You have a big idea for a restaurant. But if you really want to leave your mark on the restaurant industry, you need more than an idea. If you really want to succeed, you need a plan.
Your restaurant business plan acts as a roadmap to get you from where you are (a budding entrepreneur with a culinary vision) to where you want to be (a small business owner who has successfully brought that culinary vision to life—and has the foot traffic, industry accolades, and profits to prove it).
But why, exactly, do you need a business plan for your new restaurant? What does it need to include? And how do you create a restaurant business plan that will help you establish yourself in the restaurant world—whether you’re launching a fine dining establishment, a fast food joint, or something in between?
Why do you need a restaurant business plan?
First things first—before we jump into how to create a restaurant business plan, let’s quickly cover why you need a solid business plan to begin with.
There are a number of different reasons you’ll want to create a detailed business plan before you move forward with launching and opening your restaurant, including:
- A restaurant business plan sets you up for success. As the old saying goes, failing to plan is planning to fail. A solid business plan will help you map out the steps you need to take in order to build a sustainable restaurant business—and will keep you on track as you’re taking those steps.
- A restaurant business plan will help you land funding. Unless you’re independently financing your restaurant, you’re going to need outside funding. A solid business plan will help you present your restaurant to potential investors—and help you land the funding you need to make your restaurant dreams a reality.
- A restaurant business plan will help get everyone on the same page. If you’re working with partners, creating a business plan will make sure everyone is on the same page on how you plan to move forward in opening your restaurant.
The key elements of a restaurant business plan
Clearly, creating a business plan is a must if you want to open a restaurant. But what, exactly, do you need to include?
There are a few different elements you’ll definitely want to include in your restaurant business plan, including:
The executive summary is the first part of your restaurant business plan—and, as the name suggests, it summarizes all the elements you’re going to include in the rest of the business plan.
Your executive summary should include basic information about your proposed restaurant idea, including your restaurant name, mission statement, and general restaurant concept. It should also outline how you plan to bring your idea to life, including an overview of your marketing plan, projected costs, and target customers.
The key to a successful executive summary? Write it in a way that makes people want to read more. Your executive summary should get people excited about your restaurant idea—and, after reading it, they should be excited to continue reading your business plan to learn more.
After your executive summary, you’ll want to give a general overview of your proposed business structure. This includes your management team (including any restaurant owners, restaurateurs, and general managers that are involved in the planning process) and your ownership and business structure.
The next element of your business plan is your restaurant concept.
This is where you really bring the idea of your restaurant to life. Your restaurant concept should include:
- Restaurant type. Whether you’re planning a fine dining restaurant, a casual bistro and food restaurant, or a grab-and-go sandwich shop, you’ll want to describe the type of restaurant experience you’re trying to create, the type of cuisine, and the proposed service style in your business plan.
- Sample menu. Taking the restaurant type information a step further, if you have an idea of the types of menu items your restaurant will serve, you should also include a sample menu in your business plan. (Just make sure it looks professional and is designed as if it were an actual menu you would use in your restaurant.)
- Location. If you have a proposed location for your restaurant, include it in the business plan. And even if you haven’t identified an exact location, you’ll want to include as many details as you can about where you want to open your restaurant (for example, a specific neighborhood or city).
- Mockups. If you have any design mockups (for example, a logo design, branding materials, or a restaurant layout), make sure to include them.
- Point of difference. To use a food metaphor, think of your point of difference as your business’ “special sauce;” it’s what makes you unique, helps you stand out from the competition, and will draw diners into your restaurant—and it’s important to define it in your business plan.
The more detailed you can get, the easier it will be for people to visualize your restaurant concept—and the easier it will be to ultimately get funding and bring that concept to life.
Including a thorough industry analysis is another key element in a restaurant business plan.
Some of the key factors you’ll want to include in your industry market analysis includes:
- Target market analysis. If you know where you want to open, you’ll want to do a complete analysis of the target market, including competition, population demographics, and rental costs.
- Competitor analysis. You also want to dig deep into any competition in your target market. What other restaurants are in the area? How do they compare to your restaurant concept? And, coming back to your point of difference, how are you going to break through the clutter and differentiate yourself from the competition?
- Customer analysis. Your business plan should also include a description of your target customer base, including any key diner demographics and behaviors.
Describing the type of restaurant you want to create is the first part of the equation. But the second—and equally important—part of that equation? How you’re going to market that restaurant.
While you don’t need to include every detail about your marketing strategy in your business plan, you do want to highlight the key strategies you plan to use to drive business. For example, are you going to advertise on social media and Google? Are you going to create loyalty programs to drive repeat customers? Are you going to hang flyers at other local businesses or offer discounts to first-time customers?
The point is, whatever marketing efforts you plan to undertake as you build your restaurant business, make sure to outline them in your business plan. Not only will it help keep you on track and moving in the right direction, but it will also show potential investors you have a plan for growing your business—which can make them more likely to invest.
Budget and financial analysis
Opening a business is a numbers game—which is why including budgeting information and a detailed financial plan for your new business in your restaurant business plan is an absolute must.
Including budget and financial analysis in your restaurant business plan is important from both an operational and an investment standpoint. For you and your business partners, you need a clear picture of your finances to ensure that you have the proper budget to run your business—and for your investors, having a clear picture of your finances ensures that you’re building a financially sustainable business (and protecting their investment in the process).
So, what does that financial analysis look like? Some of the key financial information you’ll want to highlight in your business plan include:
- Projected costs. What are the start-up costs for opening your restaurant (for example, buying equipment and training staff)—and what are the regular costs you’ll incur to keep your business moving forward each month (for example, rent and payroll costs)?
- Projected cash flow. How much money do you expect to flow in and out of your business—and how will that impact your profit margins?
- Future financial projections. Based on your projected costs, income, and profit margins, what are your future financial projections? For example, how much profit are you projecting for your first year in business?
Creating a restaurant business plan is the first step towards opening your restaurant
Opening a restaurant can be an incredibly fulfilling and exciting career path. And now that you know exactly how to create a restaurant business plan from the ground up, you have everything you need to take the first step towards opening your restaurant.