Tight profit margins and heavy competition make this a challenging industry to thrive in, especially if you're not prepared.
Far too many entrepreneurs rush into things. They get caught up in the emotion and romance of the restaurant industry and forget that they need to focus, first and foremost, on running a successful business.
And that's when they get into trouble financially.
But the good news is that you have a great chance of operating a successful restaurant if you have a well–written business plan.
The trick is ensuring your plan provides the information your lender needs to see (if you're applying for a loan) while also giving you a growth–focused roadmap for the future.
All business plans follow the same basic structure, no matter the industry. This includes:
But when writing a restaurant business plan, there are certain chapters you should pay particular attention to. Especially if you want to increase your chances of getting funding.
Just think about how diverse the restaurant industry is. There are countless different types of establishments that cater to every imaginable taste and style preference.
So to be successful, it's important to have a clear (and documented) vision for your restaurant. This will give you more focus as you plan other aspects of your business.
Start by by documenting:
You get a step–by–step process for entering this type of information into your business plan and examples to follow if you get stuck. Plus the LivePlan Pitch Builder gives you an easy way to communicate your vision to anyone in 60 seconds.
LivePlan pitch builderFar too many restaurants try to appeal to everyone.
But with ever–evolving tastes and a growing number of food options available, aiming to please all types of customers is often a recipe for failure. Instead, you should focus on catering to patrons who are most likely to appreciate your unique concept and vision.
This part often requires some research. Start by documenting:
Considering these and other factors will help you provide a restaurant experience that will have patrons thinking ‘hey, this is my kind of place!’.
When you work on the ‘Market Size & Segments’ section of your business plan, you get detailed examples to guide you. You can also find sample plans from the restaurant industry that can be used as inspiration when describing your own target market.
Sample plansHow many restaurants do people have to choose from in your town or city?
Probably quite a few. So to stand out, you'll need to have some type of competitive advantage – or differentiator – that resonates with your ideal patrons.
First, start by identifying your competition. Think of indirect competitors as well, such as restaurants that are outside your niche but could be focused on your same target market.
Next, document what makes your restaurant better than the competition. Here are a few examples:
Your plan comes with a Competitive Landscape section that makes it easy to add competitors and document your advantages over them. That way, you can get a better idea of the overall market and how to position your establishment for maximum growth. You can also run reports with Industry Benchmarks to see how your restaurant stacks up to the competition.
Industry benchmarksStrong marketing is essential for success in any food service industry.
From direct mail to online advertising and sponsorships, you need to have a plan for building awareness about your restaurant.
But exactly which channels you focus on the most depends on your target audience. When outlining your marketing plan, first start by detailing key components such as:
Creating a detailed marketing plan is a big job. But by using the LivePlan Pitch Builder, you get a simple way to document your marketing activities and sales channels. It helps you get your ideas out quickly first, so you can update or elaborate on this information as your business grows.
LivePlan pitch builderA sales forecasts is simply what you expect to sell over the next few years. And it's an especially important component of your business plan.
Because restaurants often face low profit margins, strategically managing costs is essential for success. One of the main reasons why many new establishments fail is because they didn't take the time to build proper financial projections.
A well–thought-out forecast sets the standard for expenses, profits, and growth. Here are three things to consider when creating yours:
Creating sales forecasts – and other parts of your financial plan – can feel overwhelming. This is especially true if you're not used to doing the calculations. That's why LivePlan includes an Automatic Financials feature that crunches the numbers for you. Just answer a series of questions and the software handles the math.
Automatic financialsFar too many entrepreneurs write a business plan to get a loan and then never look at the document again.
That's a mistake in any industry. But in the ultra–competitive restaurant business, it's absolutely vital to have a way to track your progress and then make decisions on how best to grow.
Once your business plan is written, it provides a compass you can continually look back on for guidance. That way, you can make sure your restaurant is heading in the right financial direction.
It all comes down to monitoring your progress, examining the numbers and then making adjustments to boost your profit. Do this and you will have a much better chance of earning the success you want.
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