As Benjamin Franklin famously said, ‘always write a restaurant business plan”. Well actually, he said “by failing to prepare, you are preparing to fail” but he meant the same thing. So, if you have a goal, a vision, or a dream to start your own hospitality business, begin by writing a killer business plan for your new restaurant concept to test it properly.
If you’re just getting started with a new restaurant business or if you’re planning your second or third business, read on. This restaurant business plan template will guide you through the process of creating your own restaurant business plan which considers direct competitors, addresses your target market and creates your business structure.
We’ll be honest, conquering the catering industry takes hard work, determination, stamina and courage, but with our suggestions, thorough preparation and a lot of self-belief, we trust that your great idea, and so should you.
Step 1 – Executive summarySummarise your goals, objectives and vision
Why are you opening this new business? This executive summary is important to lay the foundations. It should compromise of the following:
Mission Statement. Creating a restaurant mission statement is a critical part of putting your goals, objectives and vision into words. A good mission statement will concisely summarise the overall purpose of your restaurant business and what you want it to achieve. It should be memorable and inspiring, and provide a clear guide for how you want your business to function.
As as much detail as you can but this company description may be a brief overview at this stage but you can come back to it later once you have carried out more market research.
Personal Goals. When opening a restaurant, it’s important to have personal goals in addition to business goals. This will help keep you motivated and on track during challenging times.
Be really honest about your motivation too. Are you looking for financial freedom, more time to yourself, to develop an awarding-winning menu or to test your business acumen, are you going to be the largest restaurant in your area?
Business goals. When opening a new restaurant, it’s important to have specific business goals in a solid business plan addition to personal ones. This a step which most entrepreneurs know internally but often forget quickly so this will help you stay on track during challenging times and ensure that your restaurant is successful. Some common business goals for restaurants include increasing sales, developing a loyal customer base, becoming the most popular dining destination in the area, and expanding the business.
Make sure your goals are specific and measurable. For example, “I want to make sales of … in the first year” is a specific and measurable goal. Make sure your goals are time-bound. Having a deadline for your goals will help you stay on track and motivated. Make sure your goals are challenging yet achievable. You should always be pushing yourself to reach new heights, but don’t set goals that are impossible to achieve.
Step 2 – SWOT analysis for your restaurant
The SWOT Analysis is a useful tool for anyone looking to start up a business. It is a strategic diagram to aid you to determine the Strengths, Weaknesses, Opportunities and Threats of your project. Both internal and external factors are considered, and when done carefully, it can result in a thorough analysis of your specific situation as a whole.
Strengths. What are the strengths of your restaurant business? Think of all the internal factors that can enhance your restaurant and give a competitive advantage, for example:
- Qualities that you hold different to your competition
- Your staff training programme and competent staff
- The décor of your establishment
- Efficient equipment and practices
- Back-up funds in place from potential investors
- High level of foot traffic in your area
Weaknesses. Ask yourself what might hinder the success of your restaurant business? Consider all of the internal factors, and be critical and honest about any weaknesses that are detrimental to your business plans, for example:
- A lack of funding or scarcity of potential investors
- Dated equipment
- A poor understanding of the market overview
- Undefined USP (Unique Selling Points)
- A small target market
Note that strengths can also convert into weaknesses. For example, if well-trained and experienced staff leave your company, you risk replacing them with less competent staff.
Opportunities. Be aware of the external opportunities that can help your restaurant business to boom, for example:
- A lack of local businesses who are direct competitors
- A high average income in your target audience
- Improved transport links nearby
- Media interest in your venture
Threats. Again, it’s an uncomfortable task, but you need to be honest about the external factors that may pose a threat to your upcoming business, for example:
- Regulations that may reduce opening times, noise limitations, equipment positioning
- A decline in population
- A rise in competitors
- An unprecedented worldwide event.
Please note that again opportunities can merge into threats, for example, the welcomed media interest may turn into the negative press so always be aware that things can change.
Once you have identified the strengths, weaknesses, opportunities and threats of your budding restaurant concept, you will find yourself in a position to think realistically about whether it will be a success, or if unfortunately the weaknesses and threats pose too greater a risk after all factors are considered.
To an extent, you may be able to work around the problem points whilst remaining aware of their presence, and hopefully, the strengths and opportunities outweigh the negatives. If so, and we do hope so, please read on…
Step 3 – Restaurant industry analysis and market trends
Over the last few years, the industry has faced unprecedented challenges. First the COVID pandemic, then the staffing crisis and now the global rate of inflation. Before you start, spend time reviewing and understanding the industry as a whole, not just what is happening in your area, and again be realistic.
International factors can and will influence your product offering, the supply chain, lead times, your customers, their predicted expenditure, and so on. Think large-scale and take everything you can think of into consideration.
Then think ‘adaptability’. What can you do to stay on track with your objectives if such events should, unfortunately, happen again? Can you switch up your products to use what is available? Can you use a more local supplier? Can you rely on a smaller, more limited customers? Have you got a detailed cost analysis just in case?
Once you’ve completed the above and answered the necessary questions, do some research into similar businesses. Again, think large-scale and industry wide.
Use case studies of similar successful restaurants and bars worldwide. An incredibly successful restaurant in Bali may just have hit the nail on the head with their décor for example, drawing in clientele from all over the world. We’re not saying copy this, we’re suggesting you take influence, encourage your ideas and personalise pre-existing projects to enhance your vision.
Next, get to know your industry. Do your research and get clued up on everything relating to environmental health, licensing laws, workplace health and safety and legal procedures. That tin of beans that you don’t mind leaving in the fridge at home will not pass a health and safety check in a professional environment.
Read about what should go in your food safety management system.
Read about your health and safety obligations.
Read about allergen management.
Step 4 – Deciding your restaurant location
Ok, so now it’s time to reign it in a little and think more locally. You know what they say… “location, location, location”.
Have you got a location in mind? If so have a look around at other restaurants, talk to people and get the low-down. What makes other businesses succeed in the area? What do the public feel is lacking from the food and drink offerings in the locality? Not only can you gain knowledge from the success stories in the community, but have any other restaurants not been successful? If not, why not? And what can you do differently to ensure this doesn’t happen to your business?
If you are yet to find your location, think about the success stories, and the restaurants that you frequent. What is it about their position that makes them attract customers like you? Are they in the centre of town or slightly out of the way? Do you regularly pass and pop in, or do you revel in the idea of an isolated spot away from the hustle and bustle?
You’ll want to find a spot that is in a high-traffic area with plenty of foot traffic. You’ll also need to make sure that the space is accessible for people with disabilities.
Once you’ve found a space, be sure to read over the lease agreement carefully before signing anything. There may be clauses that prohibit you from doing certain things or restrict how long you can stay in the space or prohibit a certain use of a segment of square footage.
It’s important to have an solicitor look over the agreement so that there are no surprises down the road.
Step 5 – Competitor analysis of restaurants in your area
Congratulations, you have decided on your location. Now let’s look at your closest competitors. What can you do similarly that is proven to work in the area? But more importantly, what can you do differently?
No matter what type of restaurant you are, you will have competition. And in order to be successful, you need to find a way to stand out from the competition. This may mean doing something similar that is proven to work, but more importantly, it also means doing something different that will attract customers to you rather than your competition. You need to find your unique selling point (USP) and execute it well.
You may for example choose to different yourself through your concept. Perhaps you can bring a fine dining concept more inline with fast food or fast casual by appealing to the same potential customers with a different service style.
Whatever you decide, take the important elements from yours competitors successes and failures so you have a better understanding of the restaurant experience that will be likely to work in your local area.
Step 6 – Analyse your target market
Who is your intended customer and how can you most effectively target this group? Begin by analysing the local demographic and determine who is already in the area. Understanding the local demographic will be key for writing a restaurant business plan because it is often the low hanging fruit for a small business. These customers are already in your area and easier to reach.
Consider how the demographic will effect all other aspects of your business plan. If it is families, should you consider you have child-friendly facilities? Will you rely solely on word-of-mouth marketing at the school gates? If there is a young population of high-flyers, do you need a wishful wine list and a cool-cocktail offering? If so, how social media savvy are you to promote these products through online platforms? If there is an elderly community do you have the ability to pop on a lunchtime promo, and the resources available to make, print and distribute flyers via door-to-door visits?
Step 7 – Create a plan to staff your restaurant
One of our go-to sayings is “you can’t make a first impression twice” and ensuring you have the most friendly, professional and well-presented staff can influence that ever-important initial intuition.
Plan out your hierarchy of staff. Who is at the top? How many managers do you require? Remember, you will pay managers more than your waiting staff, but an effective management team can be priceless. Do you need shift leaders? How many serving staff? Do you need to fill different roles between bar, restaurant, runners, cash handlers and so on? Or can the same person flit between?
And then there’s the back-of-house staff. What type of chef do you need for your menu design? What experience do you require? An experienced chef will be more expensive, but have you got the knowledge and time to train a new chef? Think of every position you need filling from management to cleaning staff, and of course how best to recruit and train them, and the subsequent cost implications.
Be careful not to over-staff creating costly outgoings, create financial projections of your labour costs so you can work out if it fits with your overall business plan finances.
Read about the different types of job roles in hospitality.
Read about where to find restaurant employees.
Read about attracting top talent to your restaurant.
Read about correct recruitment strategies and processes.
Consider your time, how hands-on will you be personally? By being present and correct you not only oversee the day-to-day running of your business, but you can also reduce the number of staff on shift, and subsequently cost. However, keep in mind your mental well-being. Don’t overdo it.
Step 8 – What will your operational blueprint look like?
Write a list of everything you require to make your business run as efficiently and as effectively as possible. You may be penny-panicking by this point so it’s important to be realistic about which systems you will use and what suppliers will work out best. Maybe you don’t need to buy everything brand new, perhaps you do, alternatively, consider renting your essential equipment.
To do this task in a manageable way, write down each person’s job role within your business and then start to think of all the tasks which they will need to complete each day, week or month. It’s a bit like a job description, but simply with a list of activities. This will help understand what jobs need doing, how often and what resources and tools will be required to get the tasks done.
Read about choosing food suppliers for your restaurant.
Read about different types of restaurant software.
Read about creating checklists.
Read about how Directors, General Managers, Head Chefs and Staff use Pilla to manage their tasks.
Step 9 – Create a marketing strategy
Creating a restaurant marketing strategy is an important business plan step, but it’s important to remember that your target market is key. Once you know who your customers are, you can tailor your message and marketing efforts specifically to them. There are a variety of marketing channels available to restaurants, including online and offline methods.
Online marketing includes creating a website and using social media accounts. Consider creating a mood board on Pinterest, sharing sample menu on Instagram, asking for ideas about new menu items on Twitter or encouraging customer experience reviews on TripAdvisor. Restaurants can also use paid advertising options such as Google AdWords or Facebook Ads to target their desired audience.
Offline marketing includes traditional methods such as print advertising (newspapers, magazines), radio/television commercials, direct mailers (postcards, catalogues), and outdoor advertising (billboards, transit shelters). It’s important to consider which channels will work best for your restaurant and budget.
Read about restaurant review sites.
Read about choosing a restaurant name.
Step 10 – Plan your finances
Now, you’ve done your market analysis, you’ve planned delicious food, you’ve decided if you are fast food or fine dining and you have a projected budget, so it’s time to ask whether it all fits within your available finances.
If you need to costs from your financial projections, make a priority list and ask yourself what you absolutely can’t do without and what could come at a later date.
Be realistic, and remember there is always something you failed to consider such as some of the industry-specific fees and licenses which are required. Be sure to double-check your calculations… and then check them again. Making an error when it comes to your financial situation could be absolutely detrimental to the success of your start-up.
Read about restaurant startup costs.
Read about menu costing.
Bonus tips for your restaurant business plan
- Consider outside consultants. We’re not all experts in everything but there are plenty of great people who are experts in in their field. Consider hiring exerts to help you with aspects of your business plan which aren’t your strength.
- Use simple data points. Data is great, it helps us make smarter decisions but at this point, you want to keep your business plan detailed but simple. Only use relevant information, try not to overcomplicate it and get bogged down in unnecessary detail. It’s a balancing act between not enough and time wasting detail.
- Communicate non-stop with your target market. The restaurant industry is about people and nobody is more important than your customers. Speak to them as often as you can, about everything.