Last Updated On December 07, 2020 / Written By Chloe Henderson

How to Make a Small Restaurant Business Plan- 11 Step Guide

By carefully crafting a small restaurant business plan, owners can pinpoint their competition and potential risks to develop effective strategies.

New restaurants enter the industry every day, making it crucial for owners to invest time and research into creating a thought-out business model. Otherwise, start-ups may run into unexpected issues that hinder their financial stability.

With a small restaurant business plan, establishments can outline their marketing, financial, and operational needs to attract investors and make strategic decisions from day one.

11 Steps for Creating a Small Business Plan

While there are many different types of restaurants, each must complete a business plan that outlines their objectives, operations, needs, and financials. The basics of every business model plan include-

1. Executive Summary

An executive summary is essentially the synopsis of a business plan used to attract investors. Primary elements of an executive summary include-

  • Mission Statement
  • Proposed Concept
  • Execution
  • Potential Expenses
  • Required Investments
  • Expected Return on Investments (ROI)
Investors will often review a company's executive summary to gauge their potential costs, profits, risks, and growth. This saves them time from having to read over the entire length of the business plan. If investors see an opportunity for a significant profit, they may decide to fund the business.

2. Business Description

The business description is the owner's opportunity to introduce their company and what they stand for. This section should start with the business's name, location, and available contacts. Owners should also give their personal contact information along with a list of any relevant experiences.

The last section of the description should define the company's legal standing, as well as their short and long-term goals. There should also be a market study that displays demand trends and where the restaurant will fit in. If there is no unmet need within the industry, restaurants may find it challenging to gain a foothold in their desired market.

3. Market Analysis

Generally, the market analysis portion of a business model is separated into three parts-

Industry Analysis

In this section, owners need to define their target market, demographics, and investors to explain why consumers will prefer the restaurant over competitors.

Competition Analysis

Although every new restaurant believes that consumers will choose their business over others, they must carefully assess the competition. Owners should take note of competitors'-

  • Customer Base
  • Pricing Strategies
  • Operating Hours
  • Menu
  • Restaurant Layout
  • Investors

Marketing Analysis

Investors want to know where the restaurants plan to market their business, whether digitally or traditionally. Owners must outline their future marketing campaigns and differentiate them from existing deals. The marketing analysis should also include any special promotions and discounts they will offer on various sales channels.

4. Menu

While restaurants do not need to have their menu finalized when drafting their business model, they should at least create a mock-up. The first draft should have the brand's logo, a consistent theme, and color scheme. Owners can utilize free online templates to test different designs before creating the final version.

The most important element of a menu is pricing. Prices should be carefully calculated after considering the cost, investor, and market analyses to ensure profit margins exceed expenses.

5. Staff

This section should go into detail about the restaurant's staffing needs, from management to servers.

While owners do not need to have their employees chosen at this point, there should be at least a few managers on the payroll. Employees should have various experiences that add to the team's value and improve decision-making.

6. Restaurant Design

The restaurant design is where owners can show investors sketches of the layout, theme, and overall aesthetic. Managers can put together boards with restaurant photos of similar looks and color schemes. This section should also include all of the equipment the business will need, from software to amenities.

7. Location

Owners need to choose a location for their restaurant that aligns with their target demographics but is far enough from the competition. If the owners do not have a set location at this point, they should at least have a short list to choose from.

Owners are responsible for explaining each location's advantages and disadvantages, from available square footage to potential foot traffic.

8. Market Overview

Similar to the market analysis section, the market overview breaks down the restaurant's potential location's micro and macro elements. This includes the different economic conditions, possible risks, and respective solutions. Threats could consist of heavy competition, a decrease in demand, or slowing foot traffic.

9. Marketing Efforts

The restaurant industry is heavily saturated these days, making it a difficult market to enter. Managers need to determine how they will appeal to consumers through various sales channels before and after the grand opening.

Marketers need to create anticipation for the restaurant's opening and sustain new leads moving forward. If the restaurant does not have team members with marketing experience, they can hire a PR company to help develop impactful campaigns.

10. External Help

Launching a new restaurant requires a lot of work. This has led many small businesses to enlist the help of external companies for the handling of financials, administration work, and even design. Owners must list all external aids they will need, such as-

  • Software
  • PR Company
  • Accountants
  • Temp Companies
  • Designers
  • Suppliers
  • Maintenance
  • Reservation Platforms

Once the list is complete, managers need to explain the importance of each party or tool and how it will improve the business's performance.

11. Financial Health Analysis

The financial analysis is the most critical section to both the owner and investors, as it determines the restaurant's potential profitability. Owners should hire professional accountants to generate estimates and create a realistic forecast of the business's financial stability.

Accountants will need to know-

  • Number of Seats
  • Average Order Value (AOV)
  • Guests per Day
  • Expenses
With this information, accountants can also calculate food costs, so management can determine which pricing strategy will create the desired profit margins.