In plain and simple terms, a restaurant business plan is a written document that outlines your restaurant’s goals and the means of achieving those goals while defeating potential challenges. It describes the nature of your business, background information, financial projections, and organizational techniques to govern your restaurant’s daily operations.
A restaurant business plan is a primary building block to help you appeal to investors and a point of reference when you need to make significant business decisions.
Why Do You Need A Restaurant Business Plan?
After deciding to leap into restaurant ownership, you probably think that a restaurant business plan is a lot of work, and you can skip the hassle and wing it every time you need to talk about your idea. Right?
Wrong!
No one is going to invest in a restaurant that does not have a plan for nurturing their business. A plan is your business’s blueprint that guarantees investors, banks, and landlords that your restaurant is worth their time and money.
In essence, a restaurant business plan gives investors an outline of your business’s progress and development from conception to set up to future projections. It is a clear roadmap to get you started and keep you on track for years on end. It also familiarizes you with restaurant operating procedures, thus saving you unnecessary stress and headaches.
On the other hand, finding the funds to set your business rolling may turn out to be a painstaking process. The whole point of a restaurant business plan is to show investors that you have done your homework, which gives them confidence in your vision. The plan, data, and information you provide need to form a succinct package that portrays a viable business opportunity.
What to Include in a Restaurant Business Plan
Your restaurant business plan is the most important step when opening a restaurant, and pitching the perfect one to investors can be a daunting task. The good news is that most of what goes into a restaurant business plan is information you have already gathered while developing the idea.
As a general rule of thumb, putting yourself in the investor’s shoes will help you develop a plan that will have them knocking at your door. Here are the ten must-haves for every restaurant business plan:
- Mission Statement: The mission statement describes your restaurant’s reason for existence. The most effective ones are the those that your audience can easily remember. Consider the following tips when writing mission statements:
- Describe Value- Describe how you meet diners’ needs and the value you are adding to the restaurant industry.
- Inspire Your Audience- The statement should inspire your potential customers, staff, and investors.
- Be realistic- Your statement should make reasonable promises.
- Be Specific- Only express what is necessary to describe your mission.
- Overview of Potential Costs: Any serious investor will want a clear picture of what his/her money will be going into. Disclose how much money you will need to get the business up and running. Identify the major expenses and put a line item in for the working capital- which is essentially a reserve fund for your restaurant’s first few (possibly slower) months of operation.
- Return on Investment: No matter how mouthwatering the menu and recipes seem or how promising the market analysis appears to be, what matters is that it makes money.
Use a projected profit and loss statement to highlight to investors how much you expect to profit by the end of your first year. This is based on an evaluation of your restaurant’s potential costs against the sales forecast.
- Industry Research: Specify the area in which you plan to open your restaurant and explain to investors how your business will fit in. You will need to cover factors such as infrastructure projects, scope of restaurant industries, residential areas, nearby businesses, and traffic, etc.
- Competitive Analysis: This is where you explain how your business compares to others within the area. Determine the operational components that make your restaurant special and then develop a ranking system to compares yours to all your nearby competition based on these criteria.
- Business Operations: Investors will also want to know how all the moving parts will mesh on a day-to-day basis (once the restaurant is operational) through a detailed operations plan. This section should outline your staffing and training programs, what equipment and technologies you will use, accounting and banking procedures, vendors, payment terms, and restaurant layouts, among others.
- Financing: This section is the backbone of your restaurant business plan. Investors want to see an outline of how you intend to invest their money in the first couple years. You will need to include capital budget requirements, projected revenue, projected profit and loss statement, as well as projected cash flow.
You may also consider going the extra mile to incorporate a break-even analysis, detailing how long it should take before you reach profitability and show a path for continued sales and profit growth over a span of five to ten years.
- Marketing: Detail how you’re going to reach out to your target audience. Talk about your restaurant’s advertising ideas to promote your menu items. These may include using social media, loyalty programs, advertisements, email marketing, etc.
- Menu Development: The menu is the heart of your restaurant’s business plan, so consider making it more than a simple list of items. Provide your drafted logo and restaurant menu ideas and include estimate prices based on a detailed cost analysis.
The menu will give the investors a visual aide of your restaurant’s branding, food item selection, menu engineering, and an understanding of your targeted price point.
- Long-term Goals: Paint a clear picture in this section of where you want your restaurant to be two years after it is operational. Discuss aspects such as financial stability, expansion plans, and growth stimulants for your restaurant.
Investors want to know your plans for the business in the future, including whether or not you will scale operations, the potential for high returns, and exit (or entry) opportunities.
Blue Orbit Is Here To Help You Open Your Restaurant
Do you want to open your first restaurant, or is it a new addition to your chain? Are you not sure where to start with laying out your business plan? At Blue Orbit, we are a national restaurant and hospitality consulting team offering invaluable insights and superior solutions to restaurateurs, real-estate developers, and hotel and restaurant groups.
Get in touch with us today, and let’s write the ultimate restaurant business plan that will attract the investors you need.
Mike Krebs – Project Manager, Blue Orbit Restaurant Consulting