:
- A soft opening or pop-up restaurant teaser event
- Special discounts on certain nights of the week
- Prix fixe (multi course fixed price) menu during your city’s restaurant week
- Chef pairings
- Takeaway options
- Charitable events
Organisation and management
List out the roles and responsibilities for your management, front of house and back of house teams. Both quality and quantity of employees will be a significant factor in your success, so it’s important to hire people who believe in your restaurant’s mission statement, as well as the right number of them to work efficiency.
This section should also include the business entity you’ll declare for your restaurant, whether a limited company, partnership and so on. Your business entity affects the tax you need to pay, so many fledgling business owners will speak to a financial expert before they complete their application.
Technology also plays a big role in operational efficiencies, so outline the systems you plan to use in your restaurant. An integrated restaurant point-of-sale will enable you to track all your sales, manage employees and stock/inventory, analyse business performance, update menus and floorplans easily, and get customer feedback — all useful tools for a company getting to grips with demand.
Mobile card readers that work with your point-of-sale allow your waiting staff to take payments at the table, speeding up table turnover – which is just one key strategy for making a profit in hospitality - and making life much easier for everyone.
An effective and integrated Kitchen Display System will keep front of house and back of house synced to ensure orders are easily seen and fulfilled. View, track and display orders via digital tickets. For larger restaurants you can install multiple screens in the kitchen and give each prepping station easy access to the system.
Last but certainly not least is the big money question: how much is all of this going to cost? This section is made up of three main components: restaurant startup costs, funding options and a break-even analysis. This is probably the most important part of your business plan, and one that may prove tricky if you’re not a numbers person. Don’t be afraid to contact a financial expert for professional help. You’ll have more peace of mind when speaking to potential investors if you know this section is in good shape. Restaurant owners need to be confident their numbers add up to remain afloat and competitive.
Tim’s advice is, “Don’t be too aggressive financially. Success doesn’t happen overnight and, while you may be able to get there, it doesn’t happen for every business or even every location,” he says. “Be conservative and try to ensure that with average financials, or even slightly below average financials, you could pay the bills and make it for a little while.”
What to include:
- Startup costs, such as tables and chairs, lighting and kitchen equipment
- Ongoing operational costs, such as utilities, rent and wages
- Your food cost percentage
- Your funding options
- How much funding (if any) you’re seeking currently, with justification
- A break-even analysis
Everything above is just an outline to the perfect restaurant business plan — don’t let it feel restrictive. You can include other sections, add details within sections and change the order as works best.
The final consideration of the restaurant business plan is how you’ll present all your notes, scribbles and lists. So, here are some final ideas on how to organise and present all that hard work you’ve delivered:
- Create a digital presentation.
A digital presentation consolidates all your ideas into one piece of content that’s sharable and digestible. Simple designs that avoid information overload will keep your audience’s focus on the things that matter. It’s best to keep your business plan close to your chest, so if you publish it online, make sure you’ve used the correct privacy settings.
- Get some printouts.
Whilst most people read online, there’s still a lot to be said for a physical business plan that can be handed out and read without internet access. Use high quality paper and get the printing done professionally.
- Prepare notes.
The opportunity to speak in person to potential new stakeholders is always going to be as nerve-wracking as it is exciting. You could make some cue cards or digital notes that help you highlight key information, entertain your audience and deliver professionally.
Future proofing your restaurant and your plans
Covid-19 accelerated the business plans of a lot of existing restaurants and pushed them to offer takeaway, delivery and click-and-collect options, outdoor dining and contactless payments. Restaurant websites became more important than ever.
Those things are all now likely to be part of thriving restaurants into the future. Give your restaurant the best chance of success by building them into your business plan from the start.
Other areas that are becoming hot topics include meat free or meat reduced offerings and carbon neutral dining.
Taking a look at restaurant trends and ensuring you have an eye on them and have a plan if they do take hold is always wise. You don’t have to follow the trends but if you aren’t going to you might want to at least consider why or what you can do instead.
Key takeaway points for your restaurant business plan
You don’t have to write or present a business plan in an exact way and you don’t have to include everything we have mentioned here. You may decide to add other things too.
What’s important is to create a compelling business plan to guide the development of your restaurant, ensure there is a strategy behind your development and demonstrate how you will make a profit.
Having a plan will help you as a business owner to deliver on your goals. It will help investors and lenders to see your vision and to buy into it.
Ultimately, it’ll help diners to be able to enjoy your restaurant and have the wonderful experiences you want to create for them.
This post is for guidance only and is not intended as legal advice. For financial or legal advice related to your specific business, be sure to consult an independent financial and / or legal professional.