How to make a restaurant business plan

27 September 2021
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Every restauranteur starts their restaurant journey with a restaurant business plan.

It is essential to have a strong, clear and detailed restaurant business plan to outline the concept and structure of your future restaurant.

While you have spent countless hours planning and visualizing your restaurant, investors and other business partners don't yet know what your restaurant is all about. This is the opportunity to show you have a clear plan of action to get your restaurant started. A restaurant business plan is one of the most complex yet passionate tasks of our culinary world. It is a plan that reflects everything - your possibilities, your potential, and your limitations. It is a map that tells us where to go and that predicts your chances of success in this industry. Although there is no strict formula for making one, there are some variables that are indispensable when it comes to creating a restaurant business plan. Here is the most basic step-by-step guide to starting a restaurant with the best future prospects:

Restaurant Business Plan

Business profile/initial analysis

A first logical step is to determine your restaurant's characteristics with the greatest-possible detail. It is the starting point for developing your project afterwards.

✔️The type of business you wish to market: The first and most basic step is to consider what format your restaurant will take. Will it be fine dining or casual dining? Would you like it to be a family restaurant, a specialised restaurant such as a small bistro or tapas bar, a macro restaurant, a franchise or something else?

✔️The type of cuisine you wish to serve: Defining your cuisine an essential part of defining your restaurant's offering. This could fall under many different categories, ranging from fresh market cuisine, traditional cuisine and international cuisine to modern-fusion cuisine, vegetarian/vegan cuisine, specialty cuisine and more!

✔️A profile of your potential customers: Next, consider who your potential customers are. Are you aiming to attract a particular demographic or interest group to your restaurant? Creating a profile of your potential customer will help you determine the best ways to brand and market your restaurant down the track. For example, is your key target market a particular age group such as generation Z? Are you aiming to attract families, groups or couples? Do you plan to cater mainly to executives, tourists or students? The list goes on!

✔️The location and its characteristics: It's very important that you take your restaurant's planned geographical location into account. What type of area is it? Why are you interested in this place? What are its advantages and challenges? E.g. Are you located near a large influx of people or in quiet area? Are you in business and office district, a popular tourist spot or a residential or recreational neighbourhood? What are the busiest times for foot traffic? 

By determining this information, you can better understand the nature of the business that you are going to set up. From here, you can tweak its characteristics to increase its chances of success.

Restaurant Business Plan

Profile of the industry/market analysis

The second basic step is to observe your restaurant's direct and indirect competitors and the behaviour of the general market that you seek to enter, especially with regard to the characteristics of your business.

✔️Market potential: Is your cuisine an industry trend? Does your business have a wide range of economic prospects? Is it appealing to different types of customers? 

✔️Market limits: Consider things that may impact or limit your market such as disruptive/inclement weather in the area, a saturation of similar restaurants nearby, the low purchasing power of customers in the area etc.

✔️The competition's potential: When considering your direct competitors, what are the key advantages/strengths that set them apart? For example, do they; use quality products, offer accessible prices, have a good reputation or long history in the area, provide a creative and varied offering or a specialised and personalised offering?

✔️The competition's limits: When considering your direct competitors, what are their limitations/weaknesses? For example, do all restaurants serve the same thing, do they do limited digital marketing, are there recurring complaints about service or certain dishes, lack of space, poor ambience/decor, do they lack the technological tools for management?

Using this analysis, you can add new details to your initial restaurant profile and improve it. For example, if the majority of your competitors have bland or unattractive decor, focussing on providing warm and welcoming decor as part of your offering would be a very strategic move.

This is also beneficial if you determine that customers demand certain types ingredients in your market - you can consider ways to include them in your menu.

Marketing plan

Using all of this information, you can take the next step - developing a marketing plan. This part is a bit more complex and consists of defining the bread and butter that will sustain your restaurant and its launch.

✔️Verify the restaurant's production capacity: Determine how many diners you can serve per day and how many meal services will be carried out per day/week based on the available space and the production capacity that you can handle for your market launch.

✔️Create the food selection: Now you can design a debut menu that is delicious, attractive and above all profitable. Try not to make your menu offering too extensive or too simple, and ensure you include dishes that satisfy the taste buds of your potential clientele. Here you must also define the type of ingredients you will use, the level of quality, the type of providers you will use and the estimated cost of delivering this menu.

✔️Define the ambience and facilities: What type of environment do you want to create for diners? If you already have a location, it is important to determine its potential and if it requires significant work/upgrades to create the space you desire. If you are considering sustainable facilities or certain types of materials, you need to create a cost estimate for the renovation/upgrades.

✔️Determine a communication and marketing strategy: In addition to developing your business's branding (name, logo, signage etc) there are a number of other elements to consider here. Which channels will you use to promote your business? What is your launch strategy? How will you advertise your offering? Look at things such as social media, using specialised websites, search engine marketing, flyers and collateral, joining industry groups and alliances and determine whether your strategy will be carried out by a marketing agency or third party. Estimate how much you would need to initially invest in your marketing to meet your objectives.

Restaurant Business Plan

Financial plan

You have arrived at the most crucial step out of all the ones you will take for your restaurant business plan. It involves taking into account all the expenses and profits that you forecast for your business. In this step, you will determine the following:

✔️Type of business: It's important to consider what type of business model you would like to adopt - will you be a sole trader, a partnership, private company or something else? Determining the legal format of your business will help you to identify the type of taxes and legal contributions which should be included in your calculations.

✔️Management plan: At this point, you will need to quantify the number of the employees required, as well as an estimated cost of salaries, the cost of equipment, machinery, tools and technical equipment, as well as the remaining operational costs for the day to day running of the restaurant.

✔️Initial investment and upfront expenses: With all the previous information, you can now determine how much money you will need to invest to successfully open and launch your restaurant, and as well as your fixed and variable costs. It is very important to consider the industry's constant changes and any variable that could destabilize your plan.

✔️Sales percentage: Here you will determine your price points - how much to charge for your culinary experience. Based on this information, you will be able to calculate the projected sales that you will need to make before you can cover your initial investment and operational expenses in principle.

✔️Profitability estimate. Finally, with all these forecasts, you will be able to calculate the point at which you will begin to see profitability within your business timeline. The most important thing is to achieve a high occupancy rate and manage fixed and variable costs well to ensure continuous benefits.

Quite a task, but highly beneficial! Have you ever drafted a business plan before?

Keep in mind that this is a summary of the most essential things to consider when creating a restaurant business plan. It is a highly complex project that naturally grows based on the business. In any case, we hope that it serves as a guide to get you started!

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