How to Write a Restaurant Business Plan to Wow Investors

The main point of a restaurant business plan is to capture the interest of investors and seal the deal in cash. But it’s also essential to iron out the details before jumping into a multi-million dollar venture so there are no surprise expenses that could derail your entire restaurant before the first customer ever walks through the door. The stats don’t lie: companies that don’t use a business plan tend to learn the hard way, with 26% of restaurants failing within the first year of opening.

So you need a plan, charts, the works to show investors, but you might be staring down a blinking cursor on an empty Word document, experiencing a case of the world’s worst writer’s block. Where do you even begin? There’s no reason to mindlessly drum your fingers on the keyboard, waiting for inspiration to hit. Likely, everything you need to write a restaurant business plan is already in your head. Here are the big-ticket items you shouldn’t miss and the points you should touch on to set your new restaurant business up for years of wild success.

Executive Summary

The executive summary is like your company’s resume. It should give a rundown of your restaurant’s concept, menu, location, target market and a 3-5 year financial projection. To reiterate, this is a short summary, so keep it to a concise 2 pages. After all, you wouldn’t give your prospective employer a 5-page resume of your entire work history starting with your first job at 16, and you wouldn’t give your investors it either.

Company Description

The company description is like any introduction paragraph you wrote for school. It should give the reader a clear understanding of your restaurant concept and what they can expect going forward.

There’s no finite word count you should shoot for, but you should try to make it as straight to the point as possible. The length of your description will depend on the scale of your business, so anywhere from a couple of paragraphs to a page should have the investors taking out their checkbook.

A company description for a restaurant should hit on the following points:

• Restaurant name


• Contact information


• Goals


• Location


• Restaurant size


• Operating hours


• Restaurant layout and design


• Target customers


• Market study and competitive advantages


• Mission statement


• Business model


• Legal structure


• Unique value proposition


• Products and services


• Opening date


• Achievements

Market Analysis

A market analysis done right will include insights into the industry, market and competition. We’ll give you a breakdown of the research to include in your restaurant business plan. But generally speaking, you should aim for at least 3-5 pages to adequately cover the topic and demonstrate a comprehensive understanding of the market you’re trying to break into.

Target Market Analysis

• Demographics – Research the demographics of your target area. These include average income, employment status, age, gender, occupation, race, ethnicity, marital status, lifestyle, education level and religion. Demographics often provide insights into the preferences of your target market.


• Gap analysis – Take an in-depth look at what the market needs. It might turn out there are no restaurants with vegan options, good value pricing or a more formal dining experience. Whatever your research reveals, make your restaurant stand out from the crowd.

Industry Analysis

• Market size – You’ll want to provide data and statistics that back up why you think you can get in on that piece of the cake. How big is the market? Is it predicted to grow? Who are the major players? And most importantly, is there enough room for you?


• Industry trends – In the context of opening a food business, this might look like new restaurant technology, takeout and delivery services or a growing consumer awareness for sustainable sourcing and practices. Be sure to list the ones relevant to your enterprise.

Competitor Analysis

• Direct competitors – Direct competitors are any restaurant that will split your customer base. They could be restaurants with similar menus or within driving distance of your new establishment. It’s important to analyze their strengths, weaknesses, marketing strategies, menu, pricing, decor, seating, etc. to learn from their mistakes and find your edge.


• Indirect competitors – Indirect competitors are any food service business that maybe isn’t necessarily a sit-down restaurant or sells the same kind of food, but is still taking business away from you. These could be fast food joints, food trucks, bars, grocery stores, etc. You’ll want to identify these in your area and come up with a plan of action, whether that be in the form of a new marketing strategy or promo to steal your customers’ back.


• Competitive advantage – How are you going to stand out from your competition? What is it that your competitors aren’t doing that you should be? Maybe their location is off a busy road, no one has a creative outdoor patio, or it takes an hour to get your burger. Find the gap and fill the need.

Marketing Strategy

Word of mouth might have worked well when the town was a one-lane street, but with today’s competition and access to loans, you’ll need a well-defined marketing strategy to ensure your new restaurant gets the attention it deserves.

Devise a strong digital marketing plan, leveraging social media, google ads and email to spread the word, deals and promos, as well as creating loyalty programs to reward your customers for coming back time and time again. Don’t forget to invest in a professional-looking website that includes your address, operating hours, contact information, menu options and deals. There’s also the traditional marketing route that’s still effective at reaching older demographics, like printed ads, direct mail, radio, TV commercials, billboards, etc.

Financial Analysis

You probably won’t get any nibbles on your restaurant business plan from investors if you don’t include a section on your current finances and potential profitability. Forget the investors for a second. Knowing your finances inside and out is one of the most important steps for setting yourself up for success and determining if your restaurant is economically feasible from the get-go.

• Sales forecast – A sales forecast is how much you think you will make within the first three to five years. You should break the first year down into monthly forecasts. From there, it can be annual projections.


• Balance sheet – A balance sheet should include your assets, liabilities and the shareholder’s equity and should be redone every quarter.


• Profit and loss statement – Include your revenue, costs of goods, gross margin, operating expenses and net profit. The income sheet will help you get a better idea of your restaurant’s financial performance on its own and in relation to your competitors.


• Cash flow statements – Cash flow statements tell you how much cash goes in and how much cash goes out in your operations, investments and financing sectors. This helps you understand how you’re earning and spending it.


• Operating budget – With a better idea of your internal finances and projected growth, you can make a budget, so you can keep operations going and invest in the right areas without accidentally putting yourself in the red.

Location

You’ll want to thoroughly research the area before settling on a location for your restaurant. Demographics like cultural background, socio-economic status, average population age, etc. can influence how popular your restaurant will be with your customers. It could even make a few decisions for you.

For example, if you’re dead set on opening a fine dining restaurant, you’ll want to avoid setting up camp in a low-income neighborhood. Keep your eyes peeled for market saturation. A small town doesn’t need 9 Irish pubs lining its main street. If you don’t like what the market analysis shows you, then it might tell you that you need to find a different area to set up shop.

Menu

After you’ve completed the market research and curated a list of possible locations, you now know your target audience and cuisine. Unfortunately, monetizing your great-grandmother’s recipes to create a mouthwatering menu is only a small piece of the pie.

You still have a few things to settle before this ship is ready to set sail – but that’s why we write a restaurant business plan – to shore up the loose ends that might have been overlooked in the excitement of starting a food business. Here’s a list to put a little wind in your sails:

• Menu description – Start this section with a brief introduction of how your menu aligns with your business concept. Mentionables include the cuisine and how this reflects your restaurant theme, style and dining experience. Write the menu descriptions concisely and add captivating adjectives to grab your reader’s attention.


• Research – Yummy food is great and all, but the menu should be backed by facts. How did you end up deciding which dishes made the cut? You should mention how demographics, market research, customer feedback and other pertinent information played a role in proving these selections were strategic rather than whimsical.


• Sample menu items – This is the perfect opportunity to showcase what your menu is all about. List a few dishes, starters, mains, desserts and beverages, and write a little blurb describing the ingredients used and how it’s prepared.


• Pricing strategy – Let’s talk numbers. To price your menu, you’ll want to consider the cost of goods, labor and overhead involved in making a recipe and decide a fair price that will turn a profit without scaring away potential customers.


• Ingredient availability and sourcing – Certain ingredients have seasonality that could affect accessibility and taste. Will you create a seasonal menu or substitute ingredients? How are you going to source your ingredients? Locally, wholesale, specialty, producers, commercially, etc.?


• Menu adaptability – How adept are you at shifting gears when the seasons change, a customer has an allergy, or a new food starts trending on social media?