October 21, 2020

How to Write a Business Plan for Your Restaurant?

The restaurant industry has been one of the hardest hit industries by the Covid-19 pandemic. But both present and aspiring restaurant owners are reimagining their operations as they try to get to terms with the new normal and the changing social constructs it brings with itself. We can see how various restaurants in an attempt to adapt with the changing consumer behaviour are adopting innovative methods. Like, turning restaurants into co-working spaces where people can work while feasting on delish food. Such a changing business environment makes it necessary to have a proper plan in place. Thereby, making a business plan a fundamental document for every restaurant business.

Importance of Business Plans for Restaurants

A restaurant business plan, as said above, is an indispensable document for your business, especially in the current times. Due to Covid-19, anything that can go wrong has gone wrong for many restaurant businesses. Which is why crafting a business plan can give restaurant owners a roadmap to re-establish their operations. Even entrepreneurs, who are looking forward to opening a restaurant, need to make a business plan to analyze the market conditions and trends, analyze competitors, gain a better understanding of their target market, create an operational and financial plan and finally have a guide to help them realize their vision. Not to forget how a business plan is also a significant document if you are looking forward to seeking funding for your business. You need to have your restaurant business plan ready to approach investors and convince them to invest in your business. A well-crafted business plan is extremely important to communicate your business idea to the investors and it also shows how serious and sincere you are towards your business. Even if you are looking for a bank loan, you need to make a business plan.

Now, having a business plan does not mean that things may never go wrong but it will help you stay focused and also make your business resilient. Having said that, the need of a restaurant business plan cannot be stressed enough. It will prepare you for what the future may hold and help you drive the business to achieve your goals.

How to Write a Restaurant Business Plan?

A restaurant is much more than just an eatery or a hangout spot. It is a dream that has been given shape by a passionate entrepreneur. However, statistics have shown that around 60 per cent of new restaurants fail in their first year while 80 per cent have to shut down their business before the fifth year. The report also revealed that the main reason behind the failure of the venture was the lack of a solid business plan.

To become a successful restaurateur, we suggest you sit down and chalk out a plan first. Opening a business is easier than maintaining its standard and building its popularity. Having a business plan will also help to attract investors and pitch your idea concretely. So, here are a few components of the business plan that you can consider before creating yours.

  • Executive Summary: 

The executive summary should always start a business plan. It is a brief description of what the business will entail. Having the entire idea of the restaurant scripted down in front of you can help in identifying the loopholes.

This section of the document should be kept short and relevant. When a potential investor first looks at the business plan, the person should be drawn to the rest of the idea.

The essential elements to include in the executive summary are:

  • The reason for choosing this business segment
  • The Proposed Idea
  • Plan for execution
  • Problem statement
  • A brief look at the costs involved
  • The Expected Return on Investment value.


  • Company and Management Summary:

In this section, start by introducing your company. State the name that you have decided upon for the restaurant. Give the owner’s details and enlist their areas of expertise.

In the latter part of the section, analyse the management that you would require for the establishment. Some restaurateurs prefer to hire an external team for managing the customers and the front desk. However, if you are new to the food industry and are still a little apprehensive about hiring external help, try to involve the family in the management department.

Discuss the legal standing of the business and make sure to spotlight the short and the long-term goals of the restaurant. Explore the current trends in the industry and study the areas which could help your venture stand apart from its competitors. Make sure to know the different licenses and permissions that you would need to acquire, especially before serving strong beverages.

  • Market Analysis:

Market Analysis is one of the most important facets of choosing a career path. So, ask the important questions before you decide to give shape to your dreams. You need to find the factors that will attract customers to your restaurant over the others.

Inspect the competitors. Study the places which are well-known and are popular among both customers and food critics. Take a note of the interior design, the menu, the prices, the open hours and other aesthetics involved. Most importantly, identify the areas where you can set up your shop that will help you to have the kind of reach that you are expecting.

  • Restaurant Design:

Designing a restaurant is not just about aesthetic pleasure. It also has a lot of science involved in it. You can show off your thought and ideas to help visualize the place. If you have the budget, hire a professional. Professionals can help you inculcate your theme and give you a reality check about which design would appeal to the diners. Intricate details like the correct placement of the air conditioners can play a huge role in providing the right ambiance.

  • Financial Plan:

If you are not equipped with all the knowledge required in financial planning, hire external help. Planning the budget for your venture is the most crucial part. An experienced professional will be able to give you the right estimates and the costs that you would have to incur. Prepare for continuous cash flow and do not depend only on bank loans. Always have a lump-sum of savings that can be readily invested in the restaurant.

Make sure that you are prepared for losses in the initial months. Building a loyal customer base takes some time. So, have surplus funds ready.

Consider the number of seats that will be present in the restaurant. Calculate the food cost too. There are many free food cost calculating software available online. It will help you to decide on an approximate profit margin per dish.

  • Location and Target Customers:

Identifying your potential customer is the biggest step before setting up your restaurant. The location can be decided upon accordingly. Look for start-up incubators that might provide the ideal space at a discounted price. Based on your funding, you can decide to opt for renting or buying the space. Famous restaurateurs also believe in starting small. It can act as the testing base before working on expanding the venture.

  • Setting and Testing a menu:

The menu needs to be dynamic. It is always advisable to start the business by playing to your strengths. Don’t go for too many items. Focus more on the quality, portion and taste of each serving. Before consolidating your menu, invite your friends and families for tasting. Use an anonymous method of ballots for getting honest feedback on the food.

Analyse the market before deciding on the price for each item. Do not keep it too low where you start incurring losses and don’t keep it high either where the sales drop. Move with the current trend.

  • Marketing Strategies:

Once you have a loyal base of customers, don’t depend only on them for the sales. These days, social media plays a huge role in marketing. Spruce up your advertising campaigns and consult with professional advertising agencies to increase your reach. Be active on platforms like Instagram or Facebook where you can even get the opinions of customers through polls. Hire an external PR team for better results. Offline Marketing like hosting events, distribution of pamphlets, radio mentions and even connecting with the community can be beneficial too.

Always focus on creating a positive buzz around your restaurant. Invite food critics and food bloggers to write reviews for your restaurants. Once you have set up the establishment, work on giving back to society. Work on a proper waste disposal system and count its set up cost in your initial plans. If you have leftovers frequently, accept the need to change the menu. Feed the poor instead of throwing out food. Try to go eco-friendly with the apparatus used in and around the restaurant. It can help with both cutting costs and benefitting the environment.

Bottom Line 

Crafting a business plan can become a difficult task because it requires a certain level of expertise. Many restaurant owners do not make a plan because of how tedious the process is. But it is important to note that lack of planning and strategy is the main reason for the astounding rate of failure in the restaurant business. Even if you may have a plan in mind, it is imperative to have a written document so that you can refer to it as and when you feel like. A business plan can also help your employees, and investors get a clear idea of your business. So if you want to craft a business plan for your restaurant but feel like you need a professional hand to help, you can also get in touch with DNA Growth.

DNA Growth

DNA Growth is a global professional service provider specializing in Business and Financial Planning. We have over three decades of Company experience and almost 150 years of cumulative professional experience in executing business planning, market research and financial analysis globally. We aim at helping clients grow their businesses for the long term in a risk-efficient manner.


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