How To Build The Perfect Restaurant Business Plan

Opening a restaurant is an exciting endeavour. However, executing your foray into the food and beverage industry properly is essential to future success. Lack of effective planning and strategy is what leads to up to 60% of restaurants failing to continue business after their first year. Anyone intending to open a restaurant should first consider exactly what their strategy entails, not only as a means of managing your restaurant, but also how you can effectively portray your idea to potential investors.

Here we outline how to build a restaurant business plan and what to include in order to succeed:

Finalise the Concept

Before you turn your restaurant idea into a reality, you need to refine exactly what that restaurant is. In order to begin your restaurant business plan you need a crystal-clear concept in mind. This includes the food your restaurant will serve, the design of brand which dictates look and feel and all other factors that will contribute towards the experience you want your guests to have.

Detail your Niche and Target Audience

What is it that will set your restaurant apart from the competition? Your restaurant business plan should detail not only your ideal customer, but also the niche under which you will fit. Once these factors have been defined, you should use them to inform decisions on menu building and even the location which would best suit your endeavour.

These are not decisions that should be made on a whim. Menus should take all factors including methodology, yields, nutritional information and chef skill sets into account. Our recipe store is offers the ultimate planning tool, with tried and tested recipes that ensure you maintain consistent gross profit without compromising on quality.

As for location, when asking any seasoned industry professional how to build a restaurant business plan, they are sure to mention considerations such as estimated foot traffic and neighbourhood demographics as key strategic influencers. Making sure that you are going to experience significant footfall is important. But what is more important is that this footfall finds your restaurant concept appealing. Looking at the likes of income levels, cultural diversity and family structure can help to decide whether you are likely to thrive in a given environment. 

Create a Budget and Financial Statement

If your business plan doesn’t take profitability and financial projections into account, your restaurant is unlikely to progress very far. Taking all factors into account, restaurant plans should consider the likes of cover estimations, average spend value and other expenditures, like food cost estimations, into account. With this in mind, conservative estimations are key. This informs all KPIs, providing coherent targets for the team to aim for, such as labour spend against appropriate staffing levels and food and beverage gross profit.

With all factors taken into consideration you will have the data required to make the most appropriate projections to include in your business plan. However, without prior experience in handling such data it can be extremely difficult to outline precisely what it is that you want.

This element of the plan is often deemed the most important by investors, who will be keen to see the likes of a capital requirements budget and a profit and loss statement covering your initial years of operations. Using this, they will deem whether or not your concept is financially feasible. This is why soliciting the help of an external expert is highly advisable for this element of the business plan.

With experience in restaurant consulting focused around finances, operations and bridging the gap between the two, at The Engine Room we specialise in creating bespoke financial modelling, commercial insight and business planning solutions to help your restaurant thrive.

Conduct a Market Overview

In this section of the restaurant business plan you need to delve into the micro and macro conditions that may affect your restaurant. Take factors like the current economic climate and likely competitors in the area into account. Then detail how you aim to counteract these potential issues and overcome possible pitfalls by outlining the elements of your strategy that will set you apart from the competition.

This is also an excellent opportunity to outline the marketing strategies that you have in mind. From out of home advertising to building your social media presence to dedicated PR campaigns, make sure that anyone reading your plan has an impression of how you intend to reach your target audience.

A comprehensive marketing strategy is key to providing confidence in your plan and projections would be married to these to ensure you achieve expectations.

Define Your Staff

With any restaurant business plan, it’s important to outline the vision you have of the people that will be running the show. Start with the top by outlining your management team – their credentials, past experience and ambitions – and build from there.

The right mix of people is essential for protecting the sustainability of your operation and protecting your concept and reputation. It also reassures any potential investors that you have the desired skill set to achieve the promised outcomes.

Why The Engine Room?

Often your experience in the industry to date grounds the vision you have in mind as well as your understanding of your restaurant in the context of the industry. However, do you have experience handling the numbers from scratch? And is this something that you want to manage when your precious time could be better spent elsewhere?

Accurate generation of a set of numbers to realistically articulate the journey of your concept is an art in itself. At The Engine Room we specialise in business modelling to align and balance the vision and financial plan. We can then remain by your side through experience and adjustment, as you establish your restaurant and drive for growth and success.

If you would like help drafting a meaningful restaurant business plan or would like experienced advice on another element of your hospitality business, get in touch with our team.