Can you imagine going to any new place without a map? For your restaurant, a business plan is synonymous with a map. Whether it is to show to a potential investor or is even for yourself, developing this plan will put you on a researched and well-thought-out path.
Writing a business plan is not optional, and doing it right is as important as doing it. This article will take you through each step and give you examples so you craft your business plan with us and have the tools to do it right.
Before you start writing your plan, it is good to know the purpose your plan should fulfill. With these points in mind, you will have a better picture of what to include in your plan.
- Your plan should be objective. A great idea in your head does not translate to a successful idea by default. Evaluate from all angles and then include it in your plan.
- Your plan should create a near-future blueprint. Be thorough and concrete about the ideas that you include.
- Your plan should create the foundation of different business functions. This will help you build your next plans and ideas. Think of the plan as a thinking guide for the future.
- Your plan should convince you and your investors (if any) that this is a good investment of time and money. Do not just adhere to the framework we give you; analyze it and be convinced of what you are writing.
Now, onto the plan and it’s components.
Table of Contents
Overview of the Business Plan Components
An overview of the components will help you understand what to expect and will give you a good introduction to what your business plan will look like. Every business plan should cover the following categories:
- Executive Summary
- Company Overview
- Industry Analysis
- Marketing Plan
- Operations Plan
- Financial Analysis
While these categories do not vary much from industry to industry, the content under these categories significantly relies on the industry and the business type. We will try to keep the content general for every restaurant and give examples so you can customize it to suit your restaurant type.
Deep-Dive Into the Business Plan Components
An executive summary is a snapshot of your business. It is an important snapshot since it is also often a make-or-break point for many investors; they do not read beyond the executive summary if they are not convinced.
The main challenge with this category is to be concise. It serves as an introduction and as a summary; as a result, plan writers try to fit in as much as they can. That is the wrong approach. It should be a brief outline containing mainly the following:
- A brief description of your concept and execution plans
- A quick justification for viability
- A snapshot of growth potential
- Potential costs and returns
- Company core values
Example of an Executive summary
Matt’s Joint will offer nutritious fast food in a strategic location on the highway adjacent to all the other fast-food joints. Our primary goal is to develop Matt’s Joint as the most convenient, affordable, and healthy fast-food joint for the thousands of visitors who stop at the highway food cluster each week.
Once we get going, we will expand our scope to include beverages and desserts and take advantage of the long highway and many food clusters to open up a chain. We will leverage our lean and optimized operational style to have a low starting cost. Within three years, we intend to create a brand that every highway passenger will come to for healthy yet tasty options at the same price as other fast-food chains.
Company and Management
The owners of the joint, Matt and Rachel, have over 20 years of experience in the fast food business. Matt served as the product manager at Burger King, while Rachel was the VP of McDonalds.
They have extensive contacts in the industry that will help them source ingredients and equipment at significant discounts.
The nature of the business is seasonal (more traffic during the holidays). Hence, to optimize the staff costs, there will be contract-based and part-time employees.
300,000 people visited the food cluster each month during the last 12 months. While there are other fast-food joints around, none of them have a healthy menu (they have salads or diet sodas at best). The customers are usually families that look for healthier versions of burgers and pizzas for their kids instead of salads. This has been confirmed by conducting field research at the proposed spot and also at other locations. Approximately 60% of the respondents said that they will opt for healthier versions if they can find an alternative which is not very expensive.
Direct competitors are some supermarkets, but they sell packaged healthy foods, not fresh burgers or pizzas. Other joints in the cluster or surrounding clusters only have 1–2 healthy options.
Matt’s Joint also wants to spend on marketing and build a strong connection with the customers by collecting surveys and preferences for further development of the product.
Matt’s Joint expects to reach the breakeven point by three years based on projected sales and revenues. The following are the assumptions used for these projections:
– Initial demand will be slow as we establish the brand and educate the consumers about us and the products.
– The equipment can be used for at least five years without significant damage or tear.
– Marketing costs will be kept at 15% of the total sales.
Tips for the Perfect Executive Summary:
- Think of it as an elevator pitch. Include only the must-knows.
- Highlight the differentiating factors. Every restaurant serves food, but how is yours different?
In this category, lay out the business elements. The elements include history, vision, location, customer profile, business ownership (who and how), brand, service, theme, and business structure.
The challenge here is that each element has an impact on the others. For instance, you mention that you want to serve high-end customers, but if your location is not equally elite, you will not be able to attract them.
When you start a business, having a definition of all the elements is tough. To combat this challenge, break down the elements into questions. For instance, to define the customer profile element by asking as many questions as you can. Here are some to get you started.
- Who is my average customer?
- Who can I target?
- What do they want?
- What problem/gap am I solving?
- Where can I find that customer?
Answering these questions in-depth will give you a concrete idea of your customer profile. Then you can summarize that and define your element.
Example of a Customer Profile
History and Vision
Matt’s Joint is a new venture that will be located at the food cluster off of Highway 56. The initial plan is to serve families looking for healthier options while they drive through and keep the menu limited to five items for faster and cheaper operations. We will then leverage the customer following and offer healthier in-house beverages and snacks.
The menu has been developed along with the health team at Michigan University. They have been doing research on plant-based and low-calorie meat. Even the bread is fermented with kefir and other ingredients that promote gut health.
Since the owners have extensive industry contacts and can source local ingredients at bargain prices, we are able to offer the products at similar prices as the other joints in the food cluster.
You can also include other information relevant to your business here, such as customers, future plans, competition, other services, and so on.
Tips for the Perfect Company Overview:
- Start from a broader level and then move on to more specific aspects. For instance, start with the structure (e.g. dine-in, quick service), then move on to customers, your products, and so on.
- When you try the “ask questions” approach mentioned above, do not include all the minute details in your plan. Leave some room for flexibility while defining your elements at a higher level.
Market research is key. Good research will give you an understanding of your market and your opportunities. It will help you realise if your services are needed and if you can make profits from them.
The challenge here is not asking questions, but asking enough and the right questions. For instance, if you ask if the customers want rainbow bagels, you will get a yes and move ahead with the plan. But you are missing vital information like whether there are others selling the same, whether the customers will buy from you instead of them, whether this demand is going to last, whether you can provide a cheaper price and better product to get customers, and what kind of customers can you expect.
Only when you have the answers to the entire question set can you make a more strategic plan for your ideas. That said, this research can be intimidating; you might get lost in the many details. Defining your research scope and goals can make the research more structured.
Here are some points you need to cover in this category to get you started:
- Industry summary (market size, trends, growth)
- Target market for your business
- Demand analysis for your products/services
- Competitor analysis and benchmarking
- Customer expectations and willingness to pay
Example of Industry Analysis
Consumers are becoming more and more health conscious, especially families with kids. They want their kids to adopt the vegetarian lifestyle from an early age. The market for plant-based meat grew 30% in the US last year. We expect this demand to rise and people to switch from junk food to healthier options.
While the demand for healthier options is increasing, due to slow growth in the economy, people are not yet willing to spend significantly extra on these options. However, over time, when the economy improves, people are ready to shell out extra bucks for the products.
- People are growing more and more aware of fermented foods.
- Innovation in bread is at an all-time high. Bakeries, restaurants, and other bread makers are experimenting with different grains, fermented kefir, and artisanal breads.
- Changes in the fast-food industry are long overdue and people are welcoming new products launched by fast-food joints.
You can also include other points here, such as growth, more factual news/information to support your points, demand analysis, main competitors and their latest moves and developments, and customer surveys.
Tips for the Perfect Industry Analysis:
- It’s much easier to research and use the information when you can quantify (i.e. there is a need and 40% of the customers want this product).
- Do not miss any angle (for instance, you are convinced that there is a demand for rainbow bagels and you can get customers and make a profit, but you later find out that there are legal laws around using color in food for babies and you can only serve 50% of your target market).
Under this category, it is important to understand that marketing does not just mean advertising your product. It will include sales, channels, pricing, PR, distribution, engagement, branding and a lot more. All of these points are included under marketing.
This is a somewhat easier category than the previous ones. If you have stuck with us so far and have done the steps above carefully, you already know many details that will make your marketing planning easier. These details include your target market, size, customer segments, customer profiles, trends, preferences, competition, brand values, product/service, and competitive advantage.
The next step after laying out those details will be to understand what to do with that information. For instance, when you know you are targeting health-conscious families, then figure out how you can best reach them.
Further questions you can answer for your marketing plans are:
- What is your budget for marketing efforts?
- What KPIs and metrics will you use to track your performances?
- What is the structure for your marketing department
Example of a Marketing Plan
Our marketing plans will be based on these plans:
- We will use billboards near our locations for high visibility.
- We will hold pop-up events at different food clusters to raise awareness and collect information.
- We will have a strong online presence to educate our consumers about our products, ingredients, and research.
Initially, we will keep our price similar to other fast-food joints. Since we can get discounts on equipment and ingredients, we are able to pass these savings on to the consumers.
You can also include other details such as messaging strategy, channels, PR plans, off-line advertisements, and budget.
Tips for the Perfect Marketing Plan:
- Understand what your biggest initial challenge will be. Will it be creating awareness, educating about products, or penetrating the market? Your initial marketing plan should focus on that.
- This is your chance to prove that you know your market and customers thoroughly. Be as intricate as you can with your findings and data.
Defining operations from the start is very important in the restaurant business. It will significantly impact costs, margins, growth, and expansion plans. Operations basically include processes that will affect day-to-day running of the restaurant, such as staffing, food preparation, inventory management, back-end processes, service methods, and utility management.
A good approach to creating your operation plan is taking each function, creating as many sub-categories as you can for each of these functions, then getting into the details of each sub-category separately. For instance, consider supplier management. Under this category, your sub-categories can be major suppliers, credit management, payment policies, delivery frequency and times, and cost management.
You will lay out plans for each of these aspects. This approach will help you not miss any detail, have a more structured operational plan, and more easily optimize operations in the future.
Example of a Operations Plan
The back-end staff will be on monthly contracts and the front-end staff will be on part-time/demand-based contracts since the demand is highly seasonal.
Each staff will go through two weeks of training to understand the entire business operation thoroughly. They will also rotate so they understand different functions and can help in different departments when needed.
Skills required will be revisited annually and will be laid out in the company books. In addition to job-based skills, each employee will also go through training to understand health regulations, cleanliness procedures, and handling customer enquiries.
This kind of plan can be made for every function that is mentioned above.
Tips for the Perfect Operation Plan:
- You should also include details like licenses, permits, health regulations, and insurance in this operation plan. Having these items sorted from the beginning can give you a smooth start.
- If you already have expansion/growth plans charted out, also account for those in your operation plans. For instance, if you want to expand your menu, make sure your food preparation process can include those extra items.
In the end, it all comes down to the bottom line. This step will help you figure that out.
Financial sheets will tell you if your ideas are profitable. There are five basic reports one must include in every business plan. These are:
This one is an easy concept. This sheet helps you understand how much revenue you need to bring in each month to cover your costs and make profit.
Read more about calculating the Break-Even Analysis Here
This sheet explains the initial investment you need to get started. This will include all your start-up costs like rent, licenses, equipment, inventory to last you some months, staff salaries for some months, furniture, legal fees, and working cash.
This will be based on your projections. It exhibits the cash flow in your business. It will include expenses such as inventory,
You might also know this as a Profit & Loss statement. It is based on projections and exhibits revenues and expenses. This is where you can understand your margins and profits. It will include your sales, how much money you earned through those sales, your cost of goods sold, labor costs, marketing costs, utility costs, rent, and operational costs.
This sheet gives an overview of the company’s financial health. It exhibits the restaurant’s assets, liabilities, and equities. Assets will include cooking equipment, tools, inventory, and cash in hand. Liabilities will be outstanding bills, leases, and loans. Equity is if you have external funding.
Tips for the Perfect Financial Plan:
- If you are not from a business/founder background, it is advisable to hire a consultant/accountant (you can read about this process here) to help you with these plans. If your plan is to raise funds and if the investor goes beyond your executive summary, this is the next most important section.
Time to Build the Pitch Deck
Some restaurant plans might also include additional information/documents as part of their business plan. For instance, information on legal agreements, FDA approvals, rental agreements, in-depth studies of ingredients or preparation methods. If there is any other additional information that could support your facts and claims in the business plan, include them in the appendix.
Business plans are not a guarantee to success, but they guarantee to give you a lot of clarity on your ideas and plans. It is a task that could take you weeks or even months, but it is still a highly recommended step to ensure that your time, money, and efforts are not headed toward failure.