Every new business requires a strategic plan in advance.
Think of your biz plan as a roadmap you can follow that gets you exactly where you want to go! It allows you to consider all the likely (and even unlikely) scenarios you will face before and after you open the doors to your new restaurant.
Give yourself every advantage and maximize your chances of success.
A solid restaurant Business Plan includes the following sections:
1) Executive Summary Your summary should be a 1-Page overview of your restaurant’s potential opportunity, your location and traffic, your concept/theme/menu and why customers will be drawn to your establishment, description of your target customer and finally your related industry experience (The entire Executive Summary will be presented in much greater detail in the main body of the plan)
2) Use of Funds Sheet A one page summary of the amount of capital you are seeking, the specific uses of this capital in detail (purchase, renovation, construction, equipment, working capital, etc..), your downpayment amount, your existing collateral and your repayment strategy.
3) Your Concept Detailed description of your restaurant theme, ambiance/appeal/colors, staff uniforms, Basic cuisine type if this relates to your theme, number of seats, bar?, entertainment?, hours of operation, daypart meals served, pricing strategy, additional profit centers beyond food & drink, staffing required per department, etc.. What is your restaurant’s special unique draw and why will customers be attracted to your concept? Is there any seasonality to your location or concept that may limit revenue?
4) Description of proposed restaurant space A) Are you buying or leasing an existing restaurant or creating an entirely new entity (describe the space)?
B) Are you leasing a space and fitting it out or purchasing real estate. If purchasing property, are you renovating an existing structure or is this new construction (describe your vision and all steps necessary to complete the project)?
C) Describe your proposed location, its visibility, proximity to population centers or tourist attractions, etc..
5) Your Target Customer and Marketing Plan How will you attract new customers, What is your primary and secondary customer profile (demographics/psychographics), How will you build Awareness and Buzz for your operation and establish a clientele? How will you build Affinity with your customer to create loyalty and regular repeat business? Once established, what is your BRAND all about? How and what will build and sustain your brand over time?
6) Financial Plan Generally banks and other financing sources will require at least 3 – 5 years of financial projections in the form of a conservative Profit and Loss Statement (P & L) for each year under 3 possible scenarios (worst case, average case, hopeful case).
Beginning with Year 1, what is your expected Revenue (broken down by profit center: food, bar, retail, etc…
The basic formula equals number of seats x average number of table turns per day x average check (per person based on your proposed pricing and day part: breakfast/lunch/dinner)
Your projections from this formula MUST cover your rent or mortgage, payroll/benefits, taxes and related fees, cost of goods, insurances, oil and utilities, marketing, repairs and maintenance, supplies, administrative expenses, etc..
Can your revenues cover all the above expenses PLUS provide growth and a cushion against weather, economic downturns, sudden loss of business, competition, time to establish a clientele, etc?
For reasonable accuracy, you may visit your potential competitors to count seats and daypart traffic, assess their pricing structure and provide a framework for your projected financials.
Simultaneously while determining your projected revenues, you will need to do due diligence on a list of Expenses:
Cost of Goods (requires you to estimate Food & Beverage cost percentage based on your menu and pricing)
Monthly lease payments or mortgage (if mortgage, only the Bank Interest portion is estimated on the P & L – you will have to include a Note that points out the monthly Principal Payment portion)
Payroll including taxes and benefits (requires you to project number of employees x average wage x number of hours per week (full and part time)
And more: Insurances, utilities, telephone and cable, maintenance and repairs, trash removal, licenses, marketing expenses, general and administrative expenses, supplies, trade associations and memberships, etc…
NOTE: For a complete list of all your Revenue and Expense accounts, see Chart of Accounts under “Quickbooks and Your Basic Accounting System” here in the Academy.
7) Your Competitors Describe at least 5 (five) of your primary competitors… What is their concept/menu? What are their strengths and weaknesses, What is the proximity of their location to your restaurant, How many seats, Traffic Volume, Price points, Entertainment?, Special Promotions, etc…
8) Your Management Team Describe your relevant past experience as well as any partners you may have and their relevant experience. Include resumes of all key personnel (Kitchen Manager, Dining Room and/or Bar Manager), etc..
9) Supporting Documents Recent Newspaper or Media articles outlining your market area, new attractions or events that will bring business near your location, desirability of your menu or concepts, surveys of potential customers, etc…