This article was updated on December 2, 2022
Already imagining yourself greeting guests as they walk through the doors of your dream restaurant? The smell of the kitchen, the tasteful lighting, the menu? As you take the first steps toward making these dreams a reality you’re going to first need to get all of your ideas down on paper.
What every restaurant needs—before it can get to cooking, selling, and serving—is a solid business plan.
Whether you've built a fine dining establishment or a coffee shop, a carefully crafted restaurant business plan is the essential first course of your journey as a restaurant owner. It’s a multifaceted, guiding document, dedicated to describing every aspect of your proposed restaurant in detail. If you don’t know how to write a business plan, you’re in luck. From financial projections to daily operations, this guide will take you on a step-by-step journey, laying out exactly how to craft a business plan that can bring your culinary vision to life.
There are many things to consider when learning how to open a restaurant. No matter if you are a big or small business, creating a business plan helps you have an official document that outlines the development of your new establishment. There are essentially three distinct purposes for drafting up a new restaurant business plan:
The business plan should be a document you can refer to when opening a restaurant. It’s also a proof of concept that’s necessary to acquire a bank loan or bring on partners and employees.
Because of its multifaceted nature, a business plan needs to be air-tight, well-written, and typically reviewed by legal experts. Use a restaurant business plan template to make sure your business model touches on the necessary requirements, and always consider bringing in an extra set of experienced eyes to read over your plan and add revisions where necessary.
The first page of your business plan should outline your main goals and objectives and include a business description. Do you want to make a profit within two years? Are you hoping to gain regional recognition for your menu? This is where you define your restaurant and set your intentions.
When mapping out your business plan, your goal is to persuade the reader that your restaurant idea is viable, whether it’s a potential investor or partner. That means you need to provide them with a clear idea of what to expect and how you’re going to do it.
You’ll be able to go into deeper detail about your business operations throughout the rest of the plan, so keep things simple and direct in your introduction.
When writing the introduction, touch on points such as:
Remember that this is your chance to make a strong first impression, so push your summary to engage with potential readers in a way that will keep them reading on and encourage them to join you in your culinary venture.
This is your chance to get into the nitty-gritty of the financial aspects of your restaurant. It is a business, after all, and any successful business requires financial planning and rigorous research.
Break down your various financial sections into specialized sub-categories to bring clarity and readability to your restaurant's financial plan:
Expand on your summary by detailing specific restaurant ongoing and startup costs, adding up monthly expenditures, conducting financial analysis, and creating a comprehensive budget for your restaurant that includes food, liquor, equipment, and marketing expenses.
You’ll also need to determine your source of funding for start-up costs and the necessary capital needed to keep the business running before it can start turning a profit.
Will Gilson of Puritan & Company in Cambridge, MA, said, “Our construction took so long and had so many financial ‘surprises’ that when we finally received our occupancy, it was a mad dash to get guests in the door to make sure we would have enough money to pay our staff.” So if you can, do your best to plan for those unexpected expenses.
The legal structure of your business is important to determine before any real purchases can be made. Here are a few options you may consider:
If you are unclear on what type of structure is best for your restaurant, a business attorney or tax expert can provide advice as to what type of structure makes the most sense for your business venture.
In order to have a successful restaurant, you will first have to conduct a thorough market analysis and customer analysis. Determine who will be dining at your restaurant. As much as you believe that everyone will love your food, restaurants have specific demographics that they cater to based on:
Once you’ve determined what type of potential customers you’re catering to at your establishment, start to research where the overlap is between your customer base and other local restaurants to gauge your competition.
Don’t be discouraged if you’re dealing with a similar demographic as another local business. Guests appreciate variety, and there’s no reason you can’t build a network with other local businesses, turning competition into cooperation.
Are you imagining a long, rustic table with a roaring fire behind it, or are you planning on a chic bakery decorated in a modern minimalist fashion? Use the concept section to dive into all your restaurant day-dreaming and turn it into a passionate and exciting basis for what your restaurant will be.
When working on your restaurant concept consider:
Restaurants are not only about food—they’re about the experience. Consider the ambiance and theme when developing your restaurant concept. Your customers may be wowed by your dishes, but the right curation of style and atmosphere will make their dining experience unforgettable.
It should go without saying—the menu is a central item in your business plan. You’ll need to describe your menu in such a way that readers can nearly taste the dishes you cook up on paper. Try to imagine your readers sitting in the best seat in the house with a full-tasting menu in front of them.
In your sample menu section describe aspects such as:
Advertisement is key to building a local customer base, especially for a new business in the restaurant industry. With the advent of digital market strategies, it opens up another avenue for businesses to get involved directly with their community and customer base.
Use your business plan to explore your marketing plan for:
How do you imagine your restaurant running when it’s finally open? From payment procedures to the chain of command, it’s important to have a handle on the daily operations of your new enterprise.
Touch on aspects such as:
The longer you choose to be open, the higher operating costs will become. As Mike Corwin, owner of Waverly Ohio’s Diner 23 says, “Taking in a lot of money doesn't help if you're spending more than you bring in."
No matter how much planning you do, there will always be unexpected challenges when it comes to opening a restaurant, so be flexible once everything is up and running.
After building your business plan, you’ll be ready to tackle the next challenge of bringing those plans to life. Before you begin, you might look to your neighbors for a little advice.
With Nextdoor, you can connect with potential customers in the neighborhoods that you’ll be serving and join a community of diverse locals. Nextdoor is about empowering local businesses to communicate with their neighbors to weave a tightly knit circle of trust and respect between business owners and their customers.
Join the neighborhood with Nextdoor today.