The first step to opening your restaurant is to have a clear, unambiguous idea of your restaurant; what you plan to create and sell. A Restaurant Business Plan acts as a guideline, a roadmap for the future development of your restaurant business. It is the blueprint of operating your restaurant. You need to structure your business plan in an easy, understandable and logical and moreover feasible manner. Your business plan should also be sustainable in the longer run. Moreover, it’s required to show any potential investor that you are not playing around and know what you are talking about. You should consider all opportunities and pitfalls of your restaurant business well while writing business plan for your restaurant. But before you put your dreams of opening a restaurant on a paper, read this detailed guide to opening a Restaurant Business. In this article, we’ll tell you in detail how to write a business plan for your restaurant.
What Your Restaurant Business Plan Should Include
The business plan of your restaurant should ideally constitute of the following-
- Summary of the Restaurant
- Business Overview
- Industry Analysis
- SWOT Analysis
- Operations Plan
- Financial Analysis
- Marketing Plan
Let us look at each of these points of the Restaurant Business Plan in detail.
1. Summary of the Restaurant Business
Your restaurant business plan should begin with an overview or the summary of your restaurant concept that acts as an introduction to your business.
It should include things such as your mission statement, a review of your restaurant legal structure and ownership, a brief history of the restaurant if it’s an existing restaurant and future plans of your restaurant business. Your restaurant business plan should be an overview of your business comprising of all-around strategies.
2. Business Overview
The next step in the creation of a business plan is describing your restaurant concept. You should be able to clearly define what would be unique about your restaurant. You should provide the reason behind the concept of your restaurant, why the concept will be successful, your plan to make it a reality, its cost, and the anticipated return on investment. While deciding upon the concept, you should be able to answer:
- What are you aiming at?
- Who are you going to cater?
- Who will be your target clientele?
- What service/product you will provide to your target clientele?
If you haven’t decided already, this article will help you choose the right concept for your upcoming restaurant.
The Business Overview of the Restaurant Business Plan comprises of three aspects-
a) The layout of the restaurant/ Type of Service
b) Sample Menu
c) Management Team
The next process of the restaurant business plan would be deciding the cuisine and the menu. By this time you must have clarity on thoughts about the pricing point because you already have decided your clientele.
a) The Layout of the Restaurant/Type of Service
You need to mention the format and the design of your restaurant in the Restaurant Business Plan. The design and the layout of the restaurant should be in sync with the format of the restaurant. For example, in the interior design of a fine-dine restaurant would be different from that of a fast-food restaurant. Also, include the cutlery, kitchen equipment, staff uniform that would complement the brand image of the restaurant in the business plan.
A good descriptive summary of the style of the service, as well as the promptness, is necessary to properly communicate the conceptual image of the restaurant.
b) Sample Menu
Needless to say, your menu is the heart of your restaurant business plan. It is generally accepted by the restaurant entrepreneurs that if you serve excellent food, your restaurant will be able to survive the competition. Your sample menu should be a simple list of items with the half and full prices. Your menu should be guided by the availability of ingredients. Instead of going for a fancy and difficult menu with 10 dishes of paneer or chicken, it is always favourable to go for 4 dishes of veg and 2 dishes of non-veg, for an example. It is recommended that while making a sample menu design, don’t go for dishes which require hard to procure ingredients or complicated techniques to prepare it. Your menu should be balanced, between cold or hot and heavy and light dishes. The reason is that generally, the chefs who apply at restaurants are less skilled and mostly unemployed. So in a crisis situation when the chef leaves your restaurant, you can hire another chef with lesser difficulty.
But your chef should be creative enough who should be able to take the risk of experimenting with texture and taste. However emphasis should be given, that you don’t miss out on popular options demanded by your targets customers even if it does not fit in your business type.
c) Management Team
Your Restaurant Business Plan should also include who all is a part of your Management Team. This list would include the owner, General Manager, Head Chef. Also, designate the responsibilities assigned to each one of them for clarity.
3. Industry Analysis
You should be able to identify your target customers, their spending behaviour and power and other demographics. You can serve better once you know about who you serve. The Industry Analysis primarily consists of Location Analysis, Target Audience Analysis, and Competition Analysis.
a) Location Analysis
Finding the ideal location for your restaurant is one of the biggest challenges that you will face. There should be a clear connection between the location of your restaurant and the target market.
The location analysis should describe market conditions that exist in the location (or general area) you have selected.
If your restaurant is in a mall, it is likely to attract families. If the location you choose is surrounded by colleges, hostels, and PGs, mainly teenagers will be the ones visiting your restaurant.
Whichever location you choose, it shall have the following features:
- The location of your restaurant should be easily accessible.
- It would be better if your restaurant has its own parking area.
- Your location should be Google-map friendly.
- Information gathered and displayed here should include demographic statistics, description of local industry and the competition around you.
- At the same time, figure out how you plan to manage the supplies in future with minimum shipping and delivery charges. So chose a location near the vendors and suppliers.
- Do think about the future prospects as well. It is likely that in the coming future when your restaurant business will be growing, you will have to acquire more employees and purchase more equipment. More customers will be walking in your restaurant, so you should be able to assess whether your restaurant can provide adequate seating, parking, storage, preparation areas.
b) Target Audience Analysis
It is important to do a Target Audience Analysis so as to come up with a comprehensive Restaurant Business Plan. It is not necessary to appeal to everyone. You should know whom your restaurant will be serving, which class they would belong to, and their specific food habits and their spending habits. The aim of doing a target audience analysis is to know which portion of the population is most likely to come to your restaurant. Analyze the customer demographic and the behaviour of the customers that you are aiming to target.
For analyzing you have to first conduct a primary research of what constitutes the population near your restaurant. For example, if you are opening up a restaurant in a student-centric area surrounded by PGs and hostels, it will be better if you are running fast-food restaurants or takeaway, serving at a lower price and with more funky interiors.
If you are planning to open up a restaurant in a residential area or where there are a lot of corporate offices, they will usually have higher spending capacity. So depending on that you can go for casual dining or fine dining. Also, your target customers should be living within 3 miles of the location of your restaurant. The closer, the better it is.
Accordingly plan out your mediums of marketing as well which would appeal to your targets customers.
c) Competition Analysis
High competition is one of the biggest challenges of the restaurant industry. However, the competition can also have a positive impact on your restaurant business, as it would bring in the customers. Still, while opening a new restaurant, you should analyze the competition in the area in terms of both the present competitors and the prospective ones. You should identify and include the list of the restaurants with similar concepts as yours in your Restaurant Business Plan. After you have already identified your competitors, you need to conduct your research in the following areas:
- The market segment your competitors serve.
- The item which is maximum purchased by the customers.
- What promotion/marketing strategies are being used by the competitor.
- Serving capacity, operational hours of your competitors.
- The strengths and weaknesses of your competitors.
- The growth rate of your competitors. You can conduct a primary research on these aspects by visiting the places or secondary research by regularly following the updates on their website, reviews on their pages and their other social media profiles.
4. SWOT Analysis
Doing a SWOT (Strength, Weakness, Opportunity, and Threats) Analysis must be included in your Restaurant Business Plan as it helps you identify internal and external factors that would impact the restaurant’s future.
a) Strength- Analyze the strengths of your restaurant business. For example, you can include the USP of your restaurant that sets you apart from the other food businesses in the area, competitive pricing, prime location, quick service.
b) Weakness- It is also essential to consider the weakness of your restaurant so that you may be prepared to tackle the problems that may arise from them. For instance, as a new business, establishing a brand identity is difficult.
c) Opportunity- This is the area where you can explore the possibilities of grasping the market. Analyze the gaps in the current market trends and note how you can benefit from it. For example, as a new concept in the area, you can have a First Mover Advantage.
d) Threats- Threats can be anything that may pose damage to your restaurant business. These can range from anything; from a new restaurant competition to a sudden shortage of supplies. Since these are external factors, you cannot do anything to prevent them, but you should be prepared for such situations.
5. Operations Plan
The Operations Plan is an integral part of your Restaurant Business Plan as it includes how the restaurant would function in the daily operations.
a) Staff Management
Another great challenge that you are going to face after you have found your space, planned the layout and the interiors have been done is finding the right people to run your restaurant. You should be aware that your restaurant is a labour-intensive business. Your team is the backbone of your restaurant so they should be treated with utmost care. When your restaurant is in profits, you need to make your team a part of your success so that they also feel a participated in the happiness.
The Restaurant Business Plan should include points such as the number of employees you would need in each area of operations, such as the Kitchen and the Service Area. Also include the entire Recruitment Procedure, Job Descriptions, and the Training Manual.
As a general rule, you will need the following staff
- Kitchen staff: Cooks, assistants, prep staff, pantry, washing staff. For bars, you will also need bartenders.
- Service staff: Waiters, orders takers, counter staff, delivery staff, cleaning, housekeeping, security.
- Management staff: Restaurant manager, chef, cashier, store keeper, purchase manager.
Spotting the Right Employee
The restaurant owner beforehand should decide whether their staff and team should comprise of local-ites or from the migrated population from small towns and villages. Also while hiring the team, always include a mixed culture of people which will not only create a backup during respective festive seasons but also will also bring diversity in the restaurant.
Training the Staff
In order to reinforce best practices, you should hold training sessions regularly related to food preparation, Healthy kitchen practices, and smart waste management, approaching the customers with a professional attitude, handling customers’ reviews and complaints and so on. Create a Training Plan for your employees and make the hired employees undergo extensive training before the opening of the restaurant.
b) Customer Service
Deciding upon the kind of service that you would provide in your restaurant is essential and must be included in the Restaurant Business Plan as it affects the entire guest experience. You should decide the type of customer service that you would be providing based on your restaurant format.
- Table d’ hote (TDH)- A table d’hôte menu in a restaurant terminology can be defined as a menu where multi-course meals with only a few choices are charged at a fixed total price. Such a menu may be called prix fixe or fixed price. The terms set meal and set menu are also used. The cutlery on the table is already set for all of the courses.
- A la carte- Table d’hôte contrasts with à la carte, where customers may order any of the separately priced menu items available. À la carte is an English language loan phrase meaning “according to the menu”. It refers to food that can be ordered as separate items, rather than part of a set meal.
- Silver service or Platter to Plate- Silver service is a method of food service that usually includes serving food at the table. It is a technique of transferring food from a dish to the guest’s plate from the left. The waiter does this by using service forks and spoons from the diner’s left. Plates are cleared from the right, glasses from the right; again by starting with the guest to the host’s right. Glasses are stacked in a diagonal to the right and away, with wine (by course) in order and then water glass.
The most important point to remember when it comes to the step of finance is to be realistic. You should have a personal financial statement and balance sheet in place, with the regular cash flow statement. The owner should be aware of all the cash inflows and outflows and should carefully keep a track. The owner should be conservative in the initial days of the restaurant. For example, a lot of times the restaurant owners become too ambitious and they start expecting good revenue from the first day itself like Rs 10,000 on the first day and in the same proportion on the other days. This over- assumption may prove to be harmful because there might be an extreme case when there might not be a single customer in your restaurant so you should be prepared for it both psychologically and emotionally. Thus, Financial Analysis is an important part of the Restaurant Business Plan. Include the Cash Flow Statement, Revenue Projections and Cost Analysis in the Business Plan.
a) Cash Flow Statement
It is the records of where is the money coming from and where is it going. In other words, it is the mapping of your restaurant. This is one of the important tools which everybody should spend time on.
b) Capital: Where the Money is coming from
This part comprises of your financials or your partner financials and how much you are ready to invest. Clarity of thought should be here so that you can tackle any contingencies.
You need to allocate some funds for the capital investment, some for the operating expenses and the duration for how long will you support the system and finally some fund for contingencies.
c) Expenses: Where the money is going
Capital and Operating Expenses give you the details of where the money is being spent.
- Capital expenses- Also called as Fixed Cost, Capital Expenses are those expenses which are fixed in nature and are not recurring. For Ex-Land cost, equipment and machinery cost, utensils cost, Interior designing cost, table, chairs, cutleries, crockeries, wall hangings, chandeliers and many other tangible items which you will use to beautify your kitchen and restaurant.
- Operating Expenses– You need to assume these costs and the projection have to be made along with the operation team. It will generally comprise of expenses which will be recurring in nature. For example- Salary, Rent, Licenses, Laundry services, Food Commodities, Office and housekeeping Supply, Light, and power.
- Cost Projection- The Cost projection of the restaurant should be done for at least 6 months.
- Revenue Projection-Understanding the scope of business is very essential. Now that you have the survey about your localities, you have your operating team in place, you have your menu and cuisines decided, you have knowledge of the expenses and, you can then easily derive the revenue projection. Majorly in revenue projection, you need to understand how many footfalls you are expecting.
- Revenue per person- As per the menu which you have created, you need to understand and analyze how much per person average you will be able to earn. Once you know that your APC (revenue per person) is X amount, then multiply with the assumed footfall and create the revenue projection for daily, monthly and quarterly basis.
- Statements of Income- As for now, you have your expenses ready and so is your revenue projection, with these data you can calculate your gross profit/ Return on Investment/PBT /PBAT. This statement of income will be your road-map for opening a restaurant.
It is always better to be a little conservative rather than generous when comes to revenue projection and more generous in terms of expense statement.
7. Restaurant Marketing
The F&B space is getting competitive day by day. Therefore, another important step while writing a restaurant business plan is marketing. You should have a clear picture of your market strategy beforehand. Plan out a budget for both online and offline marketing. For every revenue, a portion of it should go for marketing of the restaurant. Always have a visual block free logo with simple design and a simple name. However, the branding of a restaurant is determined by the country in which the restaurant is located.
a) Restaurant Launch
At first, the restaurant owner should go for a soft launch which will include mouth to mouth informing your close friends, relatives, and well-wishers. At least after a buffer of 3-4 months, go for the official and the hard launch, where you would invite the name and the famous people, politicians, media persons, and food bloggers and critics. The most common mistake the restaurateurs commit is having a hard launch on the first day of their restaurant when they do not have a financial backup to provide free drinks and food to the people coming on your launch. So this buffer of 3-4 months buffer period will not only give the time to your employees to be well equipped with the operations of the restaurant but you will also have some cash in hand to have a successful launch.
b) Online and Offline Marketing
Plan out your marketing strategy on both online and offline platforms. Through your marketing strategy, define your restaurant’s specialities and state how your restaurant will stand apart despite the prevalent competition in the restaurant space.
Your marketing type shall be determined by the contemporary market trends. Smart marketing strategies use elements of all these promotional options to build a restaurant brand and engage the restaurant’s core customers while keeping costs manageable. You need to understand that how to utilize the various channels on social media so that you get the maximum ROI from them.
(i) Online Marketing
- Website: Your website can prove to be the most important channel for your marketing. You should be able to maintain an attractive, informative and responsive website which will comprise of all the important information about your restaurant. The stronger the impression that your website makes, the more publicity you’ll get from media outlets and review sites. List your restaurant website on online listing & travel websites like TripAdvisor, Zomato, Burrp & more. Read more about the importance of a website for your restaurant here.
- Blog: You can start a blog for your restaurant that will allow you to promote your restaurant activities. A blog can help you by strengthening your digital reputation and a better SEO ranking and ability to build your database for newsletters, digital marketing, and email campaigns. You can get even more mileage from your blog by publishing posts by guest authors.
- Social Media Platforms- Having a social media presence for any restaurant is very important. By adding social media to your marketing strategy, you can increase awareness about your restaurant amongst your clientele. You can promote discount coupons, offers, loyalty programs, and events on Facebook, Instagram & Twitter. Learn the tips of social media success of your restaurant here.
- Email Marketing- Email marketing has always been one of the most reliable forms of marketing for gaining customer loyalty. If you are new to this, you could also have software for your email marketing.The restaurants can show their regards to new subscribers with a discount code for their next visit.
Your customers should be able to send a direct reply to emails that you have sent out. It is always advisable to not send an email from a ‘no reply’ address. Include these points of email marketing for a restaurant in your restaurant business plan.
(ii) Offline Marketing
Apart from the online marketing of your restaurants, there are a lot of ideas for offline marketing for your restaurants.
- Engaging with Food Bloggers
- Hosting Events
- Advertising through signages and billboards
- Distributing pamphlets
Learn more about Offline Marketing for restaurants here.
(iii) Customer Relationship Management
In today’s century, the restaurants are facing unprecedented challenges in all the aspects. One of the challenges is to cater to changing eating preferences and habits. So in such a scenario, it has become extremely important for restaurants to analyze and understand the differences and changes in the customers’ behaviour, food preferences, eating habits, and then look for more opportunities to serve them better. Before the customers start coming in, you need to ensure how you will accumulate the customer data and use it to generate more business. Include the channels through which you will acquire the customer details in your restaurant business plan, and also the strategies through which you will engage with your future guests.
You should have software which covers various important aspects. It needs to integrate easily with the software that you are already using, and that may indeed require custom CRM development. Your main focus should be on customer retention and increasing sales growth. Learn how Integrated CRM increase Customer Loyalty and improves restaurant sales here.
First of all, a CRM system aims to gather information about their customer to initiate the building of the customer relationship in 4 aspects:
1) The contact details of the customer (Phone number, email, address)
2) Frequency of visits (what time of the week or month they tend to visit)
3) Preferences/ detailed profile of what they usually eat
4) Average Spend per visit.
Using the features of Loyalty Program
Once your customer registers on your loyalty program, their profile is created. Then, it becomes easier to track the frequency of the customer’s visits, how much they spend per visit, what are their preferences. With this, you get an effective platform to engage and interact with your customers. With a loyalty program, any restaurant can give its customers an advanced access to new dishes, special discount coupons or a free meal.
- Real-time updates and personalized recommendations for your customers.
- You can Reward your loyal customers with a free gift, discount coupon. Stay in regular touch with your customers through email and text message. You can send your customers a birthday/anniversary wish.
- You can give your customer something at the end of the meal with a sense of gratitude as a surprise.
- Also with the CRM system, after analyzing customers’ history, you will be able to find out if a particular customer is a vegetarian or a non-vegetarian. Then, depending on that if a new non-vegetarian dish is launched, it would be taken into account that the specific email about that dish does not go to the vegetarian customer. Thus, making the process of customer relationship building more specific to your valuable customers which will help you in the longer run.
- Interact with your customers on social media platforms. Make them feel important.
Here is the downloadable Slideshare Presentation which will definitely serve as a visual go-to guide to a strategic Restaurant Business Plan: