If you’re considering opening a restaurant, your first step should be writing a business plan. A well-written business plan can help you raise money, manage your restaurant and succeed. Here’s what you need to know about writing one:
An executive summary is a short but powerful document that can help you get your point across quickly and effectively. Although it is usually the first section of a business plan, it should be the last piece written. It should be one page at maximum and clearly describe your business plan’s critical points in a way that makes sense to anyone who reads it. The purpose of an executive summary is to convince potential investors or lenders that they will profit from investing in your restaurant idea, so avoid unimportant details or lengthy descriptions of how great your food tastes.
An excellent way to write an executive summary is by starting with an introduction paragraph that summarizes what the rest of your plan contains—this helps readers understand why they should continue reading further into the document. Then go into discussing why this particular project is worthwhile; why people need it. How will it benefit them? Next comes some background information about yourself: include any relevant experience or education related to running this business. Finally, end with future goals: where do you see yourself after opening the shop?
Here are some items to include in your restaurant business plan:
Concept Validation and Business Model Testing
Before you launch your business, it’s important to validate your concept and test the viability of your business model. You can do this by conducting market research, talking with potential customers, and interviewing industry experts with similar business experiences. You can also test the viability of your plan by completing an “experience economy” analysis. That is, looking at ways people enjoy spending money on experiences rather than goods (such as dining out). For example, if people value experiences over material goods, opening a restaurant might be a good idea!
Labor Costs and Staffing Plan
Labor costs, including direct and indirect labor, are essential to your labor budget. Direct costs refer to wages paid directly to employees, while indirect expenses include benefits such as healthcare coverage and payroll taxes. To calculate these figures, you’ll need to estimate the number of full-time equivalents (FTE) positions you’ll need and their average salaries. This calculation can be tricky because each restaurant has its unique staffing plan based on its size, location, cuisine type, and reputation among customers, not to mention any other factors that might affect staffing decisions (eg, whether it’s open 24/7).
The first step is deciding whether or not you want full-time staff or part-time workers who work only during peak times such as lunchtime rush hour or Friday night dinners out with friends at restaurants near you. As tempting as it may seem, wait to write anything down until after reading through the following sections because several factors are clearly related to determining how many people we’ll need overall.
You want your menu to be focused and simple. Try to add only a few items, as too many menu items may confuse customers, making it difficult for them to choose what they want.
If there are any “signature” items on your menu, include them first when listing off your offerings so that people know what kind of food you serve before even stepping inside the restaurant. Also, incorporating local ingredients into these specialties will help build community spirit around supporting local businesses.
Site selection is a critical factor in your success. After conducting a comprehensive market study, the site selection is based on the data you discover to determine if your customers are in and frequent that area. David Simmonds, Founder and CEO of ResolutRE, a Commercial Real Estate firm in Austin, Texas, states: “More than ever, entrepreneurs opening a restaurant need to analyze what their own customers look like on paper (demographics, psychographics, etc.), so then when they are examining a market, they can find the highest concentration of their customers within that market . From that data, they are able to determine the number of restaurants that the market could support, and from there, create the blueprint for their expansion.”
Your plan should describe your ideal location. Your chosen location must be close to your target market and similar businesses, such as restaurants or cafes. The site should also have high foot traffic and be accessible by car, bicycle and public transportation. Simmonds goes on to say: “Analytics reinforces or disputes instincts. It is a necessary part of the expansion process, whether the restauranteur has 1 unit or 37.
When developing your business plan, think about the marketing strategy you will use. Your plan should consider and explain the following marketing tactics:
- Advertising: You can use print or online ads on social media sites like Facebook and Instagram. Also, consider running commercials on local television stations.
- public relations: This can include writing articles about your restaurant in local newspapers or magazines, hosting events at your restaurant (such as wine tastings), speaking at community events such as the Chamber of Commerce meetings with other business owners in the area, participating in charity events related to food service industries like Feeding America—the possibilities are endless! The idea is to get people talking about what makes YOU unique so they think of YOU first when ready for their next dine-out experience!
- social media: Let’s face it—most millennials don’t even pick up the phone anymore; they prefer texting over talking face-to-face because it feels intimate somehow, and guess what? By interacting directly with customers through social media platforms like Facebook Messenger or WhatsApp (which allows users from all over the world access 24 hours per day, seven days per week), we can offer immediate customer service support during high-demand times such as weekends brunch hours without having employees sit idle during slow periods throughout the weekdays when traffic drops off significantly due to the lack of demand generated elsewhere.
Profit and Return on Investment Analysis
- Profit is the difference between your sales revenue and your costs. To calculate it, you need to know the following:
- Sales revenue (how much money do you expect to make from selling food)
- The cost of goods sold (the cost of ingredients and supplies)
- Other operating expenses (including labor, rent, and utilities)
The reader of your business plan should be able to find these numbers in your budgeting worksheet and financial projections spreadsheet.
The financial plan is the most critical part of your business plan. It should clearly show how much money you need to start, run and grow your restaurant.
You will need to show a projected profit and loss statement. The projected profit and loss statement (P&L) shows how much revenue comes in, what expenses are incurred, and what profits are made over time. In addition, the P&L shows all revenue sources, including but not limited to sales of food/alcoholic beverages and income from private parties. It must also project all costs associated with operating the restaurant, such as Cost of Goods (raw materials) and salaries for employees – these include both front-of-house roles such as waiters or bartenders, as well as back-of-house roles like chefs who prepare food during off hours so it can be served fresh upon opening each day – cleaning supplies needed throughout each week, etc., depreciation costs associated with long term assets such as ovens that wear down over time and waste of unused food products .
Multi-Year Projections of Revenue and Costs
Accurate projections are the key to a successful business plan. They help you understand how much money you will make and how much you will need to make it happen. Projections also help with understanding what your costs will be.
For example, if I were starting a restaurant today and wanted my business plan projections for opening day and going out one, three, and five years.
Then I would look at similar restaurants that serve similar foods, noting their prices, portion sizes, and any specialties they offer, such as breakfast all day or lunch specials every Friday during football season. This research from other restaurants will give you a basis for your projections. Include the documentation of this research in the narrative of the plan.
A Business Plan Is Your Road Map To Success.
A business plan can help you raise money by demonstrating that you have a viable idea for a restaurant. In addition, investors want to see that others are interested in investing in your vision, so they’ll be more likely to give you money if they see other investors involved with it as well. An excellent example is when an investor wants to invest but only if another investor does first; this way, both parties feel comfortable investing because they know someone else investing in the project enough to put their own money into it too!
A well-written business plan helps manage restaurants by giving owners information about how much money will be coming in over time, so there aren’t any surprises when bills come due every month – which could lead businesses into trouble if left unchecked.”
This article has given some insights into how to write a business plan for opening a restaurant. Do your research and learn other aspects of good business plan writing. I know that it can be a lot of work, but I also know that the payoff is worth it. Not only will you have a better understanding of what it takes to open up a shop and run it successfully but also potential investors will be more likely to fund your project if they see that you’ve done your research. And remember: don’t be afraid to ask other restaurant owners for help or advice; many of them have been where you are now.