How to Cook Up a Killer Restaurant Business Plan
The inspiration to start a restaurant has struck. Now it’s time to 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.
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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 a restaurant, its 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 set up this restaurant? 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), 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.
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 neighborhood, 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. This is why it’s important to be honest about the potential struggles you might face. Not only will it help you prepare, it will instill 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 inventory 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
- A prix fixe 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 point-of-sale will enable you to track all your sales, manage employees and inventory, analyse business performance 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 and making life much easier for everyone.
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.
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 stock and get the printing done professionally.
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.
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.
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