If you’re considering opening a restaurant, a good business plan is one of the most important steps of the process. A well-constructed business plan will serve you from the moment you hatch the idea, through the search for financing and staff, and on to the day-to-day processes of running the restaurant. Even if you’ve been thinking about the possibility of owning your own restaurant for years and have it all thought out in your head, until you put it down on paper, in the form of a professional business plan, your ideas can’t take hold and your dream can’t turn into reality.
For the Bank… And For You
A restaurant is, first and foremost, a business. Food is an integral part of that business, but it’s almost an afterthought in the planning stages. Without a detailed business plan even the most talented chef, or skilled entrepreneur, will fail on the road to the grand opening.
You probably won’t be able to open your restaurant without financial backing. If you plan to raise money from banks, or from investors, you will need to show them exactly how you plan to bring your ideas to fruition, as well as give them a detailed list of your expenses –rent, raw ingredients, equipment, repairs, salaries, etc. You need to draw them a vivid picture of how your restaurant will look and how you will run it.
A business plan is also your roadmap for the future of your enterprise. Not only does it provide direction, it forces you to consider all the downsides and drawbacks of your prospective potential business, well before you open its doors. It is your script of how the business should be run and what you have to do before it becomes a reality.
Getting started with the task of creating a business plan may seem daunting, but the process of putting your ideas on paper and creating a plan that will serve you down the road is not as hard as it seems. The following describes the different sections of a comprehensive business plan.
A Mission Statement
This is the opening paragraph that consolidates your goals into a few sentences that will explain who you are and what your restaurant is all about. This section has to grab the reader; it has to be specific yet concise, interesting yet professional. You will have more opportunities in the business plan to sell yourself and your goals, but the Mission Statement is your first and most important chance to grab the reader’s attention… and to make him or her read on.
Most summaries are placed at the end of a document; but a business plan’s Executive Summary is the opening line. The Executive Summary is the panoramic view of your business. This is where you include the basics of your business idea, such as the style of your new restaurant, the name, the location, the concept, the theme, etc.
This is also a chance to talk about yourself: your experience, your background, and why you are well suited for this restaurant venture. A clear, convincing, and well-written executive summary is crucial for getting the financing you need for your restaurant. If the first few paragraphs don’t grab the attention of potential investors, you can lose their interest… and their money. A good Executive Summary to an investor is like bait to a fish: you want to hook them from the start so they will want to know more and read on.
The Company Description is more nitty-gritty than the Executive Summary. Here is where you have to give the basics of the ownership and management structure, and the details of your business concept. At this point in the process you should have a clear vision for your restaurant and this is where you should explain it. Describe how you see the brand (more on this later), and how you envision the different aspects of the business, from service and staff, to style and design.
This part of a business plan is your chance to show that you’ve really done your homework. At this point in the process you should have explored the competition, the target market, the local population base, and the restaurant’s niche.
The industry analysis section should describe the existing market in the specific location or area in which you plan to open your new restaurant. This section should cover things like the local economy, nearby residential areas and business/industrial zones, and estimated traffic – both vehicular and foot traffic – in the area. It is an analysis of all the information you’ve gathered during the research phase of your pre-launch preparation.
The competitive analysis section should explain the existing landscape of restaurants in your area, especially restaurants with similar concepts. Investors will want to understand what is unique and special about your new restaurant – things that will give it a competitive advantage. Analyzing your competition is the key to showing your potential investors that you are not cavalier about success and that you know what you are up against. In the course of your research you should have found out as much as you can about your competition, including their menu and prices. Explain in a paragraph or two how you will compete with these established businesses.
Brand and Concept
There is a thin line between a restaurant’s brand and its concept, but there is a difference. A concept is the more general of the two. If you are planning to offer breakfast all day, that’s the concept; if you will be offering a meat-lover’s buffet, that’s also a concept. The brand incorporates concept; it is the overarching raison d’etre of your restaurant. It is the vibe, the goal, the atmosphere, the emotional impact. The brand is more or less everything your restaurant stands for.
In your Mission Statement or Executive Summary you discussed how you view your overall concept and your “brand.” A brand tells customers – and investors – what your restaurant is all about. It sets the restaurant apart from its competitors and creates a corporate image. The section that explains your restaurant’s branding should give more details about your vision, your message, your strategy, and your strengths. Your brand is pervasive, and should be incorporated into everything you and your restaurant present to the public.
Explaining the concept of your restaurant is more concrete than branding. This is where you discuss the details of your menu, the theme, the décor, and the lighting. The goal in this section is to enable the reader to envision your restaurant through your words by describing the look, feel, aesthetics, and design of the business.
Once you’ve completed the arduous task of explaining your restaurant’s brand and describing the concept, you have to get down to the brass tacks of your business: how will you sell it? How will you attract customers, create awareness, and build a following of loyal and repeat patrons? This is your opportunity to show how you’re up to date on all aspects of modern marketing practices, including creating a website, offering a loyalty program and other promotions.
Your marketing plan describes how you plan to promote your restaurant before opening day, and how you will build an engaged customer base once the business is operational. Make sure to gear your marketing plans to your intended audience. Marketing your restaurant and promoting it to your target customers is the key to your success, even more than the food. First you have to get the bodies into the seats; and only afterwards can you get them to enjoy the food and spread the word.
This is where you tell investors about your hours, staffing, and training plans. If you’ve researched the procurement side of the business, this is your chance to discuss vendors, local food supply companies, and local farms and how you will utilize their business to give you a competitive edge.
The business operation section should explain how the restaurant will operate day-to-day once it is operational. Outline exactly how you will track sales and inventory including what point of sale (POS) you will use and why, as well as any other restaurant tools you will be using.
The financial analysis is often the final section of your restaurant business plan, and the meatiest. Investors expect to see a breakdown of how you plan to spend their investment dollars in the first year. Include projected revenue, anticipated costs, expected profits, and likely cash flow. Everything you described earlier in the plan is a prelude to this, and will mean nothing if this section doesn’t support the predictions of success you have made. Having a long-range financial plan will allow your business to grow, while it demonstrates to the investor that you have a clear understanding of how to manage revenue and expenditures in the busy restaurant industry.
The Power of Presentation
When you gather all the information outlined above, do so in a way that will engage and impress your audience. Use an online business plan template and save yourself the time and effort that is needed in producing a winning presentation. Using one of these templates will also help you identify and remember some of the more subtle and seemingly minor elements that should be addressed in a masterful business plan. Armed with the best business plan possible, you will be ready to conquer the world and get the backing you need to open your dream restaurant.