SMALL RESTAURANT BUSINESS PLAN GUIDE
The restaurant business is a delicate business with so much potential for profitability when done right and at the same time, hazardous and time-consuming.
In fact, research has shown that over 60% of new restaurants close shop within their first year of operation.
This information though is not to dampen the spirit of anyone interested in venturing into this line of business as it holds so much growth potential. You can rest assured that as long as you follow the right advice such as the one given in this article, on steps to starting a restaurant business, your dream of owning a booming outlet is well within reach.
What Kind of Restaurant? This should be the question on the mind of anyone with interests in starting a restaurant business. What type of restaurant exactly will you want to have? You might want to open just a diner or you might be interested in opening a high-end restaurant.
Also, you might be interested in serving specific cuisines for specific target populations. This is of course true depending on where you open shop. It might be an Italian cuisine restaurant, a Mexican cuisine restaurant, and the list goes on and on. You can also buy into a restaurant franchise business.
Here is a sample business plan for starting a restaurant cafe business.
This is indispensable to any meaningful business to be established. For a restaurant business to thrive, it has to be driven by passion, as there will be times where the profits might not be rolling in as desired.
Here, your passion for this business sustains you through the trying times. It should not just be a business venture you want to go into just for the money. If this is what drives you, your business might just end up among the 60% of restaurants that never make it to profitability.
- Write up a Business Plan
This is crucial to the planning stage of setting up a good restaurant business. Opening one can never be done based on guesswork or just starting one without prior planning. For your African or Mexican restaurant business to be successful, it needs a solid business plan written out.
This business plan should capture the budget required and the list of restaurant equipment to buy and expenditure to be made. This helps in maintaining your planned budget and also tracks your capital expenditures.
Typically, things that should be found in a good restaurant business plan include your competition; every business has its competition, and knowing how well to make your business stand out among its competitors gives you a critical edge over others.
Also, it should include a strong budget projection. This aspect is crucial to business growth. Having a strong budget projection directs and guides the business to profitability and expansion.
- Choosing a Location
Location contributes immensely to business success. A restaurant thrives on location. A wrong location might affect your business adversely. Such a location might include opening one in a very low population area.
Here, you should not expect many customers because of the business location which is scanty. In choosing a business location, an area with high foot traffic should be selected. Such busy areas stand more likely to benefit your business. But caution should also be exercised here.
How has the area impacted businesses especially restaurants? These should be found out and also, if several other restaurants closed shop in such areas, then it is not a good sign for business.
- Choosing a Restaurant Name
Choosing a fancy name for your restaurant is usually a tricky but fun affair. The name should reflect your niche or interests.
It should be a meaningful name. Such could include your name example Darcy Green restaurant or add whatever meaning name to it.
If the restaurant is exclusively for Indian or Chinese cuisines, for instance, it can be called an Indian or Chinese restaurant respectively. Whatever the case, the choice of name should be done to reflect your interests.
- Hire Qualified Help
Because you cannot do it alone, due to many details that can overwhelm you, essential help is needed to successfully run a restaurant. Such a person should also have a passion and a drive for the restaurant business and should have experience in that area.
Having such a person as an additional manager would help in efficiently running a restaurant.
- Permits and Licenses
These are essential requirements for any serious restaurant business.
When financing for the business is adequately covered, permits and licenses should be applied for. These take between weeks to months to be issued, hence, it should be applied for on time. Such licenses include sign permits, workers’ compensation, and liquor licenses.
- Well Written Out Menu
This is very important to any restaurant business. An uncluttered menu that is easy to read and understand should be made available. The layout of the menu should be attractive and should not confuse the customer. Having this in place allows the customer the freedom of making his choice without having to ask several questions.
- Advertise your Restaurant
Advertisement for your new business should not be ignored. While using the traditional media to advertise, also consider supplementing with new media such as social media which include Facebook, Twitter and so many other ones available. This efficiently puts the word out about your business. You should also consider opening a website for your restaurant as this will be greatly beneficial to your business.
- Online or Sit-in
You should also decide what type of restaurant to run. If it is an online restaurant where people place their orders online, then it means you need to have delivery vehicles or motorcycles that will deliver such orders to their doorsteps. This particular type needs more planning and logistics.
Also, there is a sit-in restaurant where customers walk in to make their orders over the counter. An eatery is provided for them to conveniently sit and eat whatever they want.
To open a fully functional and well-planned restaurant these steps have to be properly followed and the help of professionals needs to be consulted. There is never too much work put in to ensure the success of a restaurant business, as it eventually pays off with constant profits and business growth.
How to Write a Small Restaurant Business Plan
Do you need a business plan for starting a restaurant? There are several stories of successful restaurants as well as failed ones. A little inquiry will reveal challenges these businesses had to undergo to grow or those that led to the closure of the failed restaurants.
We seek to focus on how to write a restaurant business plan because this is a vital part of starting a successful restaurant.
- Your Restaurant as a Business
While this may be a long term passion you’ve had, it is important that you also view and treat your restaurant as a business. Many failed restaurants were poorly run by their owners. One of the most important parts of starting a business is setting the plan in place. Your business plan is the blueprint for attracting investments as well as guiding it through challenging times.
- What Your Restaurant Business Plan Includes
Knowing how to write a restaurant business plan involves having a clear understanding of what a plan entails. This is the skeleton of the business. This is because all parts of the business are built around it.
The plan includes details on financing, marketing, health regulations, taxation, income, and several others. With your business plan, the bigger picture is kept in view as well as how to attain it.
Elements of a Good Restaurant Business Plan
- A Branded Cover
This normally consists of a business logo (in this case a logo of your restaurant business), your name, and date.
- The Executive Summary
This is similar to an introduction. It is the window through which anyone going through it can have a grasp of what is involved. Here, you want to state the basics. This should be written in a captivating way to hold the interest of the reader. It should include the name, location, style as well as previous experience if any.
- Description of the Business
This has to do with the style of the restaurant, the legal name as well as your competition. Your target market is also pointed out clearly in this section. Detailed description provided under this section enables the investor to have the right perception of your competence/readiness as well as the viability of your business plan.
- Market Analysis
This comprises three major sections that include marketing, competition, and industry. In explaining each of these, we start with;
Under marketing, you need to clearly state the specific methods to be deployed in promoting your restaurant. In other words, you are going to state your areas of competitive advantage and also clearly provide the plans of advertising your business on all your preferred channels (these may include TV commercials, newspaper adverts, or on social media).
It is most likely that there will be several restaurant businesses you will compete with. You need to know what makes your competitors tick. Knowing these will help tremendously in designing your marketing strategies. All these details should be provided in this section.
In writing this part of your restaurant business plan, you should have a clearly defined target market. These may be young professionals, seniors, or any other category. By choosing a defined target market, it will be easy to explain why people will prefer to patronize your business than go elsewhere.
- Products and Services
What type of products and services will be provided by your restaurant? If there are food supply chains around, these should be included. Why are you offering these products and services and does it fit the needs of your target market?
- Management and Ownership
This part of your restaurant business plan deals with the question of who is in charge of running the business. It should clearly define the roles of everyone involved in running the business including yours. This should be a clearly thought out process as it enhances your chances of success.
- Market Overview
When writing this part of your plan, it should reflect major and minor market conditions for that location. In other words, you need to define how your business will perform/compete in favorable conditions or thrive in adverse conditions. You also need to answer if there are similar businesses that share your target market and how you plan to stand out.
- Business Structure
When planning for a business, it is necessary to choose the most suitable structure that would allow for growth. The services of an attorney will be required in writing this section of your restaurant business plan.
- Specialists and Consultants
To run a successful restaurant business, you will need to work with specialists and consultants in several areas. You will have to explain the specific roles each of these professionals will play. Some of these may include designers, attorney(s), public relations and marketing, etc.
This is an important section of your restaurant business plan you should pay close attention to. In writing this section, you may require the services of an accountant. All financial projections made will need to capture every detail that has to do with income and expenditure. This allows an investor to see if your business is viable for investment or not.
Knowing how to write a restaurant business plan is very crucial to how much success you will achieve. Each of the sections listed above contains key information your business plan cannot do without. It is important to note that this is the blueprint for your restaurant business and should be given all the attention it deserves.
SMALL RESTAURANT BUSINESS PLAN EXAMPLE
Are you looking for a restaurant business plan sample to help guide you to write a business plan for your restaurant business? Here is a restaurant business plan sample for you if you are about starting your restaurant business and are determined in writing a good business plan for your restaurant business.
You should know that a business plan is like a blueprint for your business which helps guide you in achieving your business goals and vision. Of course, there are many benefits to having an aptly written business plan. One of which is the ability for you to be able to attract investors and secure loans from the bank.
I suppose you are well aware of the services that a restaurant business offers, and you must have realized that it is a little tasking to draft-out a business plan for your restaurant all by yourself. So, let us get started!
BUSINESS NAME: Spicy Foods Restaurant (SHR).
- Executive Summary
- Business Objectives
- Mission Statement
- Business Structure
- Market Analysis
- Target Market
- Sales and Marketing Strategy
- Financial Plan
- Sales Forecast
- Exit Strategy
The Spicy Foods Restaurant (SFR) is a duly registered restaurant business. It will be a 90-seat restaurant that will offer food and beverage services. SFR will be focusing on serving customers with healthy and nutritious foods. We will specialize in offering sandwiches, salads, and other recipes alongside soft beverages and beer.
SFR will be a sole proprietorship restaurant business and will be owned by John and Jane Kings. The site will be located at an admirable locality in the downtown area of Detroit. The site is a 3,600 square foot space leased by the Kings, which was up to that time, used as a restaurant. The site location will nonetheless demand some sort of renovation to keep it in top shape even though it was formerly used as a restaurant.
The total startup cost for the restaurant business will be $300,000, and $100,000 of it will be secured from the owners’ pulse and other investments. The remainder will be secured by obtaining a loan from the bank.
These are our business objectives at Spicy Foods Restaurant (SFR):
– To be one of the leading restaurants in downtown Detroit.
– To deliver top-quality meals at affordable prices with top quality services.
– To achieve not lesser than a 4% annual growth rate in sales revenues.
– To reimburse all accrued debts before the end of the second year.
Our mission statement at Spicy Foods Restaurant (SFR) is: To offer to our customers; nutritious, healthy, and unique meals prepared with astounding food recipes that would leave them satisfied with our quality services.
We will do well to achieve this goal by:
– Offering menu items that include quality ingredients at reasonable prices – even if it means charging a little more.
– Taking into consideration the welfare of our customers and staff and treating them with respect and dignity.
Spicy Foods Restaurant hopes to hire employees as it expands over time. At least a total of 19 employees would constitute our staff team. The restaurant will be owned by John and Jane Kings, and together, they will personally select highly qualified and experienced people for each position through an interview process.
Many of the managerial positions will initially be occupied by the Kings due to their wealth of experience and training. John Kings, who had previously held positions as Assistant Manager and later General Manager at various restaurants in Boston, will hold the position of the General Manager.
While Jane Kings, who has a wealth of 6-year work experience preparing meals in various reputable restaurants in Las Vegas and Dallas, will initially occupy the position of Kitchen Manager.
In due course, we shall hire:
– A sales director.
– A general manager.
– A kitchen manager.
Spicy Foods Restaurant will be open 7 days a week – that is every day, 365 days a year.
We will offer a lunch and dinner menu. On our lunch and dinner menu, we will offer veggie sandwiches, vegetable and chicken soups, chips, and a variety of salads. Also, we will offer a variety of beverages such as coffee, tea, soft drinks, and beer. For dinner, we will in addition to the menu, offer take-outs to our customers.
The restaurant industry could be described as a large and diverse one, having so many niches within it where one could focus on.
The industry could be categorized into two:
Full-service restaurants (FSR)
These restaurants focus on full-service delivery. They primarily focus on providing food and beverage services to customers who seat, order for food, eat, and thereafter pay for services. Sometimes, most of these restaurants offer take-out services as well as some sort of entertainment to their customers.
Limited-service restaurants (LSR)
These restaurants, unlike the FSR, offer limited services which include buffets, cafeterias, snack bars, and non-alcoholic beverage bars.
The market is segmented into two: The residential and the business community.
The customers in the residential communities comprise both single-family and multi-family housing. SHR had chosen its location to appeal to the increasing number of households in the area. A lot of the people living in this area would close from work at the end of the day’s work and come for well prepared nutritious meals that we have to offer.
SALES AND MARKETING STRATEGY
Spicy Foods Restaurant (SHR) will station itself as one of the leading restaurants in the downtown area of Detroit.
How are we going to do this?
First, we will make sure to offer our customers healthy and nutritious meals that have been prepared with quality, nutritious, and organic ingredients at affordable prices. Our restaurant will provide customers a welcoming atmosphere that keeps them comfortable and relaxed while they enjoy their meals. We will also provide some sort of soft entertainment to our customers.
Second, SHR will also stay active and up-to-date with the latest development in the industry regarding market trends. In addition to having a website, we will create an online presence on social media platforms like Facebook and Twitter.
The total startup cost required will be $300,000. $100,000 of this capital will be provided by the owners – the Kings – and the remainder will be acquired through a loan from the bank.
Sources and Uses of Funds
The following illustrates the sources and uses of funds for SHR:
Sources of Funds
Owners’ investments $100,000
Bank loan $200,000
Total Sources of Funds $300,000
Uses of Funds
Restaurant equipment, inventory, and furniture $100,000
Lease fee $50,000
Renovation of restaurant $50,000
Additional startup expenses in the form of working capital and contingency $100,000
The following constitute the break-even analysis:
Total Fixed Cost (as annual expenses) $600,000
Variable Cost (overhead cost) $5
Average Unit Price $12
Break-Even Revenue (based on assumed average unit price) $980,000
We expect our annual sales revenues to rise gradually over the next 3 years. Over the next 3 years, we hope to generate the following profits:
Year 1 $300,300
Year 2 $400,200
Year 3 $450,200
In the event of closing our restaurant, we will sell off all our kitchen equipment, furniture, and other assets to prospective buyers. We will do away with our food inventory by selling off some of the products and giving out the remainder to people who may need them. If there be left any remainder, because of their speedy perishable shelf life, we will discard them.
Other restaurant business plans:
- Caribbean restaurant business plan
- Mexican restaurant business plan
- Fast food restaurant business plan
- Hot dog restaurant business plan
- Fried chicken restaurant business plan
- Seafood restaurant business plan
- Buffet restaurant business plan
- Italian restaurant business plan
- Chinese fast food business plan
- Korean restaurant business plan
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