It’s no doubt that the idea of starting up restaurants pops up each time we are faced with the dilemma of picking a lucrative business idea to start up. Half the time, it feels like the only business capable of thriving without a plan even in the midst of limiting start-up factors (like demographics, psychographic, etc) that pose as threats to other businesses out there if disregarded. Well if you fall under the category of people that feel this way, it’s then evident that you need this post more than ever. You need to come to the realization that basically every business out there needs planning, especially restaurant businesses.
According to a statistics report from FSRMagazine, “Sixty percent of restaurants don’t make it past their first year and 80 percent go out of business within five years.”
Want to know why that is?
The answer is pretty simple, this set of individuals felt the same way you’re feeling now. They neglected the need for planning.
I guess you’re already pumped up to find out how you can successfully plan a restaurant business. So let’s get on with it
Why do You Need Planning for Your Restaurant Business?
Just in case you’re in doubt about what a restaurant is, let’s clear the air…
A restaurant is a place people come to eat food that has been prepared on the premises. Basically, people who come into a restaurant often have to decide if they prefer to eat on the premises or order takeouts.
On the other hand, a restaurant plan consists of everything from the least to the most critical decisions taken before and during the course of running your restaurant. I can’t overemphasize how important it is to have a clear business plan first before setting up a restaurant business. Furthermore, in your plan, you will have to consider things like financing, location, branding, staffing, and so on. It literally gives your restaurant the best chance for survival.
But why does it need the best chance for survival?
In 2023, the United States recorded a total headcount of over one million restaurants across the country. That’s a huge market you’d be getting into. And as a startup, you can guess what number you would be on that list.
Yea, you got that right, the last!!!
So besides the need to focus on a sub-niche or startup with some sort of uniqueness, you need a foolproof plan that gets you prepared for the best or worst-case scenarios.
Planning a Restaurant Business
Ever heard of the saying that “no business is really considered part-time?” What this means literally, is that if you give any business full-time attention, your returns may just get you the financial freedom you’ve desired for the longest time possible.
So, first off, you need to terms with the fact that owning a restaurant is a full-time job. If you want to be really successful in this line of business your presence will be needed at all times especially at the beginning when everything is still kicking off. Meanwhile, you will want to be open on a daily basis because people look for where to eat on a daily basis especially at important events, holidays, and weekends. It will help you earn revenue and gain a reputation as a frequently open establishment.
Secondly, do your research about your business and competition to understand how to bring and keep customers. Although, this should be like the first on the checklist, let’s just stick to the shape your restaurant business planning should take. So some vital things you should be on the lookout for when checking out your competitors or restaurants is to find out why customers are attracted to them. Then figure out how to top the attraction and be careful not to mix personal prejudices with business. Also, think of something unique that your competition does not offer.
In other words, planning a restaurant business pretty much lies in research. It helps you understand the dynamics of your business, your demographics, your target market, and so on. Our article on business planning should give you a clearer perspective.
However, while the post will get you started on your research the next section will guide you on some basic requirements on planning your restaurant business.
Things to Consider Before Starting a Restaurant Business
Talking about a couple of things you should consider before the finances start rolling out into different aspects of your restaurant business planning, below is a list you shouldn’t take lightly.
#1. Business Plan
You cannot achieve your goal as a successful restaurant owner without mapping out a well-detailed and well-organized business plan. The business plan is the first step you must take to achieve success. It is like a map that guides you through your whole journey. It will help you to get funding and reach out to investors.
#2. Concept
The concept of your restaurant must be carefully researched and planned before you launch it. To do that you might want to hire a business consultant to streamline your ideas. Your concept might include what you plan to serve, branding and packaging ideas, how you plan to serve your delicacies, how you plan to serve your products, and so on. All these are usually contained in a business plan.
#3. Target Customers
It is important to consider the age and lifestyle of customers you will want to attract. You will have a clearer view about the type of restaurant you want if you consider things like the kind of customers that you will accommodate every day, their lifestyles and the kind of food they eat and the amount of money they are willing to spend. You also want to know what time of the day you get the most customers, so as to know how to go about with the menu, the price range, and the decor.
#4. Competition
Running a background check on your competition will help you a lot to improve your restaurant. it will help you identify their strengths and weaknesses. Know the customer’s likes and dislikes and improve your restaurants to meet their taste. Take note of their successes and failures so you know what to do and what not to do.
#5. Location
Whatever you do make sure your restaurant is situated in a visible place where it can be easily spotted and accessible. Also, pick a location with good roads and a large parking space. These may be difficult to come by but this is where a good real estate agent comes in handy.
Study the food trends and know if they are in line with your restaurant concept. If they are you should consider them for your menu. Furthermore, your menu should be able to accommodate vegetarians.
#7. Hours
Starting a restaurant requires more of your time; you won’t have time to go on holiday or take a day off, you will rather spend your time supervising, talking to customers, spending time with your staff, paying vendors, talking to customers, updating your menus and checking profit and loss reports. However, it gets less stressful with time.
But more importantly, you want to ensure that you set a time frame for opening hours and stick to it. This is pretty easy to set if you really know and understand your target market.
#8. Marketing
There are tons of social media platforms you can use to your advantage. Utilize them properly with your target market in view. Let it be included in your plans to spread the word about your new restaurant. Some cities help promote restaurant business and you can take part in food festivals to get the word out.
#9. Delegation
It is not easy to trust people with such a huge responsibility, but you can’t do everything yourself else you might break down. So the best option is to train your staff to meet your expectations and let them handle things sometimes.
#10. Licensing
To avoid any problems, make sure you apply for the proper licenses and permits such food handler permit,the alcohol license, the food service license. You will have to pass several inspections to open fully. The help of a legal body will be needed to know what you need for your restaurant. Also consider both state and federal requirements. It’s better to prepare everything before you open.
How Do You Create a Business Plan for a Restaurant?
A solid business planning differs from restaurant to restaurant and takes into account elements such as restaurant style, target market, location, and so on. Creating a business plan can be intimidating if you’re new to the restaurant industry. To get you started, we’ve highlighted the important things you should include in a restaurant business plan.
You can vary the order of the components to indicate priority depending on who you are presenting your business plan to.
The following are the essential elements of a restaurant business plan.
- Executive summary
- Company Information
- Market Research
- Menu
- Employees
- Restaurant Layout
- Location
- Overview of the Market
- Marketing
- Assistance from outside sources
- Financial Evaluation
#1. Executive Summary
An executive summary should always be the first section of a restaurant business plan. An executive summary serves as both an introduction to your business plan and a summary of the full concept.
The primary goal of an executive summary is to entice the reader (typically an investor) to read the whole of your business plan.
An executive summary typically has the following elements:
- Statement of purpose
- Conceptualization
- Execution
- A quick glance at the prospective costs
- Return on investment (ROI)
For individuals looking for investors to fund their ventures, an executive summary is required. Instead of having to sift through the full restaurant business plan for information, they can simply read the executive summary.
#2. Business Description
This is the section of the restaurant business plan where you introduce the company completely. Begin this area by stating the name of the restaurant you are opening, as well as the location, contact information, and other pertinent information. Include the owner’s contact information as well as a brief description of their experience.
The second section of the company description should emphasize the restaurant’s legal status and define the restaurant’s short and long-term aims. Provide brief market research demonstrating your understanding of regional food industry trends and why the restaurant will prosper in this area.
#3. Market Research
Typically, the market study section of a restaurant business plan is divided into three components.
3.1 Industry Research
What is your intended market? What types of people will your restaurant serve? This part is intended to explain to investors your target market and why you feel guests will prefer your restaurant above others.
3.2 Examine the Competition
It’s simple to think that everyone will come to your restaurant, so it’s critical to do your homework to make this a reality. What restaurants have already established a following in the neighborhood? Take note of everything, including their rates, hours, and menu design, as well as the restaurant’s décor. Then, tell your investors how your restaurant will be unique.
3.3 Marketing Evaluation
Your investors will be interested in how you plan to market your restaurant. How will your marketing campaigns differ from what others are already doing? How do you plan to secure your target market? What kinds of deals will you make available to your visitors? Make a list of everything.
#4. Menu
The menu is the most significant aspect of establishing your restaurant. Your restaurant would be unable to function without it. You definitely don’t have a final version at this time, but for a restaurant business plan, you should at least aim to have a mock-up.
Insert your logo into the mock-up and select a design that you can see yourself utilizing. If you’re having difficulties coming up with a menu design or don’t want to employ a designer, there are a plethora of resources available online to assist you.
The most important aspect of any example menu, though, should be the cost. Your prices should be based on the cost analysis you performed for investors. This will help them comprehend your restaurant’s intended price point. Even early on, you’ll notice how significant menu engineering maybe.
#5. Workers
The restaurant business plan’s company description section briefly introduces the restaurant’s proprietors and provides some information about each. This section should provide detailed information about the restaurant’s management staff.
The investors do not expect you to have recruited your complete staff at this point, but you should have at least a handful of people on board. Make use of the talent you’ve picked so far to highlight the collective professional experience everyone brings to the table.
#6. Design of a Restaurant
The design section of your restaurant business plan is where you can really impress the investors with your thoughts and ideas. It’s fine if you don’t have professional mock-ups of your restaurant rendered. Instead, create a mood board to convey your vision. Find images that have a similar aesthetic to what you want for your restaurant.
Restaurant design should go beyond just aesthetics and cover everything from restaurant software to kitchen equipment.
#7. Location
The location you choose for your restaurant should unquestionably correspond to your target market. You may not have a specific site in mind at this time, but you should have a few options.
When describing potential locations to your investors, you want to give as much information about each one as possible, as well as why it would be ideal for your restaurant. Mention anything from the size of the room to the average demographics.
#8. Overview of the Market
The market overview component of the restaurant business plan is closely tied to the market analysis section. In this section, go over the micro and macro conditions in the area where you wish to open your restaurant.
Discuss the present economic situations that may make opening a restaurant challenging, as well as how you intend to mitigate them. Mention all of the restaurants that could be competitors, as well as your strategy for standing out.
#9. Marketing
With restaurants popping up all over the place these days, investors will want to hear how you plan to spread the word about your restaurant. The marketing and publicity section should include specifics on how you plan to market your restaurant both before and after it opens. As well as any plans you may have to hire a public relations firm to help spread the news.
More information: How to Create a Restaurant Marketing Plan from Scratch
#10. Outside Assistance
You’ll need a lot of aid to make your restaurant a reality. List any outside companies or software that you plan to hire to get your restaurant up and running. This comprises everything from accountants and designers to providers who aid with the performance of your restaurants, such as POS systems and restaurant reservation systems. Explain to your investors why each is important and what they will do for your restaurant.
#11. Financial Evaluation
The financial area of your restaurant business plan is the most crucial. Given the importance of this, we would advise obtaining expert assistance. Hiring a skilled accountant will not only assist you in getting your financial estimations in order but will also provide you with a realistic perspective on managing a restaurant.
You should have some information ready to help the accountant with this phase. He or she will want to know how many seats your restaurant has, what the typical check per table is, and how many people you plan on seated per day.
Furthermore, basic food cost estimations for various menu items will assist you to determine your profit margin per dish. This is simple to do with a free food cost calculator.
Tips for Making your Restaurant Business Planning Successful
Most businesses fail because they fail to engage people. A restaurant is not a place people can just go and eat, people want a brand they can trust. They need a brand they can easily relate to and most times one way to establish that is with the help of a brand story. Our article on branding gives you tons of ideas to help you do this rightly.
In the meantime, here are some non-generic tips to ensure a successful restaurant business;
#1. Hire a Great Chef and Know Your Concept
Finding the right Chef for your peculiar restaurant business may prove difficult but eventually, it’s going to be worth every stress. So basically you need someone that buys into that unique concept you’re offering to your target market. Also, someone that would be able to transmit this concept and values effectively to his/her assistants. But most of all you really need someone with many years of experience with a proven track record of expertise and excellence.
#2. Keep Adequate Fund In Reserve
Lack of funding has become a particular issue with several startups. So avoiding this should be a priority in planning your restaurant business. It is pretty important that you are properly prepared for the future. Don’t be carried away by initial success, settle down and observe things carefully before then spending your reserve money carefully.
#3. Get a Memorable Logo
People can be attracted by the flashy unique logo. It helps you build a trustworthy brand image of your restaurant. So, create something people will see on street signs, advertisements, billboards, business cards, websites, menu cards and find it exciting and engaging. Trust me, it makes all the difference.
The menu card is the first thing a customer comes across, that’s after the environment though. The menu card affords them the opportunity to order any meal of their choosing while weighing their budgets. Little wonder why this is a no-brainer and so should be catchy. A professionally designed menu card has the ability to speak highly of your restaurant. Furthermore, it has to be unique with the dishes and prices being neatly organized.
#5. Build a Dedicated Website:
Make your restaurant business known online. This will enable people to book tables online. Meanwhile, while you are at it make sure it’s attractive and gives out basic information like your contact information, booking and ordering facilities, menu, and other details that are necessary.
Social media is one of the most effective ways to boost your restaurant’s presence online. This is because to a large extent at least 30% of your customers are on social media platforms. All you need do is post relevant content to keep them engaged but you should also keep them abreast on info like menu updates, bonuses, percentage -offs and so on.
#7. Massive Promotion
This doesn’t need much funding; you can hand out fliers in a crowded place, and be sure that the design of your flier makes a good first impression. Spread the word both online and offline.
#8. Invest On Your Customers
Treat your customers as guests, engage with them and make them feel comfortable. Show them hospitality. Taking this part lightly means undermining the power of referrals. On the other hand, you’d also need to train your staffs well to do same; if not more. They need to go the extra mile to ensure your customers get the best of experiences.
#9. Run Your Restaurant as a Corporate Entity
Handle your restaurant in a professional way. Retain good staff and chefs. Furthermore, it is pretty important to learn organization skills, putting them into practice as you plan and grow your restaurant business. Meanwhile, this training should also be extended to your staff members. They need to be able to work effectively even under stress.
#10. Partner With Smart People:
Smart people are capable of helping you reach greater heights by feeding you with unique ideas to scale through business crises. They help you build a good reputation. However, this set of people must share your vision.
What Is Planning in Restaurant?
A restaurant plan serves as both a guideline and a roadmap for your restaurant’s operations. It covers everything, from the smallest things to the most important decisions you’ll make when running your business.
What Are the Stages of Restaurant Planning?
Generally, a good restaurant planning sheet has the following parts:
- Executive Summary.
- Company Description.
- Market Analysis.
- Menu Design.
- Employees.
- Restaurant Concept and Design.
- Location.
- An Overview of the Market.
Why Do So Many Restaurants Fail?
The most common explanation is simply geography — and a general lack of self-awareness that you have no business being in that spot in the first place.
How Much Money Do I Need to Open a Small Restaurant?
For a leased building, the average restaurant launch cost is $275,000, or $3,046 per seat. If you wish to own the building, up the price to $425,000, or $3,734 per seat. Our restaurant startup cost checklist breaks down all of the expenses you’ll need to consider in order to turn your dream into a reality.
Why Is Restaurant Planning Important?
Having a well-thought-out plan in place before opening the doors to your restaurant will help you avoid several common pitfalls. Timelines added to your restaurant strategy help you focus on hitting your targets within the allotted period.
Do Small Restaurants Make Money?
While it’s true that restaurants can turn a profit, the margins are tiny. Many factors influence a restaurant’s bottom line, including the local economy, the size and kind of the establishment, and the quality of the food served. It usually takes a new restaurant around two years to begin making a profit.
What Is the Most Profitable Food to Sell?
- Honey production
- Coffee shop
- Popcorn business
- Custom cakes
- Chicken poultry
- Pizza
- Fruit juice
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