So you want to open a restaurant. We love that for you! We're sure you can’t wait to sign that lease and start decorating. But before—way before—you get to that point, you're going to need a business plan.
Restaurants can be deceptively complex operations, and require a lot of different systems in place. A good business plan will help you think things through before you take the leap. Think of it as a very detailed manual of your business, in which you will be answering lots of your own questions (and, hopefully, investors' questions, too.)
A restaurant's business plan needs to be customized according to the audience, but will contain the same general information. Here are its six parts:
Think of this as the cover letter for your restaurant. This should contain a summary of the business and anything that a financial institution or investors would need to know about the restaurant so they can give you money.
Remember: you are trying to sell your idea here, so make sure to tell the world why it’s such a good idea! If you don't need any investors, then a) good for you! And b) write this plan with other key audiences in mind: you, the city, the neighborhood, any potential listeners, and crucially, anyone who might object.
You will have to convince multiple people along the way that your business is a good idea. The executive summary is your opportunity to get them interested in your topline idea, so be brief about each of these points. You'll go into more detail later. You don’t want to lose anybody’s attention during this summary. Here's what ought to be in it.
It is very important for you to establish this as early as possible because it will be your compass and keep you on track when you are trying to make decisions. It will evolve over time, just but make sure it is always honest. Keep it short and to the point.
CONCEPT & APPROACH
This can take many different forms, but good questions to ask yourself include:
Pinpoint the location of the business, explain why you've chosen it—and why it was the right choice. This doesn't need to be comprehensive, as you'll go into more detail later about your target audience and competition. But start painting the picture now!
GOALS & COSTS
How much will it cost to open your restaurant? What is the projected budget for payroll? Describe the goals of the business and where money will need to be spent to achieve those goals.
In this section of your restaurant's business plan, go into much more detail about everything in your Executive Summary. Look at every aspect of the business from as many angles as possible.
In the Executive Summary, you were selling an idea and painting a picture. The Company Overview allows you to break things down and explain everything more specifically in the picture you have painted.
EXPLAIN YOUR RESTAURANT
There's more than one way to skin a cat, as the saying goes, and there's certainly more than one way to explain a restaurant. Look for opportunities to demonstrate your expertise and vision without getting too abstract. Consider conceptual questions like:
Make sure you supplement these considerations with more practical, tactical tactical info:
Given the ongoing nature of the coronavirus pandemic and its dramatic impact on the food & drink industry, it would be wise to address how your restaurant's business plan will accommodate the "new normal."
Some restaurants are set up for long-term employees. They offer benefits and a more consistent sense of work. Others rely on a deep pool of potential employees in the area with a more short-term approach. Many have a mix. How will you tackle this aspect of your business?
Again, there's no secret formula for information to include and exclude in this section. But here are some things worth thinking about:
From lights on to lights off, walk through a day and sketch it out to the best of your ability. Who is in the building? When is the rush? What day of the week is it? What is the music like? You may not include all of the details in the business plan but this will help you work out some details.
Use this section to put the reader in your restaurant. Give them a detailed snapshot of being in the space, interacting with the menu, and the experience that you want to provide.
Provide sample menus for both food and beverage, complete with potential items and and their proposed prices. Use this section to talk through the design of the menu. You're trying to demonstrate that it offers a cohesive, cost-effective experience that aligns with the restaurant's overall concept
Will there be a specials? Will servers verbal some things not printed on the menu? (Some restaurants, especially those opening during the pandemic, may opt not to include paper menus at all.) If your concept is seasonal and driven by relationships with local vendors, explain how your menu will highlight that distinguishing factor to potential diners.
Given how important the online experience is for diners, be sure to address how you'll present menu information on your restaurant's website and social media platforms.
Time to talk more about the restaurant's location. Make sure to include notes about:
Then, focus your attention on the interior:
Go into some detail about how the restaurant functions. If there is something unique about the style of service or the way tasks are accomplished, this is where to articulate it!
There are many ways to approach this portion, but one way to do it is by considering a step-by-step process:
TARGET MARKET ANALYSIS
This is where you will show your work about why your restaurant will succeed in the market you have selected. It will also demonstrate that you understand the makeup of the market. As you get to know your audience it will guide you. Understanding your audience can affect your hours of operation, menu presentation, choice of music, type of food, style of service, etc. Dig in as deep as you can.
COMPETITIVE MARKET ANALYSIS
Now that you know who you will be serving you must know what other businesses you are up against and how they are similar or different from yours. These other businesses are your competition and it is very important to know what they are doing so that you can do it better.
You know your audience and you know your competition. Now you have to reach your audience better than your competition. In this section you will need to describe how you will achieve this.
There are many ways to advertise your business. Look around at other successful restaurants in the neighborhood and find out how they get information out. See how they have built their brands in the market.
Here are some things to consider:
Pro-tip: Become a regular in your favorite places in the area. When you make connections with like-minded hospitality people you make friends. When you have great people in the industry on your side you will have a whole web of people communicating about you to each other and to their guests. Word-of-mouth is extremely powerful in the food and beverage industry.
This section will need to be totally tailored according to your audience. If you are presenting this business plan to a financial institution or investor make sure the information relevant to those readers. This section will need to include...
...an initial cost breakdown, which should include visibility into:
...as well as an overview of your expected recurring costs, such as:
...and of course, any investors are going to want to know when they can expect a return, so you'll want to project a timeline for turning a profit, which means
Having a proper business plan is a crucial early step towards opening your dream restaurant. Keep in mind that writing a business plan is a huge undertaking, so ask for help if you need it—from professionals, or even just other operators who have done it before. You want to sell this idea and the best chance you have at selling it is to get the proper information and present it appropriately.
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