How to Write a Restaurant Business Plan

Why Writing A Business Plan Is Very Important

Your business plan will be the road map from which
your new restaurant develops. No matter how much
thought you’ve put into your concept or how many
trusted colleagues have assured you of its greatness, you
absolutely must write a business plan. It will prove the
viability of your concept to potential investors and provide
them with a clear and engaging answer to the question:
“Why does the world need this restaurant?”

First, ask yourself questions to ensure that your restaurant
actually is financially sustainable and truly does offer
unique value in the market you’re hoping to enter. Creating
a business plan will guide you through the process and help
you find inconsistencies and potential road blocks, allowing
you to make adjustments before you’ve presented your idea
to prospective investors and partners. Here’s how to show
that you’ve thought through every aspect of the business.

Crunch the Numbers

A restaurant, first and foremost, is a business. Guests will
only get to experience your creation if you’re able to build it in a financially sustainable way. This requires research,
brutal honesty, and in almost every case, outside help to
figure out.

With a few rare exceptions, you’ll need to engage an
accountant to help you put together the financial
projections that any potential investors will expect to
see. Even if you have a background in finance, soliciting a
third-party, emotionally-detached opinion from a CPA who
has experience with restaurant clients will ensure you’ve
covered all your bases.

Charles retained an accountant while assembling Souvla’s
business plan, despite having three years of relevant
financial experience at Mina Group, a national restaurant
group with more than 20 concepts, under his belt. He says,
“It’s very helpful when you can turn around to the investors
and say, ‘We have retained the services of this firm, they
have verified all of these figures, and they’ll be handling our
accounting moving forward.’”

Mike Harden, Co-Founder and Senior Partner at venture
capital firm ARTIS Ventures, has invested in successful
restaurants like Tacolicious in San Francisco and is
presented with countless restaurant business plans every
year. When someone is on the other side of his desk hoping
for investment, he wants to know:

You must be able to demonstrate clearly that in the market
you’re hoping to enter, you’ll be able to produce enough
revenue — based on your projected number of guests per
day and your average check — to cover your expenses, and
have money left over.

Paint the Picture

The writing that comes before and after those financial
charts and numbers is equally important. Mike notes, “The
average person who invests in an independent restaurant is
someone that wants to go there. They want to get paid back
and make money, but they also look at it as an investment
in a community, an investment in the people around them,
and a way to have fun.”

With that in mind, your business plan needs to be engaging
and give the reader a clear picture of what you, your brand,
and your restaurant are all about. Roberta Economidis,
Partner in the law firm of Georgopoulos & Economidis,
LLP, has been representing restaurants in the Bay Area
for more than a decade, which means she’s laid eyes on
hundreds of business plans.

She says, “A business plan, in my mind, is the first date.
What I do as a lawyer is the prenup. You need that romance
factor to get people bought in with solid numbers that can
back it all up.”

When the reader can so clearly feel, taste, hear, and
visualize the experience you’re promising that they’re
craving it just after seeing it on paper, you know you’ve got
a solid business plan.

This is the first, but far from the last time you’ll hear me
recommend that you be very honest with yourself about
what you don’t know. If writing isn’t your cup of tea, hire
a consultant who is experienced in creating restaurant
business plans. Many potential investors will ask to see
your business plan before taking an in-person meeting
with you, so it’s crucial that this document captures their
interest quickly and represents your concept accurately.

Establish Your Brand

When it comes to establishing a brand, clarity and
consistency are always best — and your business plan is your
first chance to get off on the right foot. Brett Traussi, the Chief
Operating Officer of Daniel Boulud’s Dinex Group based in
New York City, is a leader in creating new concepts for the
company and, as a valued mentor, also reads business plans
for concepts all over the world from former employees.

Try to describe your concept completely in one short
sentence. If you can’t do it, you’re likely attempting too
much at once (remember that your first restaurant doesn’t
have to be your last!).

Add visual elements to your business plan to help readers
better understand the experience you hope to create. Design
a preliminary logo, choose a unique but easily readable font,
and create a mood board within the document that shows snippets of defining design elements, finishes, and relevant food, wine and cocktail imagery. By the time potential investors are finished reading, they should have the same
picture of your concept in their mind as you do. Everything
you include should tie back to what you do, who you are,
and why you’re doing it to help build strength and clarity
into your brand.

If graphic design is out of your realm, this might be a good
time to engage a branding expert. The idea of paying
anyone else when you may not have even secured a single
cent in funding probably sounds very unattractive, but it
could mean the difference between getting 30 minutes of
an investor’s time and getting passed over. Charles did as
much as he could to sketch out his own logo before taking it
to a graphic designer in order to minimize his costs. Looking
through your contacts to see if you’ve got any talented
friends is another low-cost way of going about this.

What Your Business Plan Should Cover

The strongest business plans always include all or most of
the components described below. Charles advises that firsttime
restaurateurs read a bunch of different business plans
for other restaurants and technology and retail companies
to get a better sense of layout options, writing styles, and clarity of concept. Put the sections that you feel would be most compelling to someone who’s never met you first: the “Management Team” section if you’re coming from
high-profile establishments, for example. The goal is for the
reader to keep turning the page.

1. Branded Cover
Include your logo (even if it’s not finalized), the date, and
your name.

2. Concept
Describe your restaurant concept and get the reader excited
about your idea. Go into detail about the food you’ll be
serving, inspiration behind your concept, and an overview
of service style. Define clearly what will be unique about
your restaurant.

3. Sample Menu
The menu is the most important touchpoint of any
restaurant’s brand, so this should be more than just a simple
list of items. Incorporate your logo and mock-up a formatted
menu design (again, tap a designer for help if needed).
Your sample menu should also include prices that are
based on a detailed cost analysis. This will give investors a
clear understanding of your targeted price point, provide
the first building block to figuring out average check
Establish Your Brand cont’d estimations needed to create financial projections, and
show investors that you’ve done the homework needed to
be confident that you’ll be able to sell these items at these
prices and operate within your budget. (We’ll dive into the
specifics of costing menu items in Chapter 10.)

4. Service
This section is most relevant for fine-dining concepts,
concepts that have a unique service style, or if you have
particularly strong feelings about what role service will play
in your restaurant. It can be a powerful way of conveying
your approach to hospitality to investors by explaining
the details of the guest’s service experience. Will your
restaurant have counter service designed to get guests
on their way as quickly as possible, or will it look more
like theater, with captains putting plates in front of guests
simultaneously? If an extensive wine program is an integral
part of what you’re doing, will you have a sommelier? If you
don’t feel that service is a noteworthy component of your
operation, address it briefly in the concept section.

5. Management Team
Write a brief overview of yourself and the team you have
established so far. You want to demonstrate that the
work experience you’ve acquired over the course of your
career has provided you with the necessary skills to run
a successful restaurant. Ideally, once you have described the strong suit of every member of your team, you’ll be
presenting a full deck. Remember that most independent
restaurant investors are in this for more than just money, so
giving some indication of what you value and who you are
outside of work may also be helpful.

6. Design
Incorporate some visuals. Create a mood board that shows
images related to the design and feeling of your restaurant.
Planning on cooking in a wood-burning oven? Include that.
Photos of materials and snippets of other restaurants that
you love that are similar to the brand you’re building are
also helpful.

7. Target Market
Who is going to eat at your restaurant? What do they do for
a living, how old are they, and what’s their average income?
Once you’ve described them in detail, reiterate why your
specific concept will be appealing to them.

8. Location
There should be a natural and very clear connection
between the information you present in the “Target
Market” section and this one. You probably won’t have a
specific site identified at this point in the process, but you should talk about viable neighborhoods. Don’t assume that potential investors will be familiar with the areas
you’re discussing and who works or lives there — make
the connections clear. You want readers to be confident
that your restaurant’s “ideal” diner intersects with the
neighborhood(s) you’re proposing as often as possible. If
don’t have a site, this is a good place to discuss what you’re
looking for in terms of square footage, foot traffic, parking,
freeway accessibility, and other important details that we’ll
outline in Chapter 3.

9. Market Overview
Address the micro and macro market conditions in your area.
At a macro level, what are the local and regional economic
conditions? If restaurants are doing poorly, explain why
yours won’t; if restaurants are doing well, explain how
you’ll be able to compete in an already booming restaurant
climate. At a micro level, discuss who your direct competitors
are. Talk about what restaurants share your target market
and how you’ll differentiate yourself.

10. Marketing & Publicity
The restaurant landscape is only getting more competitive.
Discuss your pre- and post-opening marketing plan to
show investors how you plan to gain traction leading up
to opening day, as well as how you’ll keep the momentum going. If you’re going to retain a PR/marketing company, introduce them and explain why you’ve chosen them over other companies (including some of their best-known clients
helps). If not, convey that you have a solid plan in place to
generate attention on your own through social media, your
website, and media connections.

11. Specialists & Consultants
List any outside contractors you plan to retain, such as:
• Accountant
• Attorney
• Architect
• Designer
• General Contractor
• PR & Marketing
Briefly explain the services they’ll be providing for you, why
you chose them, and any notable accomplishments.

12. Business Structure
This section should be short and sweet. What type of
business structure have you set up and why did you make
that specific decision? As we’ll discuss in Chapter 2, you will
need to work with an attorney to help you determine what
business structure is best for you.

13. Financials
Let your accountant guide you through this portion of
your business plan. It is crucial that whoever you retain to
help you with your financials has a wealth of restaurant
experience (not just one or two places), as they should
be familiar with the specifics of restaurant finances and
know what questions to ask you. Before creating realistic
financial projections, your accountant will want to know
approximately how many seats you’re planning on having,
what your average check will be, and approximately how
many covers per day you plan to do. Being conservative in
these estimations is key as these three data points will be
used as the basis for figuring out whether your concept is
financially feasible.

Lou Guerrero, Principal at Kross, Baumgarten, Kniss &
Guerrero, emphasizes that, “You’ll get a lot of accountants that
tell you that they’ve done a couple of restaurants, but you have
to choose someone that has a deep expertise in what you’re
doing. There’s nothing to gain from going with someone that
doesn’t have a very restaurant-centric practice.”

A well-vetted accountant with restaurant experience will know
exactly what you’ll need to have prepared to show investors.
The key projections you can expect to work on are:

• Pro forma profit and loss statement for the first three to
five years of operation
• Break even analysis
• Capital requirements budget

Additional Resources: For detailed reading on building the
financial portion of your business plan, see Restaurant Success
By the Numbers, by Roger Fields, CPA.

Building a Pitch Deck

A pitch deck is a consolidated, visually-driven version of
your business plan, and it’s an extremely helpful tool for you
and the person you’re presenting to. Why? Your business plan is going to be content heavy; lots of writing, not a lot of pictures, and too much information for any person to reasonably follow along with while you’re in a face-to-face

A well-designed pitch deck is a visual aid to help you
illustrate your key points and to help potential investors
better understand your vision. Here are a few tips for
creating an effective deck:

• It should be no more than 10-15 pages (printed) or slides
(digital presentation).
• Use your business plan as your outline with roughly
one slide representing a section (use more for important
areas like describing your concept).
• Try not to put more than 10 words on each slide and
make each one impactful.
• Use visuals to engage the person you’re speaking with.
What images best represent what you hope to do?
• Keep the entire deck sharp, professional and on-brand.
• Bring a digital version and a hard copy to meetings so
that technology failures don’t throw you off.

Additional Tips from the Experts

• Share your business plan with people who are experts
in areas that you’re not. Accept critical feedback from friends and colleagues that you trust; it’s hard to see the picture when you’re inside the frame.
• Drop the NDA. Charles says, “I was initially petrified that
someone was going to take this idea and just run with it,
but I quickly realized that I had much more to gain from
making it as easy as possible for people to engage with
my idea.”
• Isolate your risk factors. “As a first-time restaurateur,
you’re an unproven operator and that’s a risk factor,”
says Mike Harden. “If you open an unproven concept in
an up-and-coming location and it fails, you’ll never know
why your idea didn’t work.”

Key Takeaways

1. Pick consultants who have a deep expertise in what
you’re doing. Two of the most important people you’ll
work with in the process of opening your restaurant
will need to be identified at this stage: your attorney
and your accountant. Do your homework to make sure
they have depth of experience in the specific type of
restaurant you’re opening, check their references, get
price quotes, and ask other restaurateurs that you trust
who they use for these services.

2. Get consultants (like your attorney and accountant)
involved as early as possible. Lou says, “A one-hour
conversation today can save you a lot of heartache down
the road if you’re able to address a whole host of issues
that aren’t in your area of expertise.” Get a lot of input
before you actually start spending time and money to
open a restaurant that hasn’t been vetted.

3. Make sure your business plan demonstrates both a
passion for your concept and an understanding of
business and finance. You need to inspire potential
investors to get involved, but you also must show that
your concept will be financially viable.

4. Build a business plan that showcases your brand. This
is the first representation of your brand, so make sure
it’s something you’re proud of — a designer or talented
friend can help.

Source by Opentable

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