How to write a Restaurant Business Plan
Writing a restaurant business plan takes patience, insight, and a little bit of creativity. Insights for writing a restaurant business plan are needed because of the multiple variables that are inherent in the restaurant industry.
Patience is needed when writing pretty much any business plan. However, for a restaurant business plan, the patience factor is needed more because business owners tend to write these types of business plans while at work. This means constant interruptions. And for creativity, restaurant business plan writers need a healthy dose of this because of the need to differentiate the restaurant from local competitors. And there are a bunch of those pretty much anywhere you going to set up shop. With these wide-ranging challenges noted, our business plan writer would like to offer some insights and helpful hands to writing a restaurant business plan.
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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. In the beginning, restaurant owners should specifically state the theme of the restaurant, whether it be Mexican, a sub shop, or a breakfast facility. Next, the executive summary should briefly discuss menu items that will be available at the proposed restaurant. Following this should be a discussion about how the restaurant owner anticipates creating competitive advantages. Possible areas for competitive advantages and restaurants may include differentiating products in their menus, only using the highest or best ingredients, or just ensuring that the restaurant offers the lowest prices in the area. To round out the executive summary, make sure to have a brief discussion about your financial highlights and the funding needs for your invasion restaurant.
Company Information for a Restaurant Business Plan.
The company information section of a restaurant business plan should first start by telling the reader what type of restaurant you plan on opening. It does not matter if it’s a Mexican restaurant, fast food restaurant, or Italian restaurant, educating the reader as to the direction of the restaurant business plan is needed upfront. With this complete, the next step is to discuss your menu offerings in a product description section. An important tip for the section would be to use general categories. For example, if you plan on opening a sub shop, then your categories may include sandwiches, side items, and desserts. By breaking it up into categories, the business owner can show possible product offerings but not lock them into specific items that are required.
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 alignments with all objectives that must be discussed.
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Competitive Advantages for a Restaurant Business Plan.
Competitive advantages for a restaurant business plan should be different for all restaurants. Because of this, competitive advantages may include a wide array of actions. To illustrate, our business plan writer recently worked with a restaurant owner to create a fusion-themed restaurant. A fusion-themed restaurant is when the owner takes popular dishes from, let’s say a Mexican restaurant, and infuses, or adds, other dishes from maybe Asian or Italian. By mixing the product menu with different themes, the owner can create a competitive advantage by appealing to a wide selection of tastes for the customers. Once this is complete, make sure to explain your competitive advantage in detail in your business plan.
Target Market for a Restaurant Business Plan.
A target market for a restaurant may be based on geographic preference. For example, some restaurants target a hospital across the street or called students at local universities. 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 a 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, or 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