Every restaurant has its own unique mix of taste and style in the bustling world of the food business, where flavours and atmosphere are king. As exciting as things are, the business plan, which is a strategic road map, often takes a back seat. A well-written business plan is like the secret sauce that makes a dish better. It is what people don’t see that drives a restaurant to success. A killer business plan is invaluable, whether you’re starting a new restaurant or reviving an old one.
Why do you need a business plan?
The goal of your business is not to provide temporary services to your customers but to have long-term effects. 70% of businesses that survive into their fifth year have a clear business plan that keeps them on track.
A good business plan…
- helps you clarify your goals as a business.
- helps your restaurant stay focused on its goals.
- helps you map out where you are as a business and where you want to be within a given period.
- helps you decide the fastest route to success, and available data back this.
- prepares you for opportunities like grants and business pitches.
- helps your business identify its market and how to reach it.
So, how do you go about compiling a worthy business plan for your own restaurant?
Preparing a decent business plan for your restaurant.
There are essential elements you have to include when creating a business plan for your restaurant. While some of these key elements are staples in good business plans, some are unique to the food business. You can find any number of templates, here’s a good one specific to restaurants, but the main components you need to include are:
- Executive Summary
- Company Description
- Market Analysis
- Sample Menu
- The Management Team and Employees
- Market Overview
- Marketing strategy
- External help
- Financial Analysis
Your executive summary is a vital part of your business plan, as it acts as both an introduction and a comprehensive summary of the important details of your business plan. Getting this part of your business plan down could be the key to securing the interest of investors and venture capitalists.
Although this is the first part of your business plan, it is advisable to write it last. This will allow you to properly flesh out your business plan before condensing the vital points into your executive summary.
Your executive summary should include:
- A mission statement.
- Your restaurant’s concept.
- A quick look at your offerings.
- Potential costs.
- Potential profits.
Essentially, your executive summary should give readers a reason to root for you at first glance.
Here, you go deeper into describing your restaurant. You should include the name of the restaurant, what sort of restaurant it is, location, contact details, legal status, and more. You should also introduce yourself, your experience in this section, and other key stakeholders in your restaurant.
You should go further to give a quick market analysis as to the standing of your restaurant and its potential for success. Your company’s goals and objectives should also be outlined in this section.
You should conduct your market analysis; this will involve a deep dive into your area’s restaurant industry and its various niches. You will also have to study your potential customers and why they make certain buying decisions. You’ll look into the types of families in the neighbourhood, their preferences, and how that will impact your business.
This is a vital part of a restaurant’s business plan, as it covers what the restaurant will offer. A menu could just be a list of the items for sale and their cost. One thing to be particular about while creating your sample menu is the price point of your products.
Ensure that the prices reflected in your menu accurately represent the prices obtained from your market research. This helps your potential investors see your targeted price points and other financial projections that you will make based on your products.
The Management Team and Employees:
This section should detail the management structure and who will oversee the restaurant. You can introduce each manager here and other members of staff. It is okay if, at the initial stage, you are the only manager alongside a few employees.
This section should also include the projected expansion of your management team over time. Salaries to be paid and other benefits to be included for your employees are also parts of this section.
This is one of the few areas in your business plan where you can bring your imagination to life. Include pictures, mood boards, and architectural designs showcasing your restaurant’s design or desired design.
The restaurant’s design should incorporate not only the aesthetics but also the software and cooking equipment.
Wherever you choose to establish your restaurant plays a huge role in its success, and investors are pretty keen on this information. When drafting your first business plan, you might not have a location set, but you should have a realistic understanding of potential locations for your business.
This section should include possible locations, their challenges, and the possibilities for success in those locations.
This is another essential part of your business plan, as it narrows down the focus of your market research. In this section, you should deal with your environment’s macro- and microeconomic conditions.
You should be able to analyze similar existing restaurants in your area, their success, if any, and how you intend to stand out. If your restaurant business type has not been successful, why? And what do you want to do to guarantee a level of success?
This section should detail how you intend to attract and retain customers. This should include plans before launch if you are just starting and plans after launch. Will you be handling marketing yourself, or will you be getting the services of an agency? What is your potential marketing budget? Since marketing might be the key to gaining customer traction, you should pay particular attention to this.
While you might be a culinary expert providing unforgettable memories for your customers, you certainly are not a jack of all trades. You will need expert help in various business areas, including marketing, financial planning, design, and more. This section should cover the bulk of the external input you will need and essential details about it.
This is another vital part of your business plan; it might even be more critical than your executive summary, and you are often advised to have a professional help you with this section.
An accountant will better understand your current numbers and give you realistic projections with your existing resources. Your accountant can also help you identify potential risks, their implications, and possible ways forward to keep your business a going concern.
Your financial analysis can affect your costs, pricing, and potential profit margins if correctly done.
We cannot overestimate the importance of a business plan, and while it does not necessarily guarantee success, it helps you build a roadmap to achieving your goals. While it is safe to cover most of your business plan independently, getting peer review and professional insights will increase the possibilities of drafting a foolproof business plan for your restaurant.
CHI is dedicated to keeping up with local and national trends in the Restaurant Industry to help serve our customers better and keep them one step ahead. If you are interested in opening, purchasing, or selling a restaurant CHI Real Estate can help. Get in touch with our team today.