If you want to start a restaurant or expand your current one, you need a business plan.
Over the past 20+ years, we have helped over 5,000 entrepreneurs and business owners create business plans to start and grow their restaurants. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a restaurant business plan step-by-step so you can create your restaurant’s business plan today.
What Is a Restaurant Business Plan?
A restaurant business plan provides a snapshot of your restaurant business as it stands today, and lays out your projected growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research, information about your target market, and a sample menu to support your winning restaurant business plan.
Why You Need a Restaurant Business Plan
If you’re looking to start a restaurant or grow the existing restaurant you need a business plan. A restaurant business plan will help you secure funding, if needed, and plan out the growth of your restaurant in order to improve your chances of success. Your restaurant business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Restaurants
With regards to funding, the main sources of funding for a restaurant are bank loans and angel investors. With regards to bank loans, banks will want to review your restaurant business plan and gain confidence that you will be able to repay your loan and interest.
To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional restaurant business plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a restaurant is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan. Private equity groups are also a good source of funding for restaurant chains looking to expand further.
How To Write a Restaurant Business Plan
Use the following restaurant business plan template which includes the 10 key elements for how to write a restaurant business plan that will help you start, grow, and/or secure funding for your business.
Your executive summary provides an introduction to your restaurant business plan, but it is normally the last section you write because it provides a summary of each key section of your business plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of restaurant business you are operating and the status; for example, are you a startup, do you have a restaurant that you would like to grow, or are you operating a chain of restaurants?
Next, provide an overview of each of the subsequent sections of your business plan. For example, give a brief overview of the restaurant industry. Discuss the type of restaurant you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer a financial analysis of your business.
In your company analysis, you will provide a brief description of the type of restaurant you are operating.
For example, are you writing a small restaurant business plan or a business plan for a restaurant franchise. Further, you might operate one of the following types:
- Fine Dining: characterized by the fancy decor, a dress code, and high prices
- Casual Dining: offers waiter/waitress service in a nice (but not overly fancy) atmosphere with moderate prices
- Fast Casual: characterized by quality food (close to the quality of casual dining) but no waiter/waitress service in an accessible atmosphere
- Fast Food: quick service style provided at the counter or via a drive-through. Lowest quality food and lowest prices
- Steak Restaurant: focuses on steak entrees and is usually a higher priced and fancier restaurant
- Buffet Restaurant: may or may not offer waiter/waitress service. Patrons serve themselves from buffet food selection
- Ethnic Restaurant: focuses on a specific ethnic cuisine such as Indian food, Mexican food, or Moroccan cuisine.
Within these types of restaurants, there are also ethnic food specialties such as American, Italian, Japanese, Chinese, Indian, etc.
In addition to explaining the type of restaurant you operate, the Company Analysis section of your restaurant business plan needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- Your mission statement and how it connects to your restaurant’s brand.
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new restaurant openings, etc.
- Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, also called a Market Analysis, you need to provide a market overview and an overview of the industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the restaurant industry educates you. It helps you understand the target market in which you are operating.
Secondly, research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards speedy restaurant services, it would be helpful to ensure your business plan calls for take-out or other quick-service options.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your business plan, you achieve just that.
The following questions should be answered in the industry analysis section of your restaurant business plan:
- How big is the restaurant business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your restaurant? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your restaurant business plan must detail the customer base or target market you serve and/or expect to serve.
The following are examples of customer segments: business executives, college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of restaurant you operate. Clearly, baby boomers would want a different atmosphere, pricing and sample menu options, and would respond to different marketing promotions than teens.
Try to break out your customers in terms of their demographic and psychographic profiles. With regards to diner demographics, include a discussion of the ages, genders, locations, and average income levels of the new customers you seek to serve. Because most restaurants primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. This should also include how your customers choose where they should eat, their dining habits, and how much they are willing to spend on a meal.
The answers to the following questions should be included in your customer analysis:
- Who is your target market?
- What are their needs and wants?
- How do they make dining decisions?
- What motivates them to choose one restaurant over another?
The more you can understand and define these needs, the better you will do in attracting and building customer loyalty.
This competitive research should help you identify the direct and indirect competitors that your business faces and then focus on the latter.
Direct competitors are other restaurants.
Indirect competitors are other options that customers have to purchase from you that aren’t directly competing. This includes restaurants, supermarkets, and customers preparing dishes for themselves at home. You need to mention such competition to show you understand that not everyone frequents a restaurant each day.
With regards to direct competition, you want to detail the other restaurants with which you compete. Your greatest competitors will be restaurants located very close to your specific location, who are of the same type (e.g., fine dining, casual dining, etc.) and who offer the same cuisine (Japanese, Italian, etc.).
For each such competitor, provide an overview of the other businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of repeat customers do they serve?
- What menu items do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the existing customers’ perspective. And don’t hesitate to find out this information from customers by reviewing your competitors’ Yelp listings and other review pages.
The final part of this section is to document your areas of competitive advantage. For example:
- Will you provide superior food items?
- Will you provide menu items that your competitors don’t offer?
- Will you make it easier or faster for customers to acquire your meals?
- Will you provide better customer service?
- Will you offer better pricing?
Think about your unique selling points that will help you outperform your competition and document them in this section of your business plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a restaurant business plan, your marketing plan should include the following:
Product: in the product section you should reiterate the type of restaurant that you documented in your Company Analysis. Then, detail the specific menu items you offer/will offer.
Price: Document the prices. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.
Place: Place refers to the location of your restaurant. Perform a location analysis and mention how the location will impact your success. For example, is your restaurant located next to a heavily populated office building, or gym? Discuss how your location might provide a steady stream of customers. Also, if you operate or plan to operate food trucks, detail the locations where the trucks will operate.
Promotions: the final part of your restaurant marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Making your restaurant’s front store extra appealing to attract passing customers
- Search engine marketing and optimization
- Social media posting/advertising
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Local radio advertising
- Banner ads at local venues
While the earlier sections of your restaurant business plan explained your goals, your operational plan describes how you will meet them.
This section of your restaurant business plan should have two key elements as follows:
- Everyday short-term processes include all of the tasks involved in running your restaurant such as serving customers, procuring supplies, keeping the restaurant clean, etc.
- Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.
To demonstrate your restaurant’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in the restaurant business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience operating restaurants and/or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Pro-Forma Profit & Loss Statement / Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows how much revenue you expect to earn or have earned, and then subtracts your costs to show your actual or projected profit.
In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Pro-Forma Balance Sheets
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
For instance, if you spend $250,000 on building out your restaurant, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Pro-Forma Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
For example, let’s say a company approached you with a massive $100,000 catering contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for ingredients, supplies, equipment rentals, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a restaurant:
- Location build-out including design fees, construction, etc.
- Cost of equipment like stoves, refrigerators, blenders
- Cost of ingredients and maintaining an adequate amount of supplies
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections, detailed cost analysis and/or break-even analysis in the appendix of your business plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint, location lease, or initial menu design.
Taking the time to write your own restaurant business plan for your business is a worthwhile endeavor. It will help you communicate your ideas and provide potential investors with the information they need to make an informed decision about investing in your restaurant.
A well-crafted business plan will also give you a road map for growing your business and achieving your long-term goals. So, while it may take some time to put together, it will be well worth the effort in the end.
If you follow the restaurant business plan template above, by the time you are done, you will truly be an expert. You will really understand the restaurant business, your competition, and your existing customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful restaurant concept.
Want more tips? Check out our related articles:
- How to Start a Restaurant
- Restaurant Startup Costs: How Much Does It Cost To Start a Restaurant?
- How To Write a Restaurant Marketing Plan + Template & Examples
- How To Get Funding To Start and/or Grow Your Restaurant
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Restaurant Business Plan Template FAQs
Growthink’s Ultimate Restaurant Business Plan Template allows you to quickly and easily complete your restaurant business plan.
You can download our restaurant business plan PDF template here. This is a restaurant business plan template you can use in PDF format.
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