How to write a Restaurant Business Plan
The demand for restaurant business plans, restaurant business plan templates, and restaurant pro forma financial projections seemingly grows daily.
There are a plethora of reasons why restaurant entrepreneurs seek out business plans. For example, the recent covid-19 breakouts have forced restaurant entrepreneurs to rethink their business models from top to bottom. As restaurants, whether they be quick-service restaurants or casual dining locations, modify, update, or completely change their business models, the need to document these activities is a foregone conclusion—what better way to document business models than in the business plan? Also, new funding sources are continually becoming available for start-up and established restaurant business owners. In order to qualify or even to find out if they qualify for funding, the ticket for admission is all too often a business plan. Regardless of why restaurant owners are continually seeking out business plans, having one ready is an excellent strategic practice. From this, our restaurant business plan writer has come up with some tips and tricks to help business owners prepare their own restaurant business plan, business plan template, and even pro forma financial projections (1/22).
Executive Summary for a Restaurant Business Plan.
The executive summary section of the restaurant business plan should summarize each aspect of the restaurant very briefly. For example, the restaurant business plan executive summary should start with introducing the type of restaurant, such as breakfast restaurant or quick-service restaurant, then identify the legal structure of the business, sole proprietor, limited liability company, etc., and then finally in this paragraph the business owners.
Once this introductory statement or paragraph is complete, then our business plan writer recommends explaining one or two core competencies that the restaurant will have that not only set it apart from competitors but also may garner a sustainable competitive advantage. Examples of core competencies may include using farm-fresh products or optimizing operations to ensure hot fresh food is consistently served. By covering this information in one to two paragraphs, our business plan writer has found that the structure provides the reader a good foundation from which to better understand the rest of the executive summary as well as the business plan itself (11/21).
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Company Information for a Restaurant Business Plan.
The company information section for a restaurant business plan or restaurant business plan template should include important topics like a broad overview summary of the restaurant, menu items, competitive advantages, and primary target market. Further, when writing this section, our restaurant business plan writer recommends providing only a sample menu list, touching on appetizers, main entrées, and desserts, if applicable. For a more detailed review, make sure to put a complete menu sample in an appendix. By following this structure, the restaurant business plan reader will be able to gain a quick understanding of the menu items offered by the restaurant. Also, the structure provides the reader with the opportunity to gain a more in-depth understanding of the menu items by reviewing the business plan’s appendix (5/22).
A second important component for that company information section would be a restaurant timeline. In this timeline, make sure to identify specific objectives that the restaurant will obtain in six months, 12 months, and two years. Further, make sure to start your objective section at the two-year point. This will ensure that the restaurant timeline has alignment with all objectives that must be discussed.
Competitive Advantages for a Restaurant Business Plan.
The competitive advantage section for a restaurant business plan or restaurant business plan template should be in alignment with the organization’s theme, business model, and or target market. For example, if a restaurant is only open for breakfast and lunch, then a target market may be business owners and commuters in or through the area. In this brief scenario, a competitive advantage could be the restaurant’s focus on niche menu offerings, which would be breakfast and lunch services. By aligning business models and other aspects of the restaurant with the competitive advantages section of the business plan, owners are able to show how synergy may be created and fostered. This is just one of many benefits of utilizing the structure in regard to a restaurant’s competitive advantage business plan section (8/22).
Target Market for a Restaurant Business Plan.
A target market for a restaurant may be based on geographic preference. For example, a restaurant may target a hospital across the street or college students if located near a university. By identifying a geographic target market, the restaurant owner can create marketing strategies that will best align with the company’s geographic target market selection.
In contrast, another target market demographic would be actual demographics. To illustrate, a breakfast restaurant may seek to target tourists in the area. From this, the restaurant owner can create menu items, marketing, and restaurant decor that will best appeal to tourists.
No matter which approaches a restaurant owner chooses for a target market, always ensure that your business models consider your target market when creating and optimizing. This will increase the likelihood of synergy opportunities.
Industry research for a Restaurant Business Plan
Before writing a business plan, make sure to do some restaurant industry research. A starting point for industry research could be to document competitors in the area. For example, if you’re going to start a southern home cooking restaurant, then look for competitors that are offering meals during your target time of the day or embracing your cooking style. Stay away from analyzing competitors just because they’re local. An example of this would be comparing your organization with a fine dining establishment across the street. The two just are two different.
Once this information is documented, then it’s time to compare and contrast your proposed business with that of your competitors. Make sure to identify strengths that will be evident in your company that may not be another competitor. Also, take note of weaknesses in competitors that your organization may exploit at a later point in time. Once this is finished, then document your findings in a well-prepared but summarized business plan.
Finally, try to include current restaurant industry statistics in your business plan. For example, if you are starting a single-location full-service restaurant, make sure to include industry statistics relevant to your business. Based on some quick research by our business plan writer, the single-location full-service restaurant industry generated over $192 billion in the last year. In the last five years, the industry’s growth rate for revenues was about 2.4%. Typical profit margins for competitors in the industry are about 4%. This is just some information that’s available to use as a foundation for justifying your restaurant concept as well as pro forma financial projections.
Financials for a Restaurant Business Plan
Creating financial projections for a restaurant is also a challenging endeavor. When our business plan writers to financials for the restaurant, we first start with identifying the main dishes that will be served. If it’s a Mexican restaurant, we may identify Tocco plates, burrito plates, etc. Once different plates are noted, we then determine the anticipated price point, on average, for each dish. The next step is to work with the restaurant owner to determine what the food cost will be for different dishes. Once complete, we then create a financial model that will subtract food costs for each dish from anticipated sales prices. The final step would be to determine approximately how many of each dish will be served daily. With this done, we multiply the sales price and food cost with the anticipated number of dishes. Then subtract the two variables. The end result is a daily gross profit for the organization. Following this step would be deducting the monthly cost from monthly revenues.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author