In my six years of working with restaurants, I’ve observed that a well-crafted business plan is crucial for success. Studies indicate that entrepreneurs who start with a detailed business plan are 16% more likely to succeed.
In this article, I’ll outline the essential components of a restaurant business plan and provide a free template to help you get started.
Fill out the form to download the business plan template. By submitting the form, you agree to join our Newsletter list.
What is the Business Plan of a Restaurant?
A restaurant business plan is a document that describes planned activities, goals, and strategies for a new or existing restaurant.
It is an important document for anyone who wants to open or develop their own restaurant business.
“Every business should have a business plan in place, as it helps to guide the business’s operations. (…) A well-crafted business plan can help you secure financing, attract investors, and manage your business more efficiently.”
Source: New Business Centre
How to Write a Restaurant Business Plan (Step-by-Step)?
Below, I’ve pointed basic steps to write a restaurant business plan.
- Step 1: Gather Key Answers: Before starting your business plan, answer essential questions. I added a list of such questions in this article below.
- Step 2: Test Innovative Models: Use the Business Model Canvas to validate a new restaurant business model before writing a plan. If your restaurant has a traditional business model (e.g., pizza delivery, sushi on-site, bistro) already existing in the market, you can skip this step and create a business plan immediately.
- Step 3: Use a Template: Create your business plan using a ready-made restaurant business plan template. For a better understanding, read the information about each part of the business plan in this article below.
- Step 4: Review the business plan regularly: Review your business plan every month in the first months of running a restaurant and at least once a year in subsequent years. A business plan is a living document that will help you grow your restaurant.
- Write short and concisely. Be specific.
- Use numbers for calculations.
- Assume black scenarios. The blacker you assume, and yet the business has a chance of success, you will manage to beat the market.
- In the first months of the restaurant’s operation, work with the business plan daily and update calculations and assumptions.
- Once the restaurant is stable and has reached the so-called break-even point, return to the business plan at least once a year.
- Discuss the business plan with your management team. Also, consider sharing some profits with your team. In this way, you will build a unique commitment.
- The business plan is for years. The document should be updated regularly.
Why is a Restaurant Business Plan Important?
Let’s be honest – without a business plan, it’s tough to attract potential investors who’ll be interested in funding your restaurant. The business plan is where you’ll include important details like financial forecasts and projected profits, which are what investors care about most. Plus, it serves as a roadmap for your business, helping you stay organized and on track when opening a successful restaurant.
It’s also a good idea to check out some sample business plans to see what has worked for others.
And don’t forget, the executive summary is key – it’s the first thing restaurant investors will read, and it’ll determine whether they keep going with the rest of your plan.
“The first thing I read are the first two paragraphs of the Executive Summary. They’ve got to get that right. If they can’t describe it in two paragraphs— if I can’t be dragged in— there’s no way the next five million people can be dragged in. It doesn’t take more than a minute to decide whether a business is interesting.” said Andrew Anker, Venture Capitalist in the book “Successful Business Plan: Secrets & Strategies” by Rhonda Abrams
10+ Key Questions to Start Writing Your Restaurant Business Plan
Start writing a business plan by answering a few important questions, including:
- Why do you want to start this restaurant?
- How much would you like to earn per month?
- How many guests do you plan to serve per month?
- What kind of restaurant do you want to run? (e.g., pizzeria, or bistro. Here is a list of types of restaurants.
- What kind of delivery (handling) will you offer? (on-site, takeout, deliveries on demand).
- What area will you operate in?
- Who will be your client?
- How many direct competitors are there where you want to operate?
- How will your restaurant stand out?
- Who do you need to hire to start a restaurant?
- What restaurant metrics will you keep track of? (e.g., food cost, website traffic, customers opinions).
- What will your restaurant look like inside?
- What will the atmosphere of your restaurant be like?
- What will your restaurant menu look like? (Here, you can check restaurant menu examples).
8 Key Elements to Include in Your Restaurant Business Plan
Below, I’ve outlined all the important elements of a restaurant business plan that will help you organize your ideas, attract investors, and make the process of opening your restaurant smoother.
A typical restaurant business plan includes the following key elements:
- Executive summary for a restaurant
- Restaurant description
- Market research and competition analysis
- Market analysis
- Competition analysis
- Restaurant SWOT analysis
- Investment plan (Cost Analysis, Financial Analysis)
- Investment costs (one-off to start)
- Operating costs (fixed monthly costs)
- Financial Projections
- Profit and Loss Statement
- Break-even analysis
- Sensitivity analysis
- Team (Employees, Founders)
- Founders
- Employees
- Restaurant marketing plan
- Description of the vision for further development of the restaurant
Below, I briefly describe each of these elements of a successful restaurant business plan.
Fill out the form to download the business plan template. By submitting the form, you agree to join our Newsletter list.
1. Executive Summary
An executive summary is a concise overview of your restaurant business plan that highlights the most important aspects of your concept. It should include:
- Restaurant mission statement, vision, and values
- Description of the restaurant concept
- Why this idea will be successful
- How you plan to implement the business plan
- Estimated costs and potential profits
- Return on investment
The executive summary should be written after completing the rest of your business plan. It summarizes the entire document in a concise form (max. 600 words, or about 1-2 pages), making it easy for the reader to grasp your restaurant’s key points quickly.
62% of investors report that they would not proceed with reading a business plan if the executive summary fails to capture their interest, so it’s crucial to get it right. This will encourage them to read the full plan.
Remember, focus on the core elements of your business idea and keep it clear and to the point!
“The purpose of an executive summary is to convince potential investors or lenders that they will profit from investing in your restaurant idea, so avoid unimportant details or lengthy descriptions of how great your food tastes.”
Source: How to Write a Winning Business Plan
2. Restaurant description
This section aims to show you the details of your restaurant. It should not lack the following elements:
- Mission statement and vision
- Mission: why do we exist?
- Vision: what we want to achieve in 1, 2, and 5 years.
- Structure
- Business Type: Is your restaurant a sole proprietorship, partnership, or other business?
- Restaurant concept
- Restaurant name (get inspired by this list of restaurant names or use a restaurant name generator).
- Restaurant type: specify the type of restaurant, e.g., bistro, fine dining, etc.
- Specific restaurant location strategy: write exactly where your new restaurant is (or could be) and why you chose this place.
- The style of the place: what will be the colors, atmosphere, decorations, music, etc.
- Ways to fulfill orders: only on-site, only in delivery, both ways.
- Working hours: What hours will the place be open? Why in these?
- Menu
- Type of cuisine served
- Draft menu: attach a sample menu you want to offer (design it according to the rules of menu engineering. Here you can read how to make a restaurant menu)
- 1-3 differentiators from the competition (Unique Selling Points)
3. Market research and competition analysis
Unless you are introducing real innovation to the market – and perhaps especially then – you should thoroughly analyze the space where you’ll establish your premises, including the market and competition in the catering industry.
Analyze the market and competition, focusing on the following:
Market analysis
Customers are the key to any restaurant’s success. Understanding their demographic structure, preferences, and dining habits is critical to gaining a market overview and developing your business plan.
- Target market for a restaurant: Think about who your customers will be. Consider their age, interests, expectations, and how to reach them.
- Needs in the market: Describe the market’s needs and how your restaurant will meet them.
- Target audience size: Determine the number of potential customers in the market you intend to target.
- Market trends: Use credible information to demonstrate that people will be interested in your restaurant idea. Research current food trends and how the restaurant industry is developing.
Competition analysis
Check out other restaurants that are or could be your competition.
- A list of competing restaurants in your area: Identify the key competitors in your local market.
- Revenue and number of orders they can achieve: Estimate how much these restaurants are earning and the volume of orders they’re handling.
- Menu and prices: Analyze what these restaurants offer and how they price their menu items. Pay close attention to their menu pricing and try to calculate their food cost, comparing it to your expected costs.
- Competitor marketing activities: Assess what strategies make these competitors successful and any weaknesses they may have.
- Competitive advantages: Identify your unique selling points. What will set your restaurant apart from the competition?
I created a table that will help you compare your restaurant with others in your market across key aspects such as menu offerings, pricing, marketing, and competitive advantages.
| Your restaurant name | Name of the restaurant 1 | Name of the restaurant 2 | Name of the restaurant 3 | |
|---|---|---|---|---|
| Number of seats | ||||
| Type of Menu | ||||
| Menu prices | ||||
| Marketing activities | ||||
| Service options | ||||
| Opening hours | ||||
| Additional information |
SWOT analysis
The abbreviation comes from the words: S for Strengths, W for Weaknesses, O for Opportunities, and T for Threats.
Fields S and W are related to the restaurant’s launch situation. While the O and T fields are related to the success of your project in the future.
It is worth conducting such an analysis in the form of a table I share below:
| Positive | Negative | |
|---|---|---|
| Inside | Strengths – – – | Weaknesses – – – |
| Outside | Opportunities – – – | Threats – – – |
4. Investment plan (cost analysis)
In this section, you will present the costs associated with the initial investment and the spending plan for the first year of operation.
List the costs, dividing them into two groups:
- Investment costs (one-off to start).
- Operating costs (fixed monthly costs).
After opening a restaurant, verify the costs regularly, preferably once a month.
“If you are seeking outside funds, your business plan must reassure investors or bankers that you understand the industry factors affecting your company’s health and that you have taken those factors into consideration when developing your business strategy.” Source: “Successful Business Plan: Secrets & Strategies” by Rhonda Abrams
Investment costs include, among others:
- Rental or purchase of the real estate.
- Renovation and adaptation of the premises.
- Purchase of kitchen equipment:
- Oven.
- Gas stove.
- Fridge and freezer.
- Dishwasher.
- Mixer, blender, food processor.
- Dishes, cutlery, pots, pans.
- Purchase of room furniture and equipment:
- Tables.
- Chairs.
- Buffet.
- Decor.
- Lighting.
- Work clothes for the staff (if you plan uniforms for the staff).
- IT software and hardware:
- POS software.
- Payment terminals.
- Computer hardware for the POS system.
- Marketing and promotion costs:
- Logo.
- A website with online orders.
- Menu design.
- Flyers.
- A-boards.
- Insurance of the premises and equipment.
- Organizational and legal costs (e.g., regulations, documentation).
- Costs related to permits and licenses (e.g., permission to sell alcohol).
- External restaurant training costs.
- Operating costs.
- Rental of real estate (if the premises are rented).
- Utility charges:
- Electricity.
- Gas.
- Water.
- Staff wages:
- Chef.
- Cooks.
- Waiters.
- Dishwashers.
- Purchase of food and drinks.
- Equipment maintenance and servicing costs.
- Service charges:
- Cleaning.
- POS system support.
- Online ordering system.
- Commissions to third-party delivery services.
- Employee insurance.
- Marketing and promotion costs:
- Online and offline advertising.
- Printed materials.
- Running social media.
- Website positioning (SEO).
- Taxes and fees.
The biggest challenge for a novice restaurateur is securing financing. Options include bank loans, subsidies (which require a business plan), or loans from friends and family.
When considering a restaurant loan or subsidy, think about the worst-case scenario—what if your business fails and you need to repay the borrowed money? Assess necessary startup costs and the margin on dish production to evaluate the potential return on investment.
5. Financial Projections
The financial forecast consists of 3 elements:
- Projected restaurant profit and loss statement: It shows what turnover and profits you will generate.
- Break-even analysis: It shows when a restaurant will become profitable.
- Sensitivity analysis: It shows what happens to turnover and profit in negative scenarios (e.g., a 50% decrease in turnover for three months).
Profit and Loss Statement
You will need to estimate the value of the sale considering the size of your restaurant, target market, sales volume, and food cost. You will get a profit and loss forecast, comparing this with the costs.
The easiest way to prepare a profit and loss statement is in the form of a table, like the one I’ve created below.
| Months of running a business | Month 1 | Month 2 | Month 3 | e.t.c… |
| Number of orders per month | ||||
| Average order value | ||||
| Monthly income (turnover) | ||||
| Variable costs per month | ||||
| Fixed costs per month | ||||
| Profit per month | ||||
| Profit margin (in percentages) |
Break-even analysis
Investors will want to know how much revenue you will need to generate each month to break even after all fixed and operating costs are considered. In the analysis, you should show how you intend to generate the necessary revenue, even under challenging months with lower sales.
Sensitivity analysis
It’s worth doing this to assess negative scenarios, such as stronger competitors, losing key employees, or a 10-20% sales drop.
This helps you prepare for financial crises and reduces stress when challenges arise.
Make a sensitivity analysis in the form of a table.
| Problem | How will it affect revenue, costs and profits | How to react | Countermeasure |
|---|---|---|---|
| – – – | – – – | – – – | – – – |
6. Team
Business is people. Describe what your team will look like, dividing it into two groups:
- Founders
- Employees
Founders
If you are looking for investors, this area can be critical for them.
Describe the founders:
- List of founders
- Experience
- Successes
Employees
Consider which restaurant positions are essential for the daily operation, such as waiters or cooks, and which can be filled with temporary help.
Think about which individuals you already know with the necessary skills and which ones you’ll need to hire or train from scratch.
The cost of any required training should also be included in your restaurant business plan.
Describe the team you need to build:
- List of job titles
- Duties
- Remuneration
- Type of contract
7. Restaurant marketing plan
In this section of your business plan, you’ll need to include a strategy for promoting your restaurant both before and after you open.
Identify specific tactics you’ll rely on during the pre-launch and post-launch phases, and determine which channels you’ll use to reach your customers.
Our guide on restaurant marketing strategies describes how to execute effective marketing.
Ideally, your restaurant marketing plan should include the items I’ve listed below:
- Brand building (Logo, colors, restaurant slogans)
- Building your own website (Here you can check how to create a restaurant website)
- Selling food online from your own website (as the main way of selling online)
- Selling food through external portals and food delivery apps (as an add-on)
- Launching table ordering
- Launching a loyalty program
- An action list on how you will attract offline customers
- Flyers.
- Radio.
- PR.
- Events.
- An action list on how you will attract online customers
- Will you run social media?
- Will you implement restaurant SEO (Search Engine Optimization)?
- Will you add a business listing on Google Maps?
- Will you run email and SMS campaigns? If so, how often? How will you build your subscriber base?
- Will you blog?
- Will you run a restaurant newsletter?
- Will you do paid Google Ads and Facebook Ads for restaurants?
- Will you be offering promotions? If so, what types of restaurant promotions will you use?
8. Description of the vision for further development of the restaurant
Determining your restaurant’s development direction is crucial from the start. Set broader goals first, then break them down into daily objectives, considering how to achieve them.
Regularly assess and adapt your initial restaurant goals during execution to improve management and minimize losses in marketing, service, and the menu.
Your restaurant’s business plan should clearly outline the vision and strategies needed to achieve these objectives.
How to Present Your Restaurant Idea to Potential Investors?
Once you have written your entire business plan, you need to know it inside and out to show investors that you are knowledgeable about every aspect of your business. When you feel prepared, you can begin contacting potential investors.
Prepare a presentation pitch for meetings and practice it so you can discuss various aspects of your business fluently without relying on your notes. Also, anticipate potential questions and prepare answers for them.
However, if a question arises that you don’t know the answer to, be honest. Instead of trying to come up with an answer on the spot, it’s better to take a moment, think, and assure them that you’ll follow up with the information promptly.
Speed Up The Process with AI
You can also use AI to help you speed up the process of writing your restaurant business plan. Use the following prompt for that purpose.
“Generate a detailed restaurant business plan covering the following key areas:
- Executive Summary: Brief description of the restaurant concept, mission, and vision.
- Restaurant Description: Restaurant type, target audience, and menu offerings.
- Market Analysis: Information on competitors, customer demographics, and current trends.
- Restaurant Marketing Plan: Plan for customer acquisition, retention, and digital presence.
- Investment plan: A breakdown of one-time startup expenses and fixed monthly operating costs for running the restaurant.
- Financial Forecasts: Estimated startup costs, revenue projections, break-even analysis, and funding needs.
- Team: Structure of the management team, roles, and ownership model.”
Remember to customize the AI-generated content with personalized details to make it stand out.
Key Takeaways
- Business First, Passion Second: Strong financial planning and market research matter as much as great food. Ignoring the numbers can shorten your restaurant’s lifespan as approximately 60% of restaurants fail within their first year, and around 80% close within five years.
- Start with Defining Your Restaurant Concept: Start by clearly outlining your restaurant’s vision, concept, and service style in your business plan to provide direction and set the tone for your operations and branding.
- Cover All Elements in Your Plan: Ensure your business plan includes the 8 essential elements: executive summary for a restaurant, restaurant description, market and competition analysis, investment plan, financial forecast, staffing, marketing strategy, and a description of the vision for further development of the restaurant.
- Create a Business Plan for an Existing Restaurant: Even if your restaurant is already in operation, take the time to develop or update your business plan. It can help you identify growth opportunities, streamline operations, and secure funding for future restaurant expansion.
- Consult Experienced Restaurateurs: Consult with experienced restaurateurs or industry experts instead of outsourcing your business plan. Their insights will ensure your plan is realistic and tailored to the challenges of running a restaurant.
- Review Your Plan Regularly: If you’re just starting out, revisit your business plan monthly to track progress and make adjustments. For established restaurants, review it annually to ensure you’re on track with your long-term goals.
- Treat Your Plan as a Living Document: View your business plan as a dynamic tool that evolves with your restaurant’s growth. Use it as a guide to adapt to changing market conditions, improve restaurant operations, and plan for the future.
