Starting a business always comes with its obstacles. Restaurants have a fair amount of complexity that makes it difficult for them to survive. Many restaurant closures can be traced back to the planning stages, or potentially a lack of planning. While a business plan is an important responsibility for any beginning business, it will not remove risk for you. It can highlight it and show you areas that hold the most risk for your restaurant. This article can help you prioritize practical planning and create a useful business plan. It doesn’t need to be perfect; it just needs to focus on the best business plan for your restaurant business.
Why restaurant business plans matter more than most
Restaurants are unique when it comes to forming a business and taking those first steps towards a solid plan. When developing your restaurant business plan, focus on the areas that set restaurants apart.
Restaurants come with high costs for start-up and operation, coupled with thin margins. Costs are often high and hit all at once. This can include rent, utilities, labor, food, and so much more. Writing a business plan can highlight your breakeven point before your money starts running away from you.
Restaurants commonly face scheduling and staffing challenges. As a restaurant, your staff can make or break you. It’s a necessity, but can also be emotionally demanding. You can be vulnerable to turnover and scheduling problems. When you have a strong business plan, you can define these areas and not fail because of them.
There tends to be a good amount of complexity with regulations and compliance in the restaurant world. It’s critical that you understand them and stay within the regulatory guidelines. A small mistake can cause your restaurant to be shut down. There can be high costs when you fall outside of compliance. When you have a business plan in place, it helps you act early and not react when something happens.
What makes a restaurant business plan different
A restaurant is incredibly different from other small businesses, and its business plans need to reflect that. A restaurant faces food and inventory costs. Food is expensive, and it spoils or expires. It has a shelf life, and if it’s not used in a timely manner, it will go bad. Accurate ordering is a necessity. If you order too much food, it will cause waste. If you don’t order enough food, you will lose sales. A carefully planned business plan helps you focus on designing proper menus and controlling portions. This aids you in providing a consistent experience for your customers.
No matter what food you prepare at your restaurant, it will have equipment and space requirements. A business plan can help you understand the equipment you need to prepare the food on your menu. This can assist with the kitchen layout to ensure you’re not wasting space. A restaurant is several businesses all in one. As a result, you must be disciplined with the operations of your restaurant. In your business plan, you should also consider marketing, facilities management, and supply chain.
Key parts of a restaurant business plan
While a solid business plan doesn’t promise that your business is going to succeed, it can’t hurt. The stronger your business plan, the greater your chances that your restaurant has a fighting chance. You should consider starting with an executive summary of your business plan. This gives a snapshot of your business and your plan. You can add this last after you have created the entire document.
Concept and target customer
This is the area where you get to describe the soul of your restaurant. This includes your audience research; who you want to come to your restaurant. You want to dig into why your particular restaurant is going to fit into the local area and market. While making these determinations, you should determine what type of food you plan to serve. You should also include your price point. In this section, you want to highlight what makes your restaurant different from every other restaurant.
Location and operations
The location of your restaurant matters, and this is the section where you discuss those particulars. Be sure to outline the layout of your restaurant, including how it will flow. You want to discuss the flow of customer movement and staff, as well as how the food will move through the kitchen. This will lend itself to discussing hours of operation and staffing. You want to be sure you have a clear understanding of peak times and your staffing needs. These needs can change based on the time of year or changes to the area around your restaurant. You want to be mindful of those potential changes. This can help you understand foot traffic and the accessibility of your restaurant.
Menu planning and pricing
If you don’t have a good handle on your menu planning, it can make or break your restaurant. This includes having a set menu with the knowledge of how complex it will be to prepare the food items. If you underestimate the time it takes to prepare your food, that could negatively impact the satisfaction of your customers. When determining your menu, you want to consider how you are going to source the ingredients. The more readily available they are, the more affordable they should be. When creating a menu and prices for the food you will serve, you have to consider how much each meal is going to cost to make. If you don’t set your prices with your margins in mind, you may end up losing money.
Costs and financial assumptions
It’s important to know how much starting a restaurant is going to cost. It’s also a smart decision to have some extra money set aside in case your estimates are a little off. Creating a list of the items you need to start your restaurant will help you get a clear understanding of your start-up costs. Being able to cover these costs will ensure you are successfully able to start your restaurant.
While making money is an important reason to start a restaurant, you want to be conservative with any estimates you make regarding revenue. Until you consistently make money, you should estimate low. You want to have a good understanding of the expenses that will occur in the first 30 days, 60 days, 90 days, and so on. There are costs that will remain fixed, such as your rent. There are other costs that will be variable, such as food. You want to be able to account for expenses as they change.
Marketing and customer acquisition
You can’t make money unless you have customers coming into your restaurant. You must be sure to market your restaurant to ensure that you have a steady flow of customers. Consider having a website, as strong website branding ensures you have an online presence. Many customers will look for your restaurant online before coming into the restaurant. One of the best ways to get customers into your restaurant is by word of mouth. If customers love your food and the vibe in your place, not only will they come back, but they will tell everyone they know. Word of mouth marketing is a powerful tool. You want to keep your customers happy, so they will continue to come back.
How to build a restaurant business plan without overcomplicating it
It’s easy to get overwhelmed by creating a restaurant business plan. It’s most important that you have a clear and strong business plan. The details aren’t as important as making sure your plan clearly describes your goals. You should think of your business plan as a living document. This means that your plan should change as you make decisions. Stay realistic with assumptions and projections. If you don’t have exact numbers, use estimates, but ensure that your estimates are realistic ones.
Common mistakes in restaurant business plans
There are some common mistakes that you should avoid when creating a business plan. These mistakes can negatively impact the success of your restaurant. You want to avoid underestimating your costs. This can cause a cash flow short, and it’s not a good way to start. You also want to be conservative when estimating how in demand your restaurant is going to be, especially in the early days. While you want to remain positive about the success of your restaurant, you want to be prepared for all situations. This prepares you and helps you respond quickly and effectively.
Getting your restaurant set up before planning
It’s critical to start in an organized manner and keep it that way throughout the life of your business. Before you begin planning, you want to understand the options for business structure, so you can pick the best one —whether that means deciding to create an LLC or choosing a different setup that fits your goals. You want to be sure to keep your business finances separate from your personal ones. You could consider a platform such as Tailor Brands to help you begin the startup process, remain organized, and manage the details of your business. Keep in mind, you can do everything perfectly, and it doesn’t promise success, funding, or proper permitting.
Conclusion
A solid business plan can expose areas of risk and help you make the best decisions possible. The best planning won’t remove uncertainty, but it can help eliminate some surprises while helping you prepare for them. When all else fails, keep it simple and remember, you got this.