The Breakdown of a Restaurant Business Plan

Almost every successful business started with a business plan, and a restaurant is no different. In fact, unlike any other industry, creating a sound restaurant business plan can literally be the difference between success and failure. If you are going to open your own restaurant, before you do anything else, the very first thing you should do is create your restaurant business plan.

So many clients come to us with aspirations of opening the restaurant of their dreams, but so few take the time to create the plan on how to make that dream a successful reality. Some people think business plans only need to be created if they are approaching a financial institution for funding, but creating a restaurant business plan is not just a tool to get a small business loan. Done properly, your restaurant business plan should also be your guide for making just about every decision you need to make as you create your brand and develop your concept. Since creating a restaurant business plan is very different that other industries, we have created this guide to help you get started.

Before we go any further, I am going to suggest that you create your budget, so you have a place to draw your numbers from when the time comes. This is a pretty in-depth process, specific to the restaurant industry; so I strongly suggest you read our post on The Complete Guide to Developing a Restaurant Budget before you go any further. Don’t worry, I’ll wait…

Did you read our post and create your budget? OK, great… Let’s move on.


Confidentiality Agreement

After your title page, this should be the very first page of your plan. This ensure that whomever you share your concept with will be obligated to keep this information to themselves. You can find many templates online that you can customize to fit your needs. However, we always recommend having a licensed attorney review any legal documents you create pertaining to your business for your own protection.

Executive Summary

This is your “30 Second Elevator Pitch.” Well, it should take longer than 30 seconds to read, but this is where you summarize who you are, what you do, how you will do it better than anyone else, and why people will care about that. Keep it short, simple, direct and to the point. As industry professionals, we tend to use jargon that is familiar to our business. This is practical when talking to me, or another chef, but when you write a restaurant business plan, you have to assume that whoever is reading it, knows absolutely nothing out our business, so use simple terms. Just below your executive summary you can include subheadings such as:

Business Objectives

“I want to be a rich and famous Chef,” is not a good example… Profit and marketability are definitely important, but that is a given. Besides making money, what is your business going to do? Are you going to donate a portion of your profits to animal shelters? Are you going to support environmental conservation efforts by sourcing locally? Do you want to get into the Guinness Book of World Records for making the worlds largest pizza? Showing that you aren’t in it just for the money shows you have passion, and that is important for any business owner.

Mission Statement

This is probably the hardest part of the whole plan. In only one or two sentences, this is the statement that you will refer to when you don’t have an answer about which direction to go. If your mission is a sound one, it will guide you and your team.

Keys to Your Success

This is somewhat self-explanatory, but let’s not make this all peaches and roses. Make sure to acknowledge what will be a preventative of success and how you will overcome it.

Company Summary

Literally… What are you (as a company)? Who are you (as the owner)? Where is your company located (physical address of restaurant, TBD is acceptable)? What do you do? Again, simple, simple, simple.

Start-up Summary

This is where the financial details begin to come into play. Outline what it is going to cost to get this business off the ground and how do you plan on paying for it.

Products

Look at your menu… You did already create your menu, right? OK, good. Look at you menu and summarize what you will be selling. A little fluff is OK here, but stay away from fancy culinary terms.

Market Analysis

Location,location, location! This is going to take some research on your part. Finding the right location for your concept is 1 part instinct and 10 parts research. Do your homework!!! Once you find a couple of potential locations or areas, start there. The internet should be able to provide you with all the information you need to create your market analysis. You can literally do a Google search for “XYZ City Population Demographics.” Besides the population, search out your competition in the area. How many other restaurants are in the areas? Hoe many sell what you will be selling? Use the big chains to help if you can. If there is a Starbucks across the street from a Dunkin’ Donuts, there’s a pretty good reason for it. You will also want to take advantage of Google Maps, Earth specifically. Just the other day I had a conversation with a new client about a potential location and she said the demographics showed a lower than average median income in the city. However, once we plugged in the potential address into Google Earth, we saw that 60% of the homes within a half mile of her location all had swimming pools. Call me crazy, but I don’t think those people have lower than average incomes.

SWOT Analysis

Strengths, Weaknesses, Opportunities and Threats. They are exactly what they sound like. Create short, bullet point lists for each heading and don’t put lipstick on a pumpkin here, say it like it is. This is your opportunity to pinpoint issues that could lead to the demise of your business while at the same time, showing how you will overcome them.

Marketing Strategy

This is as simple as it sounds… How are you going to put trousers in the seats? Have a plan and explain it thoroughly. Website marketing? Newspaper ads? TV commercials? Whatever you are going to do, explain how you are going to do it, what it is going to cost and how you will see a return on that marketing investment. Just a tip, “word of mouth” is not a good strategy.

Website Marketing Strategy

In this day and age, you need a web presence and plan to make it work for you. What will your website cost? How will you use it to gain business? Will you be using social media? Gosh, I certainly hope the answer to the last question is a resounding YES! Outline how you will use these valuable tools to your benefit.

Competitive Edge

This is your opportunity to explain why you are the greatest chef in the world. OK, maybe that’s a bit much, but nevertheless, this is where you explain why you are better than your competition and why will people chose your establishment to frequent.

Sales Strategy

OK, now we have them in the door, how are we going to “sell” them? Going to have daily specials? State what will make them special to the customer and the business… Flying in Adzuki Beans from the Himalayas? Will they have crazy low food cost? Will you have a liquor license and offer karaoke night to bring in the drinkers? Are you a BYOB and familiar with the “Sullivan Nod’? If not, Google it! It won’t be helpful for your plan, but it will be to your bottom line. You’re welcome!

Sales Forecast

OK, this is where the “not fun” stuff begins for most chefs and quite honestly, is THE MOST IMPORTANT PART of your restaurant business plan. Particularity since this is where your plan differs from all other types of businesses. I’m going to assume to assume you’ve completed your restaurant budget, hopefully for three years out; so this is where to take the time to explain where these numbers come from. Be specific, be detailed, but be succinct and justify why these numbers are correct. Remember to keep in mind that you are explaining your business to someone, who potentially knows absolutely nothing about it, so don’t assume they know what “covers” or “table turns” mean.

Milestones

This is a good opportunity to explain your pans for success and growth strategy. Don’t be all “pie in the sky” with your aspirations, but this is a good place to expand on what you will do when you reach certain business benchmarks. For example, you may have a goal of opening a catering division to your restaurant concept. Explain what events will need to transpire in order for you to make that decision to move forward.

Management Summary & Personnel Plan

Who is going to be running and working in this business. As the owner, flaunt your experience and expertise here. A financial institution is going to be far more likely to lend money to someone with experience in the industry in which they are starting a business. This is also the area to justify the payroll in your budget. Explain how many positions you will have, the reporting hierarchy, their generally described work responsibilities and potential work schedule.

Financial Plan

This is the area of your restaurant business plan where you elaborate on the remaining items in your restaurant budget. Again, be specific with details and make sure you can justify all of your projections and estimated costs.

Start-Up Funding

This sub-aspect is pretty self-explanatory. What is it going to cost to cost to start this business? Where are you going to get, or hope to get the money from? How are you going to spend the money once you get it.

Break-Even Analysis

Based on the restaurant budget you created, you should be able to determine what you payback is on any funding you acquire, as well as explain when the business will begin to show a profit, beyond the break even point.

Projected Profit & Loss

This is the area of your restaurant business plan where you get to show off the fancy budget and food cost analysis you created to show how the numbers work.

Projected Cash Flow & Balance Sheet

Unless you are intimately familiar with creating Cash Flow and Balance Sheets, this is where using a business plan software will come in handy. Cash is king, but so is fluid equity, so tables and charts need to be created to show the value of the business as it grows.

Don’t Want To Create Your Own Templates?

Go to our Business Resources page to Purchase a Downloadable copy of our
Food Cost Analysis or Budgeting Templates in Microsoft Excel.

Restaurant Business Plan Summary

Starting a new business in any industry is a risk. Starting a new business without a plan however; is both risky and foolish. Understanding where you are starting, having a plan as to where you are going, and a comprehensive strategy outlined as to how you are going to get there, is the best way to ensure you are on the right road to success.

We’ve helped develop dozens of business plans with clients over the years, and know how daunting of a task it can be when you are starting from scratch. We always recommend using a software platform to make things easier after you’ve completed your food cost analysis, using our Free Food Cost Calculator.

Pin It on Pinterest

Share This