Valerie Hornbach | March 1, 2023, 11:00 PM CST
Before your car was built, it was a series of lines on an engineer’s laptop screen. Before your favorite album was recorded, a musician scribbled out some rhymes in a notebook. And before your restaurant is going to launch, you likewise have to begin with the intense work of creating a blueprint of your idea — your restaurant’s themes, its physical spaces, its food, its drink, its staff, its marketing, its tech, and its expenses. The title for this package of art, chemistry, design, and accounting goes by the extraordinarily humble title of your business plan.
With a business plan, you show the world — or, more precisely, potential investors and partners — exactly what you intend to create, if you can secure the money and the help. You don’t need to know everything about the future in order to make a convincing plan. You should do your best to figure out what it costs to hire a sous chef in Seattle and the price of bread flour in Honolulu and what A/C costs for a barbecue joint in July in Tulsa. Don’t get blindsided by the obvious costs of your unique project, because not-so-obvious ones will be all around you.
To get you started, we got the download from two people who know the score: Sean F Hennessy and Richie Karaburun, both clinical associate professors at New York University’s Jonathan M. Tisch Center of Hospitality. They underlined how difficult this process is in any environment, and how it’s only becoming tougher as investors steady themselves from the whipsaw of the past few years. “The strength of the market research being applied will support the comfort level of investors in your business,” Hennessey said. “The industry is a bigger leap of faith for investors. Your business is only as good as how many customers you’ve had during the last meal, period.”
But don’t let the world economy discourage your very personal idea. If you know you have the goods, charge ahead and get that bag. Here’s how to build a restaurant business plan that will lead you into a future of your making.
Your executive summary should present the tl;dr of your business plan. Think of it like the back cover of a novel. This is where you boil down the tightest possible description and pitch for your establishment, drawing from all the other facets of your business plan. As you continue developing your business plan, your executive summary will evolve to reflect your learnings and structure. You may write this first, but be prepared to revise it constantly. Ideally by the time you're finished, a reader will think, Oh, yeah, that should totally be a business — this will work.
Start by describing what kind of restaurant you want to create. Think through such questions as: What kind of food will you serve? Are you going for fine dining, casual, or quick-serve? What kind of ambiance or vibe will you create? And what sorts of customers do you expect to attract? Paint a picture for your reader.
Your value proposition is what you bring to the table (heh) that no one else does, or what you bring better than anyone else. Identify your competitive advantage. This could be a combination of things: an amazing location, a winning concept for décor, a brilliant chef, your grandmother’s secret recipes. What sets you apart? Lean into whatever this is as you plan and create your concept. The world is full of restaurants already. Your value proposition is what you have figured out that makes you original (and, ideally, profitable).
If you have history as a restaurateur, describe your successes. If you are or have a notable chef on your team, say so. If you have deep ties to a specific community or neighborhood, or another network to draw from (professional, academic, spiritual, whatever it might be) bring it to the fore. Sell yourself. Ask: Why would you fund you?
You probably wouldn’t even be considering opening a restaurant if you didn’t have the beginnings of a menu in mind. Still, go further than that. The menu determines not just what customers eat, but your food costs, your build-out needs, your competition, and in many cases the very location you’ll choose. Your menu should be price-competitive, yet creative enough to set you apart. You want to be reliable, yet flexible. Your menu also must work in concert with your overall brand identity and with your business model. Some foods are amazing at delivery — pizza and wings are the champs there, and drive many ghost kitchen concepts. Other foods simply aren’t going to drive as much revenue through food delivery or pickup.
So don’t simply wave your hand and say “we’re a roti joint” or “we’re going to be a New American concept.” Get down into the weeds. Is your ideal menu seasonal or perennial? Will you be serving family style? Small plates? Can you source your ingredients from vendors you can afford? And will you have back-up vendors, just in case? What does your drinks program look like? Are you doing NA cocktails, on-tap cocktails, or to-go cocktails?
Good news is, a menu by no means needs to be long to be profitable. The price of your food, your prep, and your labor all will come to bear on your bottom line. For everything you intend to execute, consider cost, consider feasibility, and consider its possible appeal. Also — consider your own personal enjoyment. Don’t build a menu around foods or kitchen tasks that you can't find a way to enjoy. Your menu should make people happy, and you are the most important person in this entire equation.
You’re as successful as the people around you, and you can’t do this by yourself. Write out your org chart: who does what tasks, and who reports to whom.
Maybe you won’t need to hire immediately because your first phase is a food truck or a very small mom-and-pop. You should nonetheless consider staff planning. Figure out how many and what kinds of staffers you’ll need, what shift schedules will look like, and how much your labor will cost. Those projections are essential to building out a budget and any other financial planning (such as your expected restaurant prime cost).
Take a deep breath, clear your mind, and consider your tech needs. They’re going to be several. For some restaurants the sum of your technology tools, or the so-called tech stack, is surprisingly straightforward: Pizza joints, tap rooms, and coffee shops, for example, use a handful of go-to tools. Most everyone else has to improvise a bit.
First thing, you’ll need a point-of-sale system — a huge choice, and one that will determine many other downstream tech choices. A good POS can simplify financial reports and analysis, stock turnover, and more. Your POS will be your best business management tool for day to day operations. Many businesses have transitioned to a cashless model by accepting sources like Apple Pay, Venmo, and credit card systems. Do some shopping, and don’t be shy about haggling over the price with your eventual provider.
You might need delivery and marketing services like DoorDash and GrubHub (or you might decide to launch your own delivery service). Digital menus and ordering, virtual check-in, mobile payment systems, and a solid website all belong in this section. You might also push the boundaries further with e-commerce, reservation software, inventory management, payroll and staffing and hiring, food waste monitoring, your kitchen display systems, and online ordering platforms. So many aspects of a restaurant’s operation are propelled or assisted by different tech tools, you’re going to want to get nerdy with it, and check those price tags.
Plan and consider the experience when you first walk into your restaurant following through every step of your space. What do you want your customers to experience? What environment do you want to create to represent your brand identity and how should it influence the dining experience? What about your workers — will they have their own bathroom? Lockers?
This vision will vary depending upon your type of restaurant, the space you’re working with, and your budget. Get creative. Depending upon how you expect to use the space at different times of the year and day, you may want a space that can transition to present different energies for different settings. The general design aesthetic may be something to test run at a soft opening or in feedback surveys.
Failing to do enough unbiased, thorough research is perhaps the greatest mistake restaurateurs make in business planning. With so many factors to consider, a guess or your gut aren’t the most reliable guides. Do your research, gather data, and make the best-educated decisions possible for your location, your budget, your concept, and your model.
Here are some broad areas to consider, with some questions to get you probing.
Location. This includes both your specific address and the rest of the neighborhood. What is foot traffic or driving traffic like? And will you have high traffic and good visibility? Who lives nearby, what do they spend, and what are their dining habits?
Have a look around, within a short drive or walking distance. Are there other restaurants with similar offerings to yours? This might not be a bad thing — opening a gelato shop on a block with an Italian restaurant might benefit you both. But if they are similar, how does their menu stack up to yours? Is their location more visible? If so, how can you set your establishment apart?
Competitive analysis. This is somewhat related to location. How well you do will depend on who else exists in your area that is both a direct and indirect competitor.
Do a SWOT analysis — strengths, weaknesses, opportunities, and threats. What demand will there be for your restaurant? Who are your top competitors, and what advantages do you have that they don’t?
Competitive analysis information for restaurants can be tricky. Business intelligence in this industry commonly travels as mostly word of mouth, which doesn’t always paint a full picture. If you have the budget, consider hiring a consultant or data firm to help you figure out the landscape. While it may be difficult to get some competitive market data, you have to be thorough.
Performance KPIs. Know how to calculate top restaurant key performance indicators, and know the most appropriate metrics of your type of restaurant. You want to set realistic financial goals.
Target marketing. Without limiting yourself, ask who is your ideal customer? Age, income, background, tastes, family size, you name it. You’re going to want to build your brand to appeal to them, without needlessly alienating other possible customers. Restaurant owners commonly overestimate how much their target demographic will spend — for instance young, hip diners are great for bringing energy and attention, but they’re often cash-poor. Know what people in your area have to spend so that you can set realistic expectations for sales.
Theme. Branding, branding, branding. This again draws from your value proposition and your overall design. Know your theme and maintain consistency to build your brand.
Financial analysis. This might be the most important analysis. If you’re spending faster than you’re earning, you’ll be sunk, and for a variety or reasons it’s easy to overestimate your profitability. Do the math — pitting all your costs against your projected revenue. Then run those calculations back while considering how you would withstand a shock to the system such as another pandemic, supply chain woes, or a bird flu that sends the price of eggs soaring. Economics is known as the dismal science for a reason. Confront the hard questions about whether you can turn a profit.
Soft openings. Have you attempted a trial run, or a pop-up? Do you have some other solid form of proof that your ideas — your menu, your marketing plans, your vibes — can draw an audience? If not, figure out a way to present a proof-of-concept menu of items to 50 or 100 people to get their customer feedback on quality, experience, and price point. Incorporate their testimony (and suggestions) into your overall plan, and use the test run to let investors know you’ve prototyped your concept. It gives them confidence.
Second perhaps only to your market analysis, your marketing plan may be the most important aspect of your business plan. Your marketing plan should at the very least include: a website, a plan to use social media, a plan to use Google, a plan to use incorporate loyalty programs, any relevant traditional media (such as print or radio ads), and any other direct-to-consumer outreach — coupons, flyers, mailers, email, and so forth. Figure out what it all costs and include that estimate into your expenses.
As you imagine your marketing, picture how the other aspects of your business plan connect to it. Does your restaurant design lend itself to creating the sort of vibe you want to showcase on Instagram, for instance? Does your menu include items that perform especially well on TikTok? Is the lighting suitable for content creators to make posts of their favorite menu items? Make a note of it. Part of the business plan’s essential function is itself to market your idea to people who might back your restaurant and encourage them to bring more people next time they visit. The marketing plan thus has a dual function. It lays out your strategies and ideas; it also serves to market the business plan itself. So think of it as a place where the other components of your overall plan converge.
If you’re stumped for ideas, scope out this quick rundown of top restaurant marketing tools and digital marketing tips. Then check out ways to build a great restaurant website, strategies to win on SEO and on local SEO in particular, a primer on setting up a Google Business Profile, basic social media best practices, specific best practices for Instagram, strategies for marketing your restaurant on TikTok (plus some TikTok accounts to follow), pointers on how to shoot great food video, how to use email as your secret weapon, and how, after all of this, to get the best returns from your restaurant marketing budget.
Now, to the point of the plan: Showing people who might want to invest in your restaurant that you’ve got a chance to turn a buck. Restaurants fail all the time. Top of your investors' minds will be the question you've been considering all along now, namely: How will this venture survive to make a profit?
Ideally you’re presenting to investors around your soft launch. If the soft launch and the pitch are successful, you may get some capital lined up and get to move ahead to the hard launch.
Whether you win over private investors or secure a business loan, this business plan will allow you to present a strong, metrics-based pitch that shows a path to success grounded in realistic expectations and thorough market research. By the time you’ve honed your business plan, tweaking and adjusting as you interrogate your ideas, you should feel ready for anything.
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