If you have a winning idea for a restaurant, what should you do? When you have worked out the details after many late nights, you run them to your friends.
After discussing them plenty of times to anyone who would listen to you, it’s time to let this idea out. It’s time to look for outside investors and other stakeholders to get on board with your restaurant idea. And to do that you need to have a good business plan for your restaurant.
Sound daunting right? It is a significant step but definitely doable. In fact, you can do it with appropriate advice and research; you will soon be writing a plan for your restaurant business in no time.
A thorough business plan is a groundwork for a successful restaurant. You need it before you can start anything that has to do with the restaurant. It will also serve as your guide to turn your restaurant idea from being a concept into a reality.
When you start seeking financial and professional support for your restaurant business, you need your business plan as your reference for your concept, marketing strategy, and explain the potential profit. You also need the business plan for the people who will help you in your business – the investors, consultants, partners, lenders, and your team members.
Here is a step-by-step guide in writing an effective business plan and with an explanation of each function.
Questions to ask before writing the restaurant business plan
Before proceeding to write your business plan, you have many things to consider. These questions will help you answer all the questions and will make writing the business plan more manageable. You also have to keep the answers to these questions in mind when writing the business plan.
- For whom you are writing the business plan for? Is it for the lenders and investors, or is your plan for you and your employees? Your style of writing should adapt to a different type of audience. Emphasis should be put in the sections that are for your primary audience.
- Where is the location of the restaurant? Even if you have no site for the establishment yet, you should at least have the neighborhood where it should be located. The location will be the determinant for many essential elements of your restaurant, like the type of venue, available ingredients, and competitive analysis.
- What is kind of your venue? Before writing your business plan, you need to make sure of the type of restaurant you are opening. You have to be sure of what precisely is your venue before you work on your business plan.
- What are your goals? If you want to start a restaurant business, you should have goals and vision you want to achieve.
- Do you have the credentials? Have you worked in the restaurant industry before? What are your skills in running a restaurant? If you are confident with your skills, it will be helpful. If none, you need to have a hands-on experience before venturing into this business.
What to Include in your business plan?
You should include the following topics in your business plan.
The restaurant’s overall concept
In the business plan, this part is where you sell your idea. Here, you have the chance to get your potential investors and partners your idea and convince them to get on board. On this part, you will tell how great your idea is and the reason why. You also explain the type of service that you are planning to offer. You can also flesh out your restaurant’s vision and mission here along with the interior design of the restaurant. Include visuals of the design elements to break the monotony of a text-heavy business plan.
It is essential to include the sample menu on your business plan, highlighting the food and drinks because it is the center of the restaurant. You must put a substantial effort into incorporating them to your business plan. You should also include enticing descriptions and a smart format. Consult with a design professional to make it look nice.
You have to include your team from the management to the servers and even your partners. It should have an outline of how many people will be working for your restaurant and what are the positions that need to be fulfilled to run the restaurant smoothly. Your management team and its structure are also critical as they are the key people who can make your restaurant business a success. Your restaurant investors would want to see who will carry out your business plan.
The target customers
Include the people who will most likely eat at your restaurant. If you have a thorough analysis and comprehensive information about the demographics, put them all in your business plan.
This section answers the “why” questions about your target customers. Once you have identified your target clients, outline why they should be choosing your business over the competition. It should also know the segment of the market you are filling in. It should also describe your advantage over the other local restaurants. Finally, highlight your uniqueness.
Like seeking the help of a design professional for your sample menu, this section also needs the help of an accountant. This part is where costs in setting up the restaurant can be found. If you are going to present your business plan to attract investors, they would want to know how, where, and why this amount is being spent.
If you have an accountant to help you with the business plan, they would be able to give you all the information you need to show your restaurant investors. Among this information include a break-even analysis, the capital requirements, and later on the profit and loss statement.
There are thousands of restaurants opening every year, and about 50% of them fail. The reasons are mainly due to lack of capital and poor planning. Studies showed that you could reduce the risk by creating a sound business plan that can help you manage the restaurant and gain capital as well as investors.