The Ingredients of a Standout Restaurant Business Plan
While creating a restaurant business plan isn't a requirement for success, it is one of the key tools that future business owners can use to ensure they have thought through all aspects of the competitive restaurant landscape. If you are seeking financing, however, a comprehensive business plan is no longer optional. Investors want to ensure that they are making a wise investment, so they'll want to see detailed proof that your business has a solid plan for success.
To ensure a healthy launch of your brand and demonstrate your potential to investors, you may want to include the following sections in your restaurant business plan.
The executive summary is often the first section included in a solid business plan, but often it’s the last section that entrepreneurs write. This is a short one or two-page summary that gives a high-level overview of the key findings included in your presentation. Investors are busy people, and they prefer to digest information quickly. A comprehensive business plan is often 30-50 pages of research, documentation, charts, and projections; show respect for your investors’ time by helping them sort through the minutia of information in an easy-to-digest format.
Industry Background and Competitive Analysis
This section generally requires the most outside research. While you want to include some background information on the restaurant industry in general, investors will be primarily concerned with the subset of your industry. Are you opening a high-end steakhouse or a Chinese takeout restaurant? While both fall into the restaurant industry, the trends within these two markets may be very different.
Spend some time researching the competition for your specific restaurant type, as well as the competition within your local area. If you are opening a franchise restaurant, the franchisor may be able to provide much of this research for you. If you are creating a new concept, you'll want to gather enough proof of concept to demonstrate to investors that your idea is sound.
While a competitive analysis may demonstrate proof of concept for a restaurant in your local market, it doesn't prove that your idea will resonate with customers. Consider including a section that demonstrates how you will distinguish yourself from other restaurants in the area, and what specifically your restaurant will offer that creates a competitive advantage.
Savvy investors know that business owners who try to be the best at everything will ultimately fail without a clearly defined value proposition. Help address these concerns by honing in on your unique selling proposition (USP) and describe how it will propel your business to success in the coming years.
Operations covers every aspect of running your business on a daily basis, so this may make up the largest component of your restaurant business plan. You should include multiple subsections that outline the specifics of your operational strategy and address a reader’s questions, including:
- Location Strategy – Where will you be located and why is this effective? Will your customers have adequate parking? Do your facilities include sufficient seating and appropriate kitchen equipment?
- Vendors and Food Cost Strategy – Which vendors will provide your food and paper supplies? Are they reliable and is their pricing consistent? What processes will you have in place to control food cost and avoid excess waste, theft, or spoilage?
- Sample Menu and Pricing Strategy – What menu items will you offer and can these be made at a reasonable profit margin? Will you offer specialty items like desserts, alcohol, or non-food merchandise?
- Advertising and Media Strategy – Will you rely on word of mouth, or do you plan to invest in advertising? Which publications and platforms will help you reach your target customers? What coupons or discount strategies will you offer (if any)?
- Target Market Strategy – Who is your target customer and how do you plan to reach them? What about this customer profile makes them a good fit for your restaurant?
- Delivery Methods Strategy – Will you offer services like delivery or catering? How will you make these services available to customers? What special pricing considerations may be required for this aspect of your business? Will you need to hire additional staff to facilitate these offerings?
Including this detailed analysis of every aspect of your operational strategy not only shows your investors that you are serious about your business, but it can also help you to avoid major pitfalls in your business that can occur after opening.
Ultimately, an investor's primary concern is financial soundness. A key aspect of any restaurant business plan is to demonstrate that you will be responsible with the money and, eventually, return the investment with interest. Most serious investors will expect three years of projected financial statements, the previous two years' financial statements (if the business is already in operation), and a detailed list of any financial assumptions made in developing the financial analysis. By explicitly stating any assumptions you made in arriving at your projected figures, you are helping the investor to assess the accuracy of your projections and determine the long-term viability of your business.
By including all of these sections in your restaurant business plan, you can help set yourself apart from other business owners who may just be looking for an easy financial handout. Invest your time in creating a detailed, professional business plan and you’ll bolster your chances of financiers investing in you.