How to Write a Restaurant Business Plan
Many people of 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, the reality of running a restaurant is not at all what they expected. Long hours, low pay and lots of stress run many out of the restaurant business after just a few years. One reason for the high failure rate is that restaurant owners fail to treat their business like 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 with a well written business plan. By writing a restaurant a business plan, you do two things:you show the bank you have a clear and concise plan for getting your restaurant up and running and you have a contindency plan for problems.
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/restaurant industry. As you research information for your restaurant business plan, you may encounter problems you hadn’t considered previously, such as licensing, health codes and tax laws.
Most business plans have the same general parts, but some sections of your plan should be geared specifically to the restaurant industry. Here is a break down of all the necessary parts of a restaurant business plan.
1. Executive Summary- Start out with an overview of your entire business plan. Think of it as your introduction. Make it interesting, to keep your readers 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 experience, you are still the perfect person for this new restaurant business.
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 get detailed and explain your local competition, population base, and other information you have gathered during your research.
3. Market Analysis- This part of restaurant business plan is sometimes referred to a marketing stategy. There are three parts to a market anaysis:
- Industry- Who are you going to be serving? Is your restaurant going to cater to the older folks at lunch time? Single professionals at dinner? Families with young children? Explain your customer base and why they are going to flock to your new restaurant, not 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 already established businesses.
- 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 a kids eat free night, or free lunch delivery to local offices. What is going to set you apart from your competition? Give specifics on how you plan to advertise (newspaper, TV commercials, ect…)
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. Here is 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 & Ownership- Who is going to run the ship? Are you going to be the general manager, bookkeeper, head cook and bartender? 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 do what, including any potential employees whom you feel will be a great benefit to your new restaurant.
For more details on writing a small business plan, check out Critical Steps to Writing a Business Plan by Darrell Zahorsky.
If you are serious about opening your own restaurant, then writing a business shouldn't be a problem. But if you find that you don't want to do it or don't think you need one, you may not be ready to be in business for yourself.