Every successful restaurateur knows that first and foremost, a restaurant is a business. As a young restaurateur about to turn your restaurant dreams into reality, remember to take just as much care creating a viable business model as you do crafting your culinary masterpieces — that’s the difference between a flash in the pan and a neighborhood staple.
So where to begin? Well before you start thinking about how to increase restaurant sales and how to grow your restaurant, you first need to nail the essentials. That means ensuring that your concept can function profitably — beyond the food that inspired it all in the first place. So tear yourself away from testing menu items for a minute, and let’s talk through creating a restaurant business plan step by step.
Laying the groundwork
In the simplest terms, your business plan outlines how you intend to generate profit. But it goes well beyond finances — it also incorporates a lot of the positioning, branding, and market research that needs to be ironed out before opening up shop. Comprehensive, clearly articulated, and powerfully substantiated, this is the key strategy document you’ll need to engage investors — and the road map that keeps you on track, even in the heat of day-to-day operations. But before putting your plan on paper, there are a few preliminary measures to take.
Spend some time reading through business plans from other restaurants: both similar and different. Where do their numbers fall? What expenses strike you as high or low — and why? Where do you think you can streamline your costs — or increase your food margins? Once you’ve gotten a sense for how other restaurant owners model their businesses, make a list of your estimated startup costs.
Determine whether you’re taking over an existing space as is, doing a renovation to an available location, or building from the ground up — and compile the associated costs. If you’re seeking a liquor license, what will that cost? What pre-launch marketing materials will you need? Think about your website, your dining room and take-out menus, and other collateral: what will these cost to design, write, and produce?
As the owner, your priorities are up to you to decide — and startup is the best time to clearly delineate what those are. But keep in mind, you’ve got a whole lot of flexibility here. Restaurant startup costs can range from a few thousand to several million dollars, depending on what you’re working with and where you choose to cut costs — or splurge.
Putting your plan together
While your restaurant concept should be unique and offer a culinary experience your target customers are currently missing — or don’t know that they’re missing — your business plan can follow a well-established template. No need to reinvent the wheel, when the old one works!
Feel free to download restaurant business plan samples from sites like RestoHub or OpenTable. While every restaurant business plan template is slightly different in the naming and structure of its categories, they all contain these similar core components: executive summary, business overview, industry analysis, operations plan, marketing plan, and financial analysis.
Establishing the core elements
- Executive summary. Articulate the big picture for your restaurant. Introduce who you are, what your vision is, and which market need you’re addressing. Include items like your mission statement, core values, and key differentiators.
- Business overview. Whereas the executive summary is all about the big idea, the business overview (or company description) provides high-level insight on the concept, brand, structure, location, design, and so forth.
- Industry analysis. Go into depth about where your restaurant fits into the marketplace. Talk about the local competition near your chosen location, synergistic businesses that surround you (like a spa, office building, or shopping center), the area’s economy and projected growth, your targeted demographics, and everything else a potential partner or investor would want to know.
- Operations plan. An overview of the day-to-day operations of your restaurant. This includes the organizational structure, employee pay, customer service policies, and plans for the general restaurant processes and procedures. Essentially, lay out the action steps for how your restaurant will function.
- Marketing plan. All things related to customer awareness, advertising, public relations, and community engagement can live here. How are you going to let customers know you’re here? How will you keep them coming back to the restaurant — and placing delivery orders from home? How will you engage and communicate with your fans, once you get a bit more established?
- Financial analysis. Include all things monetary — your investments, projected profits and losses (P&L) based on costs and sales, expected cash-flow, revenues, projected incremental sales, and an analysis of what it’ll take to break even. Use charts, graphs, and other visual aids that to show the data.
Preparing to open up shop
Creating a comprehensive business plan can be overwhelming, but by breaking it down into sections to tackle one by one, it’ll be much more manageable — and likely a stronger, more compelling, and more instructive result. Plus, it’s better to get a sense of how all of the moving parts work together on paper — and ensure that they are all accounted for — before translating them into reality. While it may seem impossible to represent your restaurant vision in a document, a business plan will assure all potential stakeholders that you’re cooking with a recipe designed to succeed from the start — which can make or break your establishment later.
A good business plan is like a menu: thought-out, unique, and enticing. Just as your menu will eventually have customers eager to order, you want your business plan to have investors eager to read more, and get on board. Checking each of these core topics off the list, and then adding whatever else you need to adequately represent your concept, is a great place to start. With all the key ingredients accounted for, you’re set to go. Prepare to break into the marketplace — and come out thriving.
Looking to expand your customer base, increase incremental sales, and drive up profits? Consider adding a partnership with DoorDash to your business plan. And for all things financial, refer to our restaurant university guide, The 2nd Course: Financing Your Restaurant and Projecting Profits.