Writing or updating your restaurant business plan? Here’s what you should include
Are you considering opening a new restaurant, adding a virtual restaurant, or pivoting your restaurant’s business strategy to adapt to the industry’s “new normal” after the pandemic? Make sure you take the time to build a restaurant business plan. Why?
- Business plans are like professional road maps — they literally lead the way to success
- They’re critical if you’re looking for investors and need to outline your restaurant’s current wins and future revenue potential
- They help you foresee challenges before they arise, so you can sidestep some catastrophes and be better prepared for the others
Some 26% of restaurants fail within a year of opening, and failure to plan is one of the primary reasons those restaurants close. Create a business plan, and you’re setting yourself up to be on the right side of that statistic.
Here’s how to do it.
What is a restaurant business plan?
Before you learn how to write a business plan, it’s crucial to understand what a business plan is — and what it isn’t.
The goal of a business plan is to create a guide that helps you navigate each stage of launching and running your business. That plan should also be comprehensive and articulate enough that a total stranger, for instance an investor, could read through it and easily understand your vision, your goals, and how you intend to turn your restaurant dream into a reality.
Business plans come in a variety of structures and they can be as short as a single page or long enough to bind into a booklet. You may want to start with a lean startup plan that focuses on a high-level take on your strategy, then follow up with a more detailed plan that elaborates on key points and offers investors more information.
In short, your business plan should communicate everything you have and plan to put into your restaurant to ensure ongoing success.
7 elements every restaurant business plan should include
Your restaurant and mission statement should be unique to your business and your vision, but that doesn’t mean you have to start completely from scratch. There are plenty of restaurant business plan examples on the internet, or you can use a free template from the Small Business Association (SBA) as your starting point. However you write it, your finalized business plan should include seven key sections.
1. Executive summary
This is a brief summary of your company, why it’s something the community wants or needs, and why it will be successful. Many different types of restaurants speak to various demographics, and it’s important to know what kind of restaurant you want to run. Are you opening a quick-service deli focused on takeout sandwiches and ready-to-eat salads? Or are you going to be the first tapas restaurant in a city eager for more variety?
If you’re using your business plan to ask for financing, the SBA recommends including financial information and high-level growth plans in your executive summary, too.
Think of your summary as your opportunity to capture your reader’s attention. Many investors will make a split-second decision based on the executive summary alone — if this section is all they’re going to read, make every word count.
2. Restaurant description
Now it’s time to launch into a more detailed description of the company, including its vital differentiator(s), target audience, and any other factors that could sway investors like experts you’ve brought on board as advisors or a location you’ve already scouted or secured.
You’ll want to include the legal structure of the business, explaining whether you’re a sole proprietorship, LLC, etc., and list out existing management and their roles (including your own).
Now comes the fun part: Writing out a description of your concept. This is where you can let your creative side come out, showcasing your passion for what you hope to create and using plenty of adjectives to engage your readers and give your concept life. You’ve already decided what type of restaurant you’re opening, now flesh out all the other details:
- Service style (counter vs. sit-down, casual vs. fine dining, etc.)
- Restaurant size and seating capacity
- General ambiance, including décor and music
- Options for styles of seating, lighting, and other fixtures
- Operating hours
- Style of cuisine
- Peripheral service offerings such as retail products, delivery/takeout, and catering
- Unique selling points such as using produce grown on an adjacent farm or a 30-minute lunch guarantee to serve the area’s office workers better
3. Sample menu
If you’re a new restaurant, including a sample menu is the only way investors will know what you plan on serving. It’s not enough to say you’re going for “rustic Italian,” as that could mean different things to different people. Chances are your menu is your key differentiator, or at least part of it — otherwise, why will customers choose you over tried-and-true competitors already offering similar dishes?
Collaborate with your chef and keep the core tenets of great menu design in mind:
- Know your audience and tailor your design and descriptions to your target customer base — a college crowd eager for drink deals and shareable eats will be more interested in pictures and flashy pricing than diners looking for a white tablecloth experience
- Menu descriptions should be short but evocative — choose words that help customers understand exactly what they’ll be eating and get them excited about trying it (for example, say “succulent tea-smoked duck with anise-scented plum sauce” rather than “duck with plum sauce”)
- Refer to menu psychology when determining and placing pricing, sticking to simple numerals (no dollar signs) placed to the right of the menu item with no dots or dashes in between
- Use that same psychology to guide customers through your offerings, using call-out boxes and bold text to highlight more profitable items
- View your menu as an extension of your restaurant branding, using the same colors, design elements, and fonts
4. Target market analysis
Detail your target market, using buyer personas to indicate who you see being your primary customer and what their dining habits might look like. These personas should include information on where target customers live, their income levels, their pain points (do they hate long waits or want restaurants that are open later?), and how often they dine out or order in.
5. Marketing plans and competitor analysis
Bolster your business plan with an overview of the industry. This should include competitive research that offers insight into how other restaurants in your niche are doing, what successes they’ve had, and where they’ve faltered so you can learn from those mistakes. Refer again to your key differentiators, this time explaining how your restaurant will address the current market and exceed customer expectations.
This is an excellent place to include your marketing plan, too. For example, how will you be promoting your restaurant? Will marketing be handled in-house or outsourced?
Promotional events, social media, and paid ads are just some ways you can help get your restaurant off the ground, and investors will be very interested to hear what you have planned.
6. Organizational management
While you’ve touched on your organizational structure and management earlier on in your business plan, now you’ll explain your business structure and share a more comprehensive look at your team. An organizational chart can be helpful, as is a summary of your collective experience. Some people include a bullet list of the team’s top achievements that’s easy to scan and digest.
In addition to listing out co-founders, managers, servers, etc., you can attach resumes from your executive team or critical players like a well-known mixologist that’s helping you develop your cocktail program.
7. Financial projections
Finally, it’s time to address the financial side of your business, especially if you’re using your business plan to acquire startup funds or additional capital after you’re already operational.
If you’re pre-launch, your projections are just that: guesses. But these guesses should be based on market research, actual expenses, and projected income, culminating in a five-year look at everything from estimated revenue to capital expenditure budgets.
If your business is up and running, you’ll include actual financial records such as cash flow statements and your P&Ls, ideally for the last five years. Use colorful charts and graphs to highlight financial wins and make it easier for investors to gauge your company’s financial health quickly.
If you’re asking for funding, specify how those funds will be used and whether you have collateral you’re able to put up to secure a loan.
Strengthen business plan by strategizing how you'll capture new customers through takeout and delivery
COVID-19 has drastically changed the hospitality industry, but many restaurants like Pig & Khoa and The Council Cafe have found ways to revamp their restaurant models to support not only on-premise dining but expanded delivery and takeout orders as well.
In 2020, some 1.2 billion people worldwide used online food ordering. In addition, surveys found that 68% of consumers are more likely to grab takeout from a restaurant now than pre-pandemic, and 53% say takeout and delivery play an essential role in their way of life.
Platforms like Grubhub Marketplace can make it easier than ever to capture the attention of new customers and reinvigorate relationships with existing customers by offering quick-click access to ordering and stress-free pickup or delivery.