Creating a Restaurant Business Plan

Creating a Restaurant Business PlanWhether you are thinking about launching a new restaurant or have been in business for years, having a business plan for your establishment just makes good sense. We covered some advice from industry leaders in Restaurant Start-Up Tips for those new to the industry, but every restaurateur or pub owner can benefit from a business plan.

Typically, a restaurant business plan is at the forefront at the start of operations. Then some folks may relegate the document to a desk drawer never to be seen again. That’s the wrong approach. A good business plan is a dynamic document and the process around it should be ongoing. The industry and your clientele are always changing, so reviewing your plan is a good way to keep up and even stay ahead of the curve.

This is especially true if you are catering to the middle class. Earlier, we looked at the middle class erosion effect on restaurants, and while no one’s crystal ball is accurate, if you cater to this demographic, it may be time to take another look at your approach. A business plan is a good way to review your existing situation and create a road map for changes that may be needed to be successful.

Business Plan Detail

One of the aspects of a business plan is to review the competition. Union Sushi + Barbeque Bar owner, Mike Schatzman suggests that a restaurant business plan needs to be more detailed than one for any other industry due to the level of competition (“Great advice about restaurant business plans.”) The smallest details from napkins to décor to lighting mean a world of difference in the restaurant business. The best plans have the greatest detail that far exceeds a spreadsheet with some figures and a paragraph or two describing the concept. Schatzman attributes his success in the Chicago market to having an incredibly detail-oriented business plan.

According to Forbes “Business Plan Outline – 23 Point Checklist for Success,” there are three analyses that must be done in your business plan: industry analysis, customer analysis, and competitive analysis. In your industry analysis, you have to consider the market overview (size and characteristics of your market including sectors like fine dining and fast food) as well as the relevant market size. You can calculate relevant market size by multiplying the number of customers you can attract by what they’re willing to spend in a year.

Your customer analysis must define who it is that walks through your door, including demographic data about age, salary, geography, education, etc. The other factor in this analysis is what their needs are: Why do they want to come into your establishment?

The competitive analysis in your business plan should address both direct and indirect competitors. Direct competitors are in the same industry segment as you, for example, fine dining (and that can be explored even further with your menu, for instance Italian food), pubs, or fast casual. Those outside of your segment would be indirect competitors.

SWOT

You’ll also want to research and itemize “swot” – strengths, weaknesses, opportunities, and threats, and you’ll want to do this for both yourself and your direct and indirect competitors. This helps you figure out how to capitalize on your strengths, your competitors’ weaknesses, and any opportunities on the horizon while avoiding potential threats.

Creating a restaurant business plan is a must. If you’re new, you’ll need one to get started and secure financing. If you’ve been in business but would like to see improvement, you’ll need one to figure out what to change and how to change direction. If you’ve been in business and are successful, re-visiting or creating a business plan for your restaurant can help you identify and leverage the things you’re doing right to continue to grow and succeed.

Undeniably, creating a business plan takes work and time. As a result, some restaurateurs and pub owners avoid the process like the plague and feel too caught up in the daily responsibilities to tackle this process. Big mistake. We can’t make the process easier, but we can point you to a few resources to make the process a bit easier. Check out 6 Helpful Resources for Creating Your Restaurant Business Plan.

Your restaurant business plan will serve as your road map to success.