Your Restaurant Business Plan:
Planning to start a restaurant? Trying to figure out where to start?
Start with a business plan. You will need it to attract investors – whether they are private investment ‘angels’ or a lending facility like a bank. And, if you are in the rare position of needing no external funding, you will still need a business plan to get your ideas straight and have a financial strategy for the future of your business.
A business plan is a document that shows how your business is going to stay alive – and thrive! It also shows to investors why your business idea is worth investing in.
Your restaurant business plan is both a working plan for the future as well as a marketing instrument; you will not be taken seriously without it. It is therefore of vital importance to consult with a professional in writing your own business plan. In an ideal world, you might contact a successful restauranteur who attracted investment at the beginning of their own business – just as you seek to now. Otherwise, invest in some expertise.
This is particularly the case with your financial projections. Invest in professional help from an accountant to put some ‘financials’ together. You will need to do some thinking and research yourself, but the strategy of your financial presentation you need to trust to a professional.
We review some options in section 5 below (financial planning). But please note – these are not definitive suggestions. There are many ways to present your financial proposals, and your accountant can tell you which way suits the scope of your business endeavour, the density of your data, and the financial reality of your position.
Otherwise, the key elements of a Best Practice restaurant business plan include:
- Title Page
- Executive Summary
- Business Overview
- Financial Planning
- Business Description
- Business Operations
- Market Research and Analysis
- Online Marketing
- Offline Marketing
- Employees and Staff
- Venue layout and design
- Customer Service
- Business Continuity Plan
You need to top and tail your business plan with an executive summary (to kick it off) as well as a conclusion (to wrap things up). Lead your reader in and out of your restaurant idea neatly and politely. Other than that (and the title page coming first!), you are free to order your sections as you see fit:
1. Title Page
Do not under-estimate the impact of your Title Page. Sure, your business plan needs to be packed with fact and strong arguments. But it also needs to look smart and professional from first sight.
Do not stint, and be sure to cover the basics at least: use your Title Page to state that this document is a business plan relating to your idea. Be sure to include authorship and contact details here.
If you have developed a logo for your restaurant, or any visual branding/design ideas at all including computer-generated imagery – use it to grab attention on your title page and make your presentation memorable.
2. Executive Summary
Here you summarize everything that follows in the rest of your business plan.
Your Executive Summary If you had just 60 seconds to present your restaurant idea to a potential investor, what would you say?
The ideal Executive Summary is no longer than one page long. Why? Because if it is longer, there is a risk that the reader will not turn the page. You need to be concise and disciplined for maximum impact. Use bullet points.
(On an informal note, make sure your Executive Summary includes the expression ‘great location’; potential investors will be surprised otherwise!)
Here is your chance to get the reader emotionally involved in your restaurant idea. Here is where you pitch the creative side.
To keep your message strong and simple, structure your description of your restaurant concept around a ‘USP’.
What is the USP of your restaurant?
‘USP’ is a marketing term. It means ‘Unique Selling Point’ or ‘Unique Single-Minded Proposition.’ USP means the one thing that describes your business truthfully whilst at the same time describing how it is different. Your USP is your calling card.
So, what’s your angle? See if you can describe in a single sentence what your restaurant idea is all about. Try to capture everything that is crucial to understand why your restaurant will be great. Be specific about cuisine and geography. Be passionate. And keep it simple!
Example working USPs could be:
Do not worry too much about getting the wording of your USP perfect for your potential investors straight away. It is more important that you use your USP to hone your own thinking: if you had one sentence to sell the passion of your own restaurant dream, what would that sentence sound like?
You need to be sure about why your restaurant idea stands out – or how can you expect a potential investor to be?
(Remember that your USP to investors will be different from your business’s USP to customers when it gets up and running.)
4. Business Overview
Here you summarize your business argument, your financial case. Here you prove to investors why your business is worth investing in.
You will need to show a strategy for making money in the future, based on an assessment of the market and your own financial position. You will need to summarize all relevant calculations that show the financial viability of your business. Potential investors will be particularly keen to see that you have a plan for the first five years of trading.
Above all, you will need to adopt certain technical accounting formats as well as show simply that your figures add up. You will definitely need to employ an accountant to get this section right!
5. Financial Planning
Go into more detail with your financial plans. Use this section to deliver in full your calculations in the following areas:
This shows how much seed capital you intend to start with, and what you intend to spend it on.
Monthly Cost Projection
How much is it going to cost to run the restaurant each month? Be sure to include costs for food, labour and all operations. Allow Raqtan to show you all about some key calculations here with our blog tutorial How to Calculate the Ideal Food Cost for your Restaurant.
How much is it going to cost to get the business up to the point of opening for trade?
Monthly Revenue Projection
How much do you expect to take in sales per month?
Profit-loss Projection (or Cash Flow Projection)
Using your cost and revenue projections, you can calculate a cash-flow or profit-loss projection. Both take a slightly different angle on the same issue, and ultimately show a balanced picture of how you expect your business to stand financially. You will need professional assistance from an accountant to develop either, that is for certain.
For your Cash Flow Projection, summarize what revenues you expect to be coming in each month, as well as all expected expenses (disbursements). The difference between projected revenues and disbursements is your cash flow projection figure.
(Note that, distinct from Cash Flow Projection, your ‘Cash Flow Statement’ refers only to a working business; yours is not up and running yet!)
Projected operating profit percentage
This percentage figure shows how much you are expecting to be making each month (or year) after all your business costs are accounted for.
Projected ROI (Return on Investment)
This figure depends on what commercial terms you are offering private investors (if you are at all). shows how much money an investor can expect to see on top of their initial investment. This figure is expressed as a percentage.
Use your projected ROI % in a conjunction with a projected timeline to show investors how much they stand to make at different benchmark points in the future. Note that any serious investor will understand that your restaurant is extremely unlikely to be making a profit in its first year; that is just the way the F&B sector is, and always has been. We run on tight margins, and are all the more efficient as a sector for it.
6. Business Description
Here is where you move your focus from financials to operations. You need to lay out matter-of-fact descriptions of how your business is structured and how you plan it to operate. Summarise the creative concept for your restaurant. Restate your USP. State the goal of the business. List (using bullet points) your services.
7. Business Operations
List which companies you plan to buy your produce and equipment from. Be very clear about your reasons. Are you aiming to secure a successful balance of low cost and high quality?
List all professional help that you aim to enlist from the very beginning of your start-up project. That includes architects, designers, business planners, marketing consultants, kitchen experts (engineering, supply, installation, after-sales) and even a party-planner if you aim to make your opening night go off with a bang!
8. Market Research and Analysis
Who are your target diners? Can you be specific in terms of age, marital status, likely spending patterns? The more specific you can be about your target customers, you more chance you have of turning them into repeat customers.
This is all about the micro view; the little picture; the market locality. Whether your business occupies an internet landscape or a real geographical landscape, you need to know which companies will be your immediate rivals. Whose business will you potentially be taking customers away from? Make sure you find out – or they will start taking your trade without you realising it!
Trends are about the big picture. What is going in the world of restaurants and beyond that your business plans to take advantage of?
How many potential customers could your business reach? If you are doing an online collection/delivery service, you will need to calculate the maximum likely geographical scope – and calculate the population you cover.
For bricks-and-mortar businesses, you will need to consider the distance that people might realistically travel to visit your venue. For fast food outlets, this will be a lot shorter distance than for fine dining outlets. Especially important will be footfall: how many people actually walk past your venue every day? Each one might be a ‘walk-in’.
9. Online Marketing
If you are an online collection/delivery service – with no/limited seating – it is likely that the internet will be your chief area of marketing operations.
Here you need to outline a seed budget as well as an ongoing budget for your marketing operations across social media, email marketing, loyalty programs and, of course, your website.
You need to demonstrate here that you have got your website worked out in full detail, both in terms of cost and operation. (For the purposes of this business plan, you do not need to have a completed website.) Show here that your website will be made to a level of durability and sophistication that suits your market size. Be sure to mention specifics, like which online payment system you plan to employ, and why.
If your business is a traditional bricks-and-mortar establishment, you will still need to do online marketing – even though most venues rely on walk-in trade. Your website needs to be based on a strategy that makes sense.
10. Offline Marketing
Outline plans and budgets for:
You do not need to be specific about any planned creative content. But if you have some good ideas that really suit your business model, then here is the section of your business plan to share them. (Just do not overdo it: your business is about a lot more than marketing).
It’s time for some punch in your business plan! Include a fully-designed version of your menu (even if you have not finalised it yet). Invest in a graphic designer and get your logo and visual branding on there. This is not the place to hold back; you’ve got one chance to grab investors, just like your menu should grab diners and make them want to order.
It is really important here to show the actual meals you are intending to serve. These choices will be made on the basis of your cost analysis, including the key calculation of projected cost per dish.
When you get your business off the ground, you will learn that regular menu engineering can make or break you. So get used to it being central to your plans.
12. Employees and Staff
You don’t need a full list of the waiting staff you plan to employ. But you do need to know who will be your restaurant manager (perhaps you?) at the very least. Potential investors will also want to know that you have firm, if not definitive, ideas about who you are going to hire as chefs.
Use a clear map to show where your planned restaurant is. Show other key landmarks and businesses, but keep the map as uncluttered as possible.
Other sections of your restaurant business plan will be full of figures and often dense material. So do not be scared to go visual in this section and use a sequence of maps covering a few pages; show where your venue is from a variety of scales, and your reader will appreciate it.
14. Restaurant Layout and Design
A picture speaks a thousand words. Rather than describe the practical layout of your venue and your planned design scheme for customer areas – show them. In this section, include visual material and mark it up clearly. For maximum impact, show one image per page, with one caption.
15. Customer Service
No doubt you’ve worked in the restaurant business before. Or maybe elsewhere in customer service? Either way, be sure to include testimonials of how great you are with clients.
16. Business Continuity Plan
All potential investors will want to see that you have a plan to keep your business going in the event of unforeseen emergencies – such as the lockdowns caused by Coronavirus.
But Covid-19 will not be all that restaurants have on their plate in coming years! The whole purpose of Best Practice Business Continuity is to be ready for crisis – so show that your business will be.
17. SWOT Analysis
A good way to summarize your business plan is to show a SWOT chart. ‘SWOT’ stands for ‘Strengths, Weaknesses, Opportunities and Threats.’ Each section should have somewhere between 3 and 5 bullet points. (For added impact, use the same amount of bullet points in each section).
Simply list the best parts of your proposed business. You can choose which strengths to include. But be sure to include some positive mention of venue, cuisine and location. These are 3 key factors which must be presented in a positive light, or canny investors will wonder why not!
It pays to be honest with yourself what the major problems are with your planned set-up. Present them here positively as keys areas for future development.
Look to the future. As your business grows, what advantages can it take? What holes can it fill in the local market? What trends can it ride?
Here is a good place to tackle any potential criticisms of your plan. Show that you have a measured grasp of all the risks involved. List key risks and briefly state how you intend to manage them.
In your conclusion to your business plan, thank the reader for following your line of argument until the end. If there is one big point about your plan – other than the USP for your restaurant – that you would like to make, make it here. But be sure in whatever case to include a recap of your key financials.
What are the types of business plan?
You can subdivide restaurant business plans into the period of time they apply to:
What are the keys to success in a business?
In the booming Saudi restaurant sector, the keys to success are catering for an increasingly younger market as well as using expert consultants to tailor your brand offering accordingly.
What’s a successful business?
A successful restaurant business never stops listening to its diners – whether that it in the venue or online.
What is a good business plan?
A good business plan for the Saudi restaurant sector leaves the reader in no doubt that the restaurant idea will make money over the long term.
What makes a successful business owner?
A successful business owner in the restaurant business is fixed about upholding standards of service and cuisine on the one hand, whilst being entirely reactive to opportunity and change on the other hand.
How many pages should a business plan be?
The rule of thumb is: no longer than necessary. For the Saudi restaurant sector, your business plan should certainly be no longer than 50 pages, and ideally between 10 and 30.
We hope you have found this overview of restaurant business plan development to be useful.
The length and scope of your plan will depend on the ambition of your restaurant idea. Try to strike a balance between being brief to make impact and being detailed to back up your main points. Be sure to model your financial planning section on professional accounting advice.
As a final thought, remember to invest in some professional graphic design for your final document. Whether you intend to share the document via email or as hard copy, expert presentation skills will give it the necessary professional feel.
You cannot expect investors to be interested in a business that is not interested in promoting itself properly, even if you are a restauranteur not a marketing expert. Remember that part of great restaurant management is showmanship, and it starts with your business plan.
If you think there’s something we could expand upon, please leave a comment below!
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