How to Write a Restaurant Business Plan

A good restaurant business plan is vital to opening a new restaurant
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Many people dream of opening their own restaurant. They see it as an opportunity to turn a love for entertaining or cooking into a business. Unfortunately, for many restauranteurs, the reality of running a restaurant is not what they expected. Long hours, low pay, and a lot of stress cause many entrepreneurs to close shop after just a few years.

One reason for the high failure rate in this industry is that restaurant owners fail to treat their restaurant operation as a business from the very beginning. They have no plan to deal with problems and unexpected expenses and don't understand the scope of cost associated with opening a restaurant. One way to prevent these types of problems is to develop a well-written business plan. By writing a restaurant business plan, you do two things: you show the bank you have a clear plan for getting your restaurant up and running—and you have a contingency plan to handle problems.

What a Plan Can Do for You

Creating a restaurant business plan forces you to learn about all the different parts of restauranting, as well as your local competition and the local market. Plus, a business plan is essential for most new businesses seeking any kind of financing. It is absolutely imperative for a prospective restaurateur and is especially helpful to those new to the food and restaurant industry. As you research information for your restaurant business plan, you may encounter issues you hadn’t considered previously, such as licensing, health codes, and tax laws.

Most business plans have the same general components, but some sections of your plan should be geared specifically to the restaurant industry. Here is a break down of all the necessary elements to be included in a restaurant business plan.

1. Executive Summary. Start out with an overview of your entire business plan. Think of it as your introduction and make it interesting to hold your reader's attention. Here are some tips for writing an executive summary geared toward a restaurant business plan.

  • You want to give the reader (a potential investor) the basics of your business idea. What is the style of your new restaurant, the name, the location?
  • Explain why you are well-suited for this restaurant venture. Do you have previous cooking experience in restaurants? If not, do you have any experience in the restaurant business? If the answer is no, then you need to sell them on the idea that despite your lack of food experience, you are still the perfect person for this new venture.

2. Company Description. This part of a business plan is sometimes referred to as a business analysis. It tells the reader the location, legal name and style of restaurant you want to create. This is where you offer details and explain your local competition, population base, and other information you have gathered during your research.

3. Market Analysis. This is often referred to as a marketing strategy. The three parts included in a market analysis consist of the following:

  • Industry. Who are you going to be serving? Is your restaurant going to cater to the older retired generation at lunchtime? Single professionals at dinner? Families with young children? Explain your customer base and why they are going to flock to your new restaurant instead of your competitors.
  • Competition. Who is your competition? Many people opening a new restaurant assume everyone will prefer their new establishment to the existing competition. Don’t undermine the other restaurants. They already have a loyal customer base and luring customers from that base is not always easy. Find out as much as you can about your competition, including their menu, hours, and prices. Then, explain in a paragraph or two how you will compete with the established businesses in your area.
  • Marketing. What methods do you plan to use to promote your restaurant? How are you going to target your core audience? Perhaps you will offer free lunch delivery to local offices. What is going to set you apart from your competition? Give specifics on how you plan to advertise whether it's newspaper, TV commercials, or social media platforms.

4. Business Operation. Sometimes referred to as Products and Services. This is where you tell investors about your hours and how many employees you plan to hire. It's also where you explain the benefits of your establishment for customers, such as its convenient downtown location, or its close proximity to the local interstate exit. This is also a good place to mention any close ties you have to local restaurant vendors, such as food supply companies or local farms that will give you a competitive edge.

5. Management and Ownership. Who is going to helm the ship? Are you going to be the general manager, bookkeeper, head cook, and bartender all rolled into one? If so, how are you going to do it all? Many new restaurant owners either hire a general dining room manager or a kitchen manager (but usually not both). Explain who is going to perform which duties, including potential employees you might hire as you expand.

The more thoughful you are in the beginning, the more successful you will be in the end.