Whenever you want to create something complex, and the stakes are high, it’s a good idea to put your ideas on paper. In the restaurant world, that translates to a business plan. So what is a business plan? Think of it as your road map.
Simply put, it’s all the aspects of your restaurant—written down. What’s your concept? Design style? What will be on the menu? Beverages? Location? Will you do take-out? There is no question too small or detailed. Keep these variations in mind when creating your restaurant business plan for a smooth ride.
- Target audience
- The foot traffic of the area
- Cost of menu items
- Cost of ingredients
- Inventory management systems
- Management of the restaurant
- SWOT Analysis
- Sample menu
Your business plan is key for keeping ideas and questions streamlined while establishing goals. A business plan is necessary for not only you and your team, but also for helping investors see why they should part with their money, and what it will mean for them, in black and white, financially.
When you take your restaurant idea to the bank for a loan, the lender will want to see that you have a solid plan for your restaurant. Make sure you stick to a solid format when creating your plan, and keep the facts straight-forward for potential investors to understand.
Take It to the Streets
Identify your target market. This targeted marketing helps narrow down potential locations and clientele—an essential element in all forms of business planning. From your interior design to your menu—knowing your audience will lead to higher satisfaction all around, and in turn, more revenue. Scope out other restaurants in your desired area and do a little research.
Figure out neighborhood demographics such as age and affluence. Determine foot traffic patterns. Use the information gathered to avoid many potential pitfalls and capitalize on winning tactics to optimize your planning process. Most importantly, track what works and what doesn’t.
Something as simple as the traffic of an area can make or break your business plan. Look for easy access to your new restaurant, and choose the highest traffic area for the entrance of your new business.
Talk to the Pros
Getting outside advice is one of the best ways to prevent future problems, simply by being prepared for them. You might talk to an architect or designer to nail down a description of how your business will look and feel. Before the plan faces investors, have an accountant go over financial projections, and set realistic budgets. A restaurant consultant can guide nearly all levels, from food vendors to profit margins. By gathering a team of experts to advise you while creating your restaurant business plan, you’ll garner invaluable information that may not have occurred to you otherwise.
Analyze Your Local Restaurant Market
While information from local business owners is key to building a business plan for your restaurant, you should also look at local market analysis to gain valuable data for your future restaurant. Solid data and numbers that can be analyzed can’t lie and will give you a better vision of what you can expect to see as a return on investment.
Brainstorm It Out
Ever read a description of a meal, so tantalizing you start drooling? Win before you begin and paint a picture of your concept menu and test it out on family and friends. Get together with people you trust and brainstorm.
Go over your theme and food descriptions. It might make sense to you, but may not be so clear to other people, such as your financial backers. By maintaining an open mind, gathering opinions, and revisiting and reworking, your menu plan can easily go from concept to reality.
Get everyone who is a part of your business together for brainstorming sessions, so ideas are balanced. Work together as a team, and pull in family members or friends for feedback if your team is small. If you already have a restaurant management team before your business plan has been set in stone, utilize their expertise during your brainstorming sessions.
Break It Down
In addition to being one of the most important parts of your restaurant business plan, your financial plan can make or break your pitch to investors. Be as detailed as possible when describing your intended spending costs, as well as anticipated revenue. Start with the basics. How many seats will your restaurant have? The number of seats will determine the number of guests and checks each day. Check out this tool from SmartDraw to turn your seating chart into a visual display for your restaurant’s business plan.
Menu pricing determines the check average. Multiply the projected number of daily checks by the average check amount for a ballpark idea for what your daily revenue will be. A floor plan and an overview of the management team and employees are also necessary to show how your business will flow, and in turn, grow.
The more detailed, well thought out and precise your business plan is the fewer surprises along the way for you and your investors. Once you open, your financial plan will probably be your de facto budget.
Formatting your Dream into a Cohesive Business Plan
When formatting your business plan, these are the key ingredients you need to present to potential investors, and to help forecast your profitability for your restaurant.
- Branded Cover: If you’ve created branding, logos, or signage for your restaurant, include it in your branded cover.
- The Concept for Your Restaurant: Outline what makes your restaurant unique, what your hours will be, and what you will offer.
- Sample Menu: Go into detail with your sample menu; this is the foundation of your restaurant and should showcase what you offer beyond pricing.
- Market Research: Provide analysis of the local market, and the market for your restaurant’s offerings.
- Comprehensive Look at Your Competitors: Information on your competitors helps provide a clear outline of your projected profit and loss.
- Define Your Target Audience: Specify who you are targeting with your new restaurant concept.
- Outline Your Marketing Plan: For more tips on creating a marketing plan, check out this 5 Ways Restaurant Marketing Helps blog post from Lavu.
- Solid Financial and Budgeting Plan: Have a plan to budget for all your needs, from your restaurant POS to where you’ll source your tomatoes.
When presenting financial information, or other information that is mostly numerical, try to include tables and graphs for a visual representation. Highly mathematical business plans are overlooked by investors often, but visuals can engage them to invest in your new restaurant.
Having a business plan helps create a roadmap for your restaurant, and involves comprehensive research. Take steps to plan your business out to avoid running into unexpected losses, and gain the trust of your potential investors for your restaurant.