“Restaurant Business Plan” is not as heavy as it sounds. It’s simply a document that contains all the crucial details about your restaurant. Things that need to be taken into consideration before you start. But an obvious question that follows is why do you need one?
Every new venture needs a plan. Whether it’s building a shelter home for dogs or opening a new restaurant. The idea behind your restaurant must be clearly laid down for everyone to understand and read.
A restaurant business plan serves as a guide that explains everything that is required to start a restaurant and how is it going to function thereafter. It’s a detailed plan consisting of schemes and strategies.
In this blog, we’re going to look at what an ideal restaurant business plan looks like and what it contains. Consider it to be detailed package of all that you need to know while opening your first restaurant.
What to include in your Restaurant Business Plan?
The restaurant business plan is a book that talks about your brand. Let’s go ahead and discuss the content of this book.
1. Executive Summary
The first part of your restaurant business plan should talk about the main objective of your restaurant. Here you must cover the brand’s history, how you’re planning to make it a success, future prospects and everything you’ve envisioned your restaurant to be. Remember, you’ve got to keep the readers engrossed while being short and crisp about everything. It must cover the following key points.
- The restaurant model you’re looking to open. Whether it’s going to be a QSR, fine-dine, Food Truck, Bar or a Cafe.
- The food that’s going to be served there.
- Location in which you’re planning to establish your restaurant and the competition that comes with it.
- Your target audience.
- Prerequisites like restaurant name, interior design, menu and more.
2. Company Overview
Next comes a business or company overview. It’s a sketch of your restaurant’s concept. Here, you must be able to put forth your plan for acquiring and later multiplying your customers. Discuss anything that’s different and unique about your restaurant. Basically, here you sell your brand to your investors. There are three main ingredients here, restaurant model type, menu card, and staff.
- Restaurant Model
A Quick Service Restaurant, fine dining establishment, cafe or bar? What is your first restaurant going to be? Based on the restaurant type, the layout of your restaurant must be clearly mentioned. This includes everything from interior design to your restaurant’s furnishing. The overview must also contain details like restaurant technology and what Commercial Kitchen Equipment you’re going to buy.
Looking for ideas to design your restaurant? Check these Stunning Restaurant Interior Designs out.
- Restaurant Menu
In any restaurant, a menu plays a massive role in shaping the customer’s perspective towards your eatery. Therefore, it only makes sense that you create menus that are captivating enough.
In the overview, you’re not supposed to provide the complete and final menu design but a brief sketch of the same. Something that gives a glimpse of what your menu would look like once it goes live. Whether it’s going to be a menu full of illustrations or pictures directly from your kitchen. The font and designs that you’re going to be using while creating the menu. If you’re planning to hire professionals for creating your restaurant menu card then make sure you share some sample designs.
When talking about the menu, you must also list down the ingredients that would be required to prepare various dishes. Try and list down menu items that require common ingredients, this helps in optimizing the food cost. However, this doesn’t mean you don’t include popular dishes that cater to your target audience.Bonus read: Creating the best restaurant menu card with tips and examples from top restaurants across the globe.
The ownership angle of the restaurant is introduced in this section. Typically, this contains basic details about people who are going to be managing your restaurant. Owner, Restaurant/Bar Manager, and Head Chef. Discuss the hierarchy and important things like who will be in charge in your absence, their roles and duties.
The company overview is not limited to just restaurant type, menu, and management. Given below are a few other things that are an essential part of a restaurant business plan :
- The concept or theme behind your brand.
- The layout and design of your restaurant.
- The menu you’re going to be serving there.
- The target audience you’re going to cater to.
- The service style you’re going to follow. Any distinct product or service you’re going to offer to your customers.
3. Industry Analysis
Young office goers? Millennials who Instagram each bite of their food? Or families that stay and eat together? Who is your restaurant going to cater to? The third very important part of your restaurant business plan is industry analysis. Before starting out you must be able to identify the customers you’re going to target, anticipate their expectations and how much are they willing to spend. It is extremely crucial for you to understand what is happening in the restaurant industry to gain a better idea of what the audience is actually rooting for. Industry Analysis majorly consists of three parts, location, competition, and target. This is the area that requires you to dig in and excavate the reasons why you’ll be a good fit in that particular area.
- Location Analysis
Pre-planning a location for your restaurant is very important and it is something many restaurateurs skip looking into. In case you don’t have a site in mind, you could perhaps mention a potential location with the desired surroundings. On the other hand, if you’re sure about where about the location of your restaurant then measure the local economic growth, infrastructural scope and growth opportunities for that location. Potential investors and other readers of your restaurant business plan might not be familiar with the location you mention. Therefore it’s essential you show them a pattern between the location, target audience and the restaurant format you’re going to follow.
Choosing a location is not tricky, all you need is a set of rules basis which you can go ahead and finalize.
- Accessibility – Your restaurant must be situated in an area that is within your target audience’s reach. Somewhere Google Maps can easily take them to. A distant location with very little to offer is not something customers are looking for.
- Adequately spaced – In a world that’s ruled by Swiggy and Uber Eats, if a person is making the effort of coming to your restaurant, they might as well be given a parking spot. The location must have ample space in case you decide to expand your restaurant once the business grows.
- Vendor friendly – An area that’s close to the food vendors and other merchants is something you should aim for. This will also help cut down delivery or shipping charges.
- Competition Analysis
Who are you directly in competition with? There will be restaurants that will have the same target audience as yours. So, what is it that you’re going to do differently that will bring customers to your restaurant? You need to make your brand stand out from the rest. In your business plan, list down the existing restaurants in the location you’ve chosen, highlight the ones that mirror your model type and write down all the things you’re offering that your competitors aren’t.
- Target Analysis
You get a fair idea of the kind of customers that will come to your restaurant once you decide its concept. The foundation of providing exceptional guest experience is knowing your audience. As per your location, you could do a quick survey on the customers that are most likely to come your way. The kind of customers you’re going to target, their behavior and expectations, how much are they willing to spend. Everything falls under the target market of your restaurant business plan.
4. Marketing Plan
Simply starting a restaurant won’t bring you customers. You have to market your brand right in order to widen your customer base. Marketing Plan as a crucial part of the restaurant business plan includes strategies and promotional hacks that must be followed before and after opening your restaurant. You can depend heavily on Public Relations and Advertising before the launch of your brand. And later when your restaurant is completely functional you can bank on social media, blogs, and other platforms.
Online Marketing for your Restaurant Business
- Social Media
A survey conducted by MGH, a Marketing Agency based out of the US, states that around 45% of the U.S. diners tried a restaurant for the first time based on the social media post of the restaurant itself.
The world is dictated by social media. People are constantly on their phones. A mere picture of an egg has the maximum number of likes on social media today. Use this in your favor and market your brand via interesting offers and campaigns on platforms like Facebook, Twitter, and Instagram.
Another interesting report suggests that consumers worldwide downloaded 194 billion apps in 2018. We’re almost towards the end of 2019 now. One can only imagine the uncountable benefits of having their own website and mobile app of their restaurant. Make sure your website is listed online on TripAdvisor, Google My Business, Yelp, and more to become more discoverable.
Here’s how you can Build a Restaurant Business.
Start your blog. Build a base with things that happen in your restaurant. Then slowly start targeting keywords that will help rank those blogs. Keep your diners entertained and informed at the same time. You don’t necessarily have to post about in-house events. Include things that are taking up the online space in the food world on a global level.
- Newsletters and emails
Sending out timely newsletters and emails is a great way of reaching out to customers. Make sure they’re a subtle mix of the blogs that you write and a piece of news related to the restaurant industry or any of the latest trends.
There are multiple methods for promoting your restaurant brand offline. A few ways of doing so are given below.
Holding in house-events like game nights, movie screenings and more is a good way of getting people to come to your restaurant and attend such events. Other way of going about this is by presenting your eatery outside in food festivals or reach out to organizers who are looking to conduct events.
- Print Ads
You can advertise your brand through vivid posts in newspapers and other forms of print media. This would help attract that portion of customers who still subscribe to newspapers and magazines.
- Food critics and bloggers
Invite people to come into your restaurant, taste your food and give reviews on their channels. Food bloggers and restaurant critiques have a fan base of their own which will help you get customers.
Customer Relationship Management
Based on customer demographics and eating trends, send out effective CRM campaigns. Group your customers based on their order frequency, order type, order size and more. Basis this, send them compelling discounts and offers which they can redeem on subsequent orders with your restaurant. To put this plan to action you need a strong and reliable customer database. This will help you upsell and thereby increase revenue.
Read this if you’re struggling to make the most of your Restaurant CRM.
5. Restaurant Business Operations Plan
Your restaurant’s daily activities and functions are to be discussed in this section of the restaurant business plan.
- Staff – Hiring and Training
Anybody going through your restaurant business plan will be curious to know about the people who are going to be working at your restaurant. Depending on the model type, decide and put down the number of people you’re going to employ at your restaurant. Segregate the roles based on the two operations in your restaurant, Front of House and Back of House.
Typically, BOH staff roles include:-
- Head Chef
- Sous Chef
- Line Cooks
- Prep Cooks
- Maintenance and cleaning staff
And FOH roles are:-
- Restaurant Manager
- Bar Manager
The restaurant staff roles mentioned above vary according to the kind of restaurant you’re running. Just listing down the number of staff members won’t suffice. You will have to give a brief role description along with each of the staff roles mentioned above. Other important things that you must include under this section are eligibility criteria for each role, training procedure and time, staff management and retention goals, the average salary for each role and more.
To know more about hiring the best team for your restaurant, click here.
- Customer Service
What are the kinds of services that you’ll provide at your restaurant? If you’re planning to open a fine dining establishment, you’d require a highly trained staff with specific roles. A classic example of this would be hiring a sommelier for serving wine to customers. Here you can also mention ways in which your restaurant services are going to be different from your competitors. How do you plan on providing a memorable guest experience? Mention everything you can about the customer while primarily focusing on the guest experience.
- Technology for tracking operations
Tracking multiple operations in your restaurant simultaneously can land you in a pretty tough spot. And hence you must mention the restaurant technology that you’re going to make use of like, a Point of Sale system. Technology that will help you manage inventory, staff, payroll and more.
6. Financial Analysis
Finances are a pivotal part of a restaurant business plan. Any investor who is looking to invest in your business will anticipate this part from the very beginning. You need to give them a solid plan. This will also help you work out the overall cost of opening a restaurant. In this section, you discuss the various expenses that will come your way, funding, and the expected revenue.
- Investment Plan
Under this section, you firstly give out details about all potential investors and then describe where all are you going to spend the money in the initial first year of your restaurant business.
Here’s how you can raise money for your restaurant business.
- Informal loans – You could approach your family, friends, and acquaintances for financing your new restaurant.
- Formal loans – This means raising money with the help of a bank or a financial institute.
- Investors – There are plenty of investors in the business who are looking to invest their money in promising new ventures. They can either completely fund your restaurant or partially, in return for a certain percentage in your business.
Now that you know where you’re getting the money from, let’s discuss the possible areas where you’re bound to spend, your expenses.
- Rental Costs – This could either be the cost of buying or renting out space for your eatery. The cost per square feet is decided by the location, size, material used and the kind of restaurant establishment. Naturally, a casual restaurant would take up more space as compared to a typical cafe. It all comes down to the average space you would require.
- Licenses Cost – There are various licenses that are absolutely essential for your restaurant. Each license is priced differently. Some even have renewal charges that you would be required to pay either monthly or annually. More about Licenses in the following section.
- Restaurant Design and Furnishing – No two restaurants are the same. The price varies according to the type of restaurant model. A fine-dine would have lavish furnishing whereas a Cafe or a QSR would have limited furnishing. Ideally, 30%-40% of the total budget must be reserved for furniture and fixtures.
- Operational Costs – You need to have quality equipment in your restaurant. It’s a one-time investment that includes Commercial Kitchen Equipment and other electrical appliances that are required in different eateries.
- Labor Costs – How much will your restaurant staff cost you? This would include the overall cost of hiring and training your restaurant staff. You need people to help you run both, the front and back of house operations.
- Marketing – In order to bring customers, you need to market your newly established brand. A decent chunk of money must be reserved just for marketing. There are two kinds of marketing, paid and unpaid. Paid marketing simply means running ads on various platforms online and printed collaterals as in the case of offline marketing. Whereas unpaid marketing involves everyday social media posts after you have a certain base (followers).
- Professionals – The journey of getting started with your restaurant will involve a number of professionals that you’d be required to hire and work with. Given their experience in a particular area, you will have to pay them accordingly.
- Restaurant Technology – Point of Sale system, Kitchen Display System, tablets, kiosks, etc. to help you run your operations without any blunders. Make sure you keep your restaurant updated and equipped with the latest technology. Sticking to traditional systems might be tricky in the subsequent years of your business.
- Food costs – Fresh produce and raw ingredients for your kitchen. They take up to 25%-40% of your restaurant’s total revenue. There should be no cost-cutting while buying these since the quality of food matters a lot for any restaurant.
There will be a couple of other miscellaneous costs that you might incur apart from the ones mentioned above.
- Statement of Profit and Loss
Your investors would want to get a fair idea about how your business would do. Therefore it’s important that you quote an estimated value of costs and number of sales based on the target market, competition in your area, size and operational efficiency of your restaurant. Under this section, you should also include
- Expected Cash Flow
This basically explains the influx and outflow of cash at your restaurant. It largely depends on the number of employees and their payroll activities, frequency of stock and purchase.
7. Legal Necessities
The restaurant business plan must contain a list of all the licenses that are essential and applicable to your restaurant. These licenses could vary depending on the city or state you’re opening your restaurant in. Nobody likes to run into trouble with the authorities. There are some very important restaurant licenses that you must obtain before starting your first restaurant.
- FSSAI License – More commonly known as the food license, the FSSAI License is obtained from the Food Safety and Standard Authority of India. It’s a unique 14 digit registration number that is allotted to restaurants.
- Liquor License – If you’re going to start a restaurant that serves alcoholic beverages then this license is an absolute must. This can be obtained from the Local Excise Commissioner.
- Health/Trade License – This license serves as approval from the Health Department that your restaurant is compliant with the decided health codes of the department.
- Eating House License – Valid for three years, this license can be obtained from the Licensing Police Commissioner of the city where you’re opening your eatery.
- Shop and Establishment License – A city-specific license, every restaurant must obtain it within the first month of starting the establishment, be it a Food Truck or a Cafe.
- Fire and Safety License – Every restaurant needs a No-Objection-Certificate (NOC) from the fire department to make sure that the restaurant’s environment is safe.
- Certificate of Environmental Clearance – None of the restaurant operations must harm the environment. And therefore you’re also expected to have a Certificate of Environmental Clearance.
- Signage License – In order to legally use posters, graphics, and paintings to promote your restaurant in a nearby location you need to obtain this license from either the Municipal Corporation or local authority.
There are a few other licenses and certificates that you might need depending on the kind of restaurant you are planning on running. To read more about the pricing and procedures to obtain these licenses read All the 10 Licenses Required to Open a Restaurant in India.
8. SWOT Analysis
A SWOT (Strength, Weakness, Opportunity, and Threat) analysis, as the name suggests, is listing down all potential factors that will affect your restaurant business. Including this in your restaurant business plan will help identify and cover all aspects that are substantial for your restaurant’s growth.
- Strengths – Each new business venture has a USP. Recognize the strong points of your restaurant and describe how it is going to uplift your restaurant’s sales. You could bank on a unique restaurant concept, central location or a game-changing dish.
- Weaknesses – During the initial time of planning out a restaurant business, you get a fair idea of all the probable pitfalls that you might incur on your way. You could be struggling with restricted restaurant space or a handful of employees. Therefore, it’s important to list these down so that new methods can be devised to overcome those.
- Opportunity – This simply includes implementing interesting new ideas that haven’t been touched upon by anyone else. Anything that you can anticipate in the eating behavior of your customers. Something that proves to be a turning point for your restaurant business.
- Threat – An upcoming new restaurant across the street that serves a similar cuisine or high staff attrition rates. There are plenty of perils while opening a restaurant. These threats may curb a restaurant’s growth. Hence it’s important to figure out various threats you might face that may be harmful to your business.
9. Specialists and Restaurant Business Consultants
There are contractors and consultants that are going to help at various stages of your restaurant business. You may not understand each and every aspect of opening a restaurant. That’s where Specialists and Consultants come in. These are :
- Financial accountants
- Lawyers and attorneys
- Interior designers
- Menu designers and/or engineers
- Marketing professionals
They are experienced professionals who will help you get your restaurant business up and running. List down all the top companies and professionals within your restaurant’s vicinity and then approach the ones you think would suit your needs the best.
Why should you have a Restaurant Business Plan?
Having a complete restaurant business plan may seem a lot of work at first. Putting everything in black and white might even tire you out. However, this is essential for every restaurant.
One of the major reasons why is that your investors should be convinced that you have thought this through. Anyone who is looking to invest in your restaurant business needs to know what will be the state of your new venture ten years down the lane. Another reason why you must have a restaurant business plan is that it’ll help structure the entire process, make it more organized. You will know at each stage what is happening and what is to follow.
Ready to plan out your Restaurant Business?
Planning a restaurant before actually starting to build it is going to prove profitable eventually. Often overlooked by many restaurant owners, this plan not only brings you one step closer to your dreams but also helps you get started in the right direction. Have you thought about creating a restaurant business plan yet?