In the previous post, I wrote about how to do start your business planning process with some big picture visioning. In case you missed it, you can read part 1 here.
In this post, you’ll learn what you need to include in your business plan and you’ll get some helpful resources, too.
First, let’s start with why you need a business plan. Your business plan is the roadmap for your restaurant. During the process of writing your business plan, you’ll develop your restaurant concept, how you’ll run your restaurant, who your customers will be, how much money you will need to get started and to stay in business and what the competitive landscape looks like and how you’ll stand out from the crowd.
Writing a business plan for your restaurant will also help you anticipate any roadblocks and have a way to deal with obstacles before you reach them. Being prepared before you open the doors of your restaurant will help position you for success.
Business plans can range from a simple outline to a 50-page document. Consider who will be reading your business plan and for what purpose to determine how much detail you should include. If it is for you and a partner who will be self-funding, a shorter plan may do. If you will be looking for capital, you should plan to include more detail so that investors can see that you have a solid understanding of what you need to achieve your restaurant’s financial goals and to provide them with a return.
No matter how detailed, a solid business plan addresses 5 main areas and should be written in a logical and easy to follow manner.
The five areas to include are:
1. Concept and company structure – what kind of restaurant and what type of business organization.
2. Operational plan – How will the place run?
3. Human Resources – Who will run it?
4. Finances – What capital do you need?
5. Marketing – What’s your story and how will you take it to the marketplace?
Use the work that you did in part 1 as inputs for your business.
1. Concept and company structure – Writing about your restaurant concept is a fun and creative part of the business plan. Here is where you write a colorful description about the type of service (fast casual, breakfast only, fine dining or family style), the size of the restaurant, the décor and atmosphere, customer experience, sample menu, any other merchandise or products and what makes your concept unique. Points of difference can include service, menu items, unique location, atmosphere, entertainment or themes. You should be excited about your concept so that others including investors, partners, employees and customers will be excited to join you.
You can read more about restaurant concept in these articles.
Next, describe your company structure, are you a sole proprietor, a partnership, an LLC or a C-corp. You should consult an attorney and/or an accountant to find out which corporate structure is best for your restaurant. You should also include a list of the company management and their biographies, as well as the company structure (who does what). Include any management agreements if you have them. If you require start-up capital, you’ll include a brief description of required funds in this section. The financial details will be in the Finances section.
Be sure to include the future plans for the restaurant in the company description. Do you plan on running one restaurant or opening multiple locations and franchising the concept? Also describe how your role will evolve in the restaurant; do you envision staying forever, or building the concept and selling it?
In this section, you should include sample logos, menus, mock-ups or photos of the restaurant interior and exterior, floor plans, signage, uniforms or anything that has a visual element. This is where you and other stakeholders can really see what the restaurant is going to look like.
2. Operational plan – this is the section that describes how the restaurant will run. Your operations plan should include: the hours of operation, the daily procedures from open to close, detail about each employees roles and responsibilities, customer service policies, information about suppliers and ordering procedures, payroll, accounting and reporting.
This information you put in this section will be the foundation for your operations manual. This information is crucial to your restaurant’s success because it ensures that everyone is on the same page and that they know how to run the business.
3. Human resources – In this section, you’ll outline how you will recruit, hire and train staff. You should also outline systems and procedures that you will have in place regarding rules of conduct (and consequences of breaking the rules), scheduling and paying your staff. If you plan on having career paths for your employees, include that in this section. Include a copy of your employee handbook and any training materials in the appendix.
4. Finances – Begin drafting the financial section by understanding where will your revenue come from. Restaurants typically earn revenues from in dining customer checks, but you may have other revenue streams from to-go food, catering, special event services, gift cards, parking services, advertising from your website, in your store or on your property, Merchandise, Food trucks.
Next, create some assumptions to project your revenue such as average ticket size, expected number of clients per day, number of days in operation, hours of operation. Once you have these assumptions, you can begin your arithmetic and create projections.
Then, you’ll estimate what it will cost to run your restaurant. Write down every expense, some of which are rent, lease or mortgage, utilities, maintenance, furniture, supplies, payroll, taxes and food cost. This is not an exhaustive list. Create monthly estimates for each taking into account seasonality and growth rates.
Finally, subtract expenses from revenue to get your bottom line, or net income. This will give you an idea of how much you’ll need to get your restaurant started and to keep it running. You can take that number to use in the Company section under capitalization requirements.
5. Marketing – This section includes your market research as well as your marketing plan. First, scope out the competitive landscape. Take inventory of what restaurants are in the area and which seem to be doing well. Dig deeper to find out what is driving success (location, price, type of service). Identify any unmet needs in the market place and work that into your concept.
Next, create a detailed description of your target market. This may seem counterintuitive, but the more defined your target is, the more successful you will be. See this article on target market. Describe your customer in as much detail as possible include age, occupation, where they live, marital status, education, hobbies and lifestyle.
Finally, provide and analysis of your location, or a set of criteria for your location if you haven’t yet found one. Describe the demographics, economic outlook, surrounding businesses, traffic, parking, accessibility and other features in the neighborhood that could attract customers to your location. There is readily available public information for this section from census.gov and your local government. You can also find anecdotal and supporting evidence from local media outlets such as job growth, community outreach and crime rates.
The marketing section is where you can elaborate on your concept and tell your brand story. Your brand story should be unique, memorable and sharable – you want people to tell others about it.
Once you’ve illustrated that you understand the market and that you have a great story, explain how you’ll attract customers and develop repeat business. Remember, “build it and they will come” is not a marketing strategy.
Marketing strategies include, but are not limited to, events, direct mail, advertising, email marketing, social media, co-marketing with other businesses, PR and charitable events. Map out how you will use these strategies and your expected results. Know, though, that you’ll learn the most from executing and refining your plan.
Once you have these sections completed, you can summarize them in an executive summary, which is a one pager that is a snapshot of your business and plans for growth. Even though it goes at the beginning of the document, it’s best to write this section last.
Writing a business plan may seem like a lot of work, but the process of thinking though how you will build, run and market your restaurant will save you time once you open the doors. If you want help with the process there are consultants that can help you think through the issues and get them into a logical format.
Helpful tip: make sure to have a second set of eyes review your plan to see if it makes sense and to double check your spelling.
Here are some additional resources that you might find helpful.
Business plan writing templates and to see other well-written plans www.bplans.com
Business mentors: SCORE.org.
Books on how to write a business plan*
* Note: these are affiliate links, which means that Restaurant Branding Roadmap receives a referral fee for any purchases