Write an effective restaurant business plan in 5 smart steps

Key takeaways

• A

  restaurant business plan

  is your

  step-by-step

  roadmap

  for starting a

  new restaurant

  and will be an important tool for your

  management team

  and

  potential investors

• Restaurant business plans

  should include a

  market analysis

  ,

  competitive analysis

  ,

  financial projections

  , and other elements to ensure that your

  type of restaurant

  is a fit for the area and projected profit will justify the

  startup

  costs

• Change is inevitable for most

  new businesses

  and virtually all restaurant concepts, so be prepared to update your

  restaurant business plan

  as time goes on

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Starting a restaurant opens up a world of excitement, like being on a perpetual roller coaster ride. Dreaming up your dining room, crafting your menu, and designing your guest experience are some of the most fun and rewarding parts of the restaurant industry. 

At the same time, low margins, long hours, and high turnover make restaurant startups a risky business—many will fail within their first year. That may induce that  butterflies-in-the-stomach feeling you get from riding a roller-coaster.

To be on the positive side of that statistic, develop a roadmap for your restaurant idea before you begin writing any checks. It’s something that any new business should do. And just like any new entrepreneur, restaurateurs should prepare themselves for the ride.

That’s where the business plan comes in. Creating a restaurant business plan is among the foundational best practices for opening a restaurant. Think of a business plan like the blueprint of a home, providing every detail one would need to turn a design on paper into reality. 

How to start, you ask? Every new restaurant is different, but whether you’re going into fast food, a food truck, or fine dining, aspiring restaurant owners can draw off the same restaurant business plan template. So, here’s a step-by-step guide to creating your restaurant business plan.

5 smart steps to build a restaurant business plan

With so many moving parts, from staffing to marketing strategy, having things mapped out will go a long way to make sure you’re on the right track to positive cash flow. A mindset shift is required of business owners and entrepreneurs, who have to think differently than employees. For those new to owning a small business, this may appear daunting.

But fear not. Most restaurant business plans can follow the same basic structure regardless of service style or customer demographics. A professional-level presentation that validates your new restaurant can go a long way with potential investors and lenders.

To wow your audience, make your restaurant business plan visual using PowerPoint or similar presentation software, using photos and keeping word counts on each page to a minimum. Consider your future brand and try to hint at your aesthetic in your document.

A simple Word doc can suffice if you’re not as familiar with putting visual presentations together and just want to get pen to paper. In any case, include these five steps in the development of your business plan:

1. Craft your executive summary

Every restaurant business plan should begin with an executive summary, a one-page overview that gives readers a high-level view of what your new restaurant is all about. No need to go into detail here, but rather paint a picture of what the rest of your presentation will illustrate. Your executive summary should include:

• Company description

  : A 1-2 sentence summary of

  your restaurant concept

  ,

  service style

  , and

  restaurant location

  .

• Mission statement

  : A sentence describing your restaurant’s customer experience goals and noting your

  competitive advantage

  . 

2. Conduct thorough market analysis

Successful restaurants may not always serve the best food of all time or have the greatest ambiance, but they do provide exactly what their target audience wants. Some restaurateurs may get lucky, but for most, creating a restaurant concept that appeals to your target market is a science. We recommend carrying out an industry analysis that covers the trends in foodservice at large as well as in your area. What’s currently in, and what’s out?

Market research is essential to determine whether your restaurant will have a reliable customer base. Market analysis will take time and, in most cases, boots on the ground, but it could make or break your business depending on the following:

• Target audience

  : What does your customer base look like? Describe

  demographics

  like average age and household income. Your pricing and menu should match that customer base’s preferences.

• Competitive advantage

  : What will incentivize your

  target customers

  to choose your

  new restaurant

  over others in the area? Novel

  menu items

  and lower pricing are common first answers, but you must account for those

  competitive advantages

  in your

  financial projections

  .

3. Dig into financial projections

Potential investors and lenders need to know that your new restaurant will generate positive cash flow. Your financial projections should accurately depict your new restaurant’s projected profit and how you’ll reach that projected profit with your startup costs. Include the following in your financial analysis:

• Startup costs

  : Think critically about the money you’ll need to take your

  new restaurant

  from concept to opening day. Buying or leasing a building, furnishing your dining room,

  choosing the right kitchen equipment

  , and

  selecting a POS system

  require significant capital and, depending on your service type, vary wildly in cost. Asking for more money up front will be easier than asking midway through development, so err on the side of caution when calculating your

  startup

  costs.

• Break-even analysis

  : A

  break-even analysis

  shows

  potential investors

  and lenders how long it will take to get their investment back. To calculate your break-even point, simply divide your

  startup

  costs by your projected profit per month. Be realistic about your operating costs—a quicker break-even point only works if feasible. Consider broader

  market conditions

  since the

  restaurant industry

  is famously subject to economic trends.

4. Draft a solid operations plan

An operations plan accounts for the many moving parts in both the front and back of the house, and it’s an essential element of any restaurant business plan. Map out your operations plan by discerning every touchpoint of the customer experience, then identifying who will attend to those touchpoints and how:

• Management team

  : Unless you plan to be in your

  new restaurant

  nearly every day, you’ll want to

  hire a general manager

  to be your agent in the field, ultimately responsible for ensuring your

  financial projections

  and

  profit margins

  play out correctly. And unless you plan to lead the back of the house, an executive chef will be another necessary addition to your

  restaurant management team

  .

• Staffing

  : Your general manager and executive chef should

  handle staffing

  , but you should work with them in determining an accurate head count based on your

  menu items

  and service type. These labor costs will be a critical factor in your

  financial projections

  .

• Sample menu

  : Work with your executive chef to create a

  sample menu

  with pricing for each

  menu item

  as well as

  menu design

  . You can create multiple

  mockups,

  see which work best, and sample

  price points

  with trusted and knowledgeable colleagues. This

  sample menu

  will provide the foundation for your

  cash flow and projected profit

  and help you nail down your

  food cost percentage

  .

• Front-of-house system

  : Taking reservations,

  managing waitlists

  , handling

  takeout

  and delivery orders, and more day-to-day responsibilities must be organized and accounted for. Thankfully you can use

  restaurant technology

  to

  address these issues with ease

  .

5. Create a marketing plan that sells

Successful restaurants don’t just bring customers through their doors. They get them to return—and tell their friends, family, and anyone else within earshot. A successful restaurant marketing strategy will help your new restaurant build buzz, so clearly outline it in your restaurant business plan. Consider:

• Social media

  : Instagram, Facebook, TikTok, and other

  social media

  platforms will likely be your first choice to get discovered online. Different

  demographics

  flock to different platforms, so focus your efforts wisely. Also, make sure that you’ve got a

  great restaurant website

  linked to an up-to-date Yelp profile to maximize conversion.

• Loyalty program

  : Repeat business can account for

  up to 70% of your total sales

  , so be sure to incentivize guests to return after their first visit. There are many ways to build

  modern loyalty programs

  beyond simple punch cards, so dive in deep and get creative!

• Public relations

  : Reaching out to local media outlets and community leaders can go a long way to help you get discovered. Familiarize yourself with the local papers, blogs, and major

  social media

  profiles that reach large, targeted audiences, as well as events and organizations where your

  new restaurant

  can do business.

Take your new restaurant to the next level

Opening a new restaurant armed with a solid business plan is a must. Nailing down the big picture and the individual steps helps break down a very long process into actionable, digestible bits that you can conquer. Baby steps are the way forward, especially when you’re just starting out. 

Do you know what else is important when opening a business in 2023? Ensuring you’ve got the best restaurant technology possible. Imagine table management, online check-ins, waitlists, and reservations all in one place. Combine that with third-party tools like online delivery apps and top-notch POS and inventory management systems, and you’ve got one heck of a program. Of course, we’re talking about Yelp Guest Manager. 

But wait! There’s more. Your online presence matters more than ever, so be sure to check out Yelp Connect to make yourself as visible and appealing as possible.

When used right, the suite of products from Yelp for Restaurants can help entrepreneurs take their new restaurants to the next level. It just works. 

If you want to see just how it works, contact us for a free demo. We’ll be thrilled to show you around. That’s part of our business plan, after all. 

By: Sam McCommon