How To Write a Restaurant Business Plan
February 21, 2020 • 13 minutes
About 42,000 new restaurants open each year and about 17% of those close in their first year, with even more following in their third and second years. It’s likely that most of those closures come from poor planning or when inexperienced entrepreneurs decide to learn as they go.
A restaurant business plan demands that you give attention to common reasons for failure, such as not budgeting, cash flow, and not thoroughly researching a location. As you create your plan, you learn how to start a restaurant before you commit to any major decisions.
You can use this structure as a basic restaurant business plan template, but keep in mind that each plan is unique to the business. Your executive summary or company overview should be different from any other restaurant.
The executive summary offers one or two-sentence takeaways that highlight the essential information from each of the sections in your plan. Ideally, this is less than one page and will act as an introduction to your restaurant business plan. It’s something that an investor or lender can evaluate in less than a minute.
Your executive summary should show that you’re serious about opening this restaurant. It will need to layout facts, show a transparent likelihood of success, and explore how you intend to overcome challenges. With this page, you have less than 5 minutes to hook an investor.
A business plan for a restaurant will often serve to help new owners acquire funding through lenders or bringing in partners. You should expect those people to glance at this page first before they decide to read anything else.
Follow these tips for writing your executive summary:
Write this page last, so you know that everything comes from your research, findings, and other elements of your report.
Use engaging language such as: because, results, and found or findings.
List out facts and goals
Start and end with startling insights, relevant quotes, or something that will hook your readers.
Your restaurant business plan executive summary should stand independently but also align with the larger plan. It should seal the deal on its own, but the rest of the plan must provide in-depth information to support these claims and win over investors that decided it was worth it to keep reading.
Your company description should cover the name, mission statement, concept, and goals. It’s very straightforward. When looking at a restaurant business plan sample, this would seem like the fun portion to write.
What you’re doing with the company overview is committing to paper your ideas and the things that make you passionate about your business. Opening a new restaurant business plan will probably flow best when you start with this section. Think of it as the formal introduction for your business to everyone, including prospective investors.
Include the following in your company overview:
All brand information including your logo, and restaurant’s name
Concept — explain your service plan, a summary of your menu, and design plan
Hours of operation
Insight into your goals
Glance at your target market (such as couples, local families, single tourists, etc.)
Your company overview might start with something like this example_: «Gabri’s Lounge and Restaurant will feature an outstanding New American-Swedish menu with a touch of Asian influence in an upscale and cozy atmosphere.» It's a simple introduction to the overall concept._
Your company overview may be a few pages long as you're covering so much information. When going through your business plan checklist for restaurants, completing the company overview should leave you feeling pretty accomplished.
Who is your competition, and do they have something better than you? Probably not, but your potential investors, landlord, or partners don't know that yet. Use this section when writing a restaurant business plan to show them that you know your rivals in the area and that you can outperform them. Does your city need a Bahn Mi sandwich shop, or are there already a handful in a small radius?
Restaurant competition is fierce because a concept doesn’t limit the competition. A steak house will still compete with Italian-inspired restaurants, and Ramen shops as well as other steakhouses in the area indirectly. Every restaurant competes for diners.
When writing your restaurant business plan for a landlord you should have very realistic numbers here as the potential landlord is likely aware of nearby competition already. It's the chance to show that you know what you're getting into and can handle it. A simple way to wrap up your competitive section is with a SWOT analysis where you can directly address how your restaurant sits in position to your competition.
With a similar approach to the competitive analysis, you'll need to look at your target market and your community. Use data and statistics for your restaurant business plan market analysis.
There are many resources online for hyperlocal demographic data. In the U.S., new entrepreneurs can use Hometownlocator.com to find recent information from local, state, and federally collected data for that region.
Use the market analysis for your restaurant business plan to show how you’ll serve the community. In the market segmentation for a restaurant business plan, you will need to do some research on:
Local income levels
Age ranges in the community
Average spending on food in the area
One sample restaurant business plan shows the market analysis in bullet points with simple insights such as, “ Age — Youngsters, college kids.» But, that same market analysis summary explored the high food spending, before segmenting their market in a more in-depth follow-up section.
As you learn how to write a restaurant business plan, you'll have the opportunity to decide where you want to include more information and when it isn't necessary. The market analysis section gives you a little freedom because you can provide a brief overview or dive deep into each market segment that will impact your restaurant.
Do managers need your approval to hire and fire, or will they have autonomy in handling staff concerns? The best restaurant business plan approaches include an organization plan to explain precisely how you intend to structure and run your business. When choosing the structure of your business, you should consider operating as an LLC, partnership, or sole proprietor.
In addition to how your business is formally recognized, you'll need to explain how you intend to protect it, such as with insurance. There are a variety of restaurant insurance options, and you'll need to make sure that you're adequately covered.
Utilize something similar to this template for chefs, and other positions in your organizational plan, «An executive chef (to be hired) will manage kitchen operations, develop menus, and maintain food inventory.»
In almost any restaurant business plan example, you'll see explanations of the management team’s work history, but that’s not necessary. Simply give insight into their experience in the food and beverage industry and why they’re a valuable team member. Then clearly lay out the responsibilities of your management team, as well as the front and back of house teams.
In a business plan template for a restaurant, the product overview could be as straightforward as a mock-menu. Your products are your menu items, and how you intend to extend those products is up to you. The overview will need to cover if your location will offer alternative ways for customers to access your products, such as with restaurant catering or delivery services.
Can you describe what is the nature of your products and services in your restaurant business plan with just a few paragraphs? Most entrepreneurs can't, and that's why they create a menu. It may not be the finalized menu, but it's critical that you have something here that represents what you want to provide to your guests.
In your product overview, you can:
Name potential suppliers — create a focus on affordable ingredients to keep prices low or high-end ingredients to outperform your competitors.
Connect your preparation methods or menu with your concept.
Include blanket statements to allow for product changes.
A simple restaurant business plan can stand with a menu and dining-in/out options as the entire product overview. You don't need to overcomplicate this section unless your concept calls for it. For example, a health-food based restaurant might provide nutritional information along with the menu for their products overview to prove that the menu is in line with the concept.
Everyone needs a marketing strategy in their new restaurant business plan. You should hit on the big three: social media, word of mouth, and paper advertising. From mailers to Facebook ads, you need to get in front of your future guests. There are many ways to spread the word, so create a plan that promotes your grand opening, promotions, and holiday marketing.
Often when people try to understand how to write a business plan for a restaurant, they will avoid this section because it seems intimidating. You don’t need a professional marketer, and many restaurant owners can manage a marketing plan alone. Consider these elements or milestones when developing your plan:
Grand opening event — post flyers, hand out cards, and more.
Sponsoring community events that align with your target audience.
Participating in community events for exposure.
Social media posting, contests, and promotions.
Holiday marketing promotions.
Developing a business plan for a restaurant can be fun, and this is usually one of the more engaging sections. Use this segment to get creative while also thinking about what you’ll do when the initial rush of being a new business wears off and your sales slowdown.
Your sales plan will include your pricing strategy and how you plan to perpetuate good sales figures. Think about discussing tools that can play into long-term sales plans, such as a restaurant POS system, delivery apps, marketing software.
Explain your particular sales strategies as well, such as upselling bar items, using Prix Fixe menus, or even running daily specials to manage your inventory with less waste. Making a restaurant business plan is the opportunity to accommodate challenges that you know you will face, such as food waste and low sales months.
For example, serving staff will recommend alcoholic beverages or wine to match the customer’s order and upsell desert on each table.
As part of a sales plan, you could also showcase a plan to franchise, or to open more locations after this one proves a success. Or, you can explain that one site will create exclusivity and cultivate hype within the community.
Funding and finances section
When opening a restaurant you’ll need to know how to get money to open your doors, and how much you should make when you’re doing business. To do this, you might need to hire an accountant earlier than anticipated.
Start by dividing your financials into three segments: income, cash flow, and balance sheets. You should provide pro forma or projected versions of formal reports for the next three years. When writing a business plan for a restaurant, it can be a challenge to create realistic sales forecasts. Break your first year's projections down into monthly segments, which will serve as your financial goals.
The financial sections should be a living element of your business plan. Tim Berry, a business plan expert, advises new entrepreneurs to review the financial part of their plan at the end of each month, comparing the actual figures. Then they can use the differences to create more realistic financial goals and milestones.
The funding section should highlight how to finance a restaurant, how much money you need from loans or investors and how you intend to spend that money. This can include things such as leasing a resataurant space, hiring a consultant, paying staff for the first month, or anything involved with the operations of your restaurant. The finances section should explain what you should make, realistically, and how that will break down in expenses, investments, and more.
Your conclusion should come at the end of your finances section but before your projected documents. The documents will become part of the appendix for reference rather than the actual plan. As part of a conclusion for a restaurant business plan, you’ll need to provide a few financial takeaways and then a full explanation of how the financial objectives will lead to the successful execution of the concept, marketing strategy, and sales plan.
Preparing a restaurant business plan can help you avoid common problems that cause restaurants to fail. It should guide you through the opening process, such as finding investors and for into the first few years of operations. With a well-constructed business plan, you can adapt quickly and keep up with long-term goals for growth.