Restaurant Business Plan: Step By Step For Those That Hate Business Plans

So investors and banks want to see your business plan. Now, what the do? Stick around and I'm going to show you what you should and shouldn't do when writing a business plan. Hey, if you have a burning passion for the restaurant industry, but you hate the idea of writing a business plan, you're in the right place. Today we're going to be diving into a step by step guide on creating a restaurant business plan without the dread of of the traditional process. So let's jump right in. Hey, Donald Burns, the restaurant coach and over my 44 years in the restaurant business, I've written 63 business plans for restaurants. I'm also a restaurant investor and I see roughly two dozen business plans and pitches each month. So some of the things I'm going to be discussing today are based on looking at your business plan as an investment pitch. Now, the business plan process is not that complicated. It basically just consists of seven components. So let's break them down one by one. Step one is the executive summary. Think of this as your elevator pitch. It's basically a brief overview of your restaurant concept. Here is where you either pique my interest as an investor or you get tossed into the pile of rejection. You really want to open strong with confidence, but don't be too cocky here. You really want to focus on your restaurant's unique selling proposition, the things that are going to make you stand out, who your ideal target market is, and the overall experience that you aim to provide. Remember, a good executive summary should be concise, yet compelling. Here's a big secret to any business plan. Open strong, close strong. Step two is the company description. This is where you provide more details about your restaurant, such as its name, location, ownership, structure. This stuff tends to be the boring business stuff, but that's not going to be you. Now, according to a study by the National Restaurant association, there are over 1 million restaurant locations in the US in 2021. And every year that is growing and growing. So make sure, don't be boring. Jazz this section up and make sure you really stand out. Share your mission, your vision and your core values. And these things are going to guide you through the decision making process and also help you attract the right team members and also the right business partners. Now, when I'm looking at this section as a potential investor, I want to see if you're thinking bigger and bolder than your competition. Step three, Market analysis. Knowledge is power. And this step is all about understanding your target audience, your competition, and industry trends. Quick little tip. Did you know that in 2021 the US restaurant industry generated an estimated $899 billion in sales. That is huge. But to get a slice of that piece of you're going to need to do your homework on this business plan. You really want to identify your competitors, both direct and indirect competition. Find a niche that you can dominate and really keep an eye on emerging trends. Please, for the love of all that is sacred, don't try to be everything to everyone. Keep your brand message tight and really dialed in. Now when I invest in restaurants, I prefer smaller, very targeted niche concepts. I like things that center around like empanadas, samitas, bao buns, pasties and fideo for example are probably the the six of the last ones I just invested in. Just remember, it's better to be a big fish in a small pond than a minnow in a sea of sharks. This is what they call in marketing Red ocean, Blue ocean strategy. Most competition is based on being a commodity and they're more focused on blending in rather than standing out. That's why it's called Red Ocean from the blood in the water. You want to be in the blue ocean where you dominate the market and guests come looking for you. Step four is your menu and service style. Your menu is the heart of your restaurant, so it's essential to be as strategic as its design. Consider factors like food cost, pricing and your profit margins. As an investor, you'll impress the out of me. If you have your menu, cost it out. Did you know that a 1% reduction in food costs can increase your net profits up to 33%? Don't forget to outline your service style as well. Whether it's fast, casual, fine dining or something in between. Try to share why you choose this style of service so that I know you've done your homework. Step 5 Marketing strategy. A great restaurant concept is nothing without the right marketing strategy. Here you're going to outline your plan for creating brand awareness, how you're going to attract guests, how you're going to drive sales. Consider also in this part your online presence, your social media strategy, and all your promotional efforts. Now, according to research by Yelp, 84% of customers trust online reviews just as much as they do personal recommendations, so do not underestimate the power of your online reputation. Step six Management and staffing. Your team is crucial to to the success of your restaurant. Now, as a restaurant coach, your team structure is a major element that will contribute to your success for failure. So show me that you're not going to be overstaffed with too many salaried people for a new restaurant see this all the time. It happens way more than you think, especially if you'd hired a bunch of inexperienced managers to help you set up the restaurant. They're going to staff it like it's already a $6 million concept. And they're going to give themselves plenty of support staff so they get the banker's hours. That's the fast way to close your restaurant. In this section of the business plan, you also want to outline your management structure. Any key personnel. If you already hired some key personnel, maybe include their resume and any staffing requirements and schedules that you might have. Now, just remember, when you're doing the staffing stuff, I want you to take into account that the U.S. bureau of Labor Statistics reported in 2021 that the annual employee turnover rate in the restaurant industry is a whopping 75%. As an investor, I want you to see how you're going to make sure that you stay way below that, around the 10% or under Mark for turnover. So think about how you're going to create a supportive work environment, how you're going to create a culture of positivity and accountability, and how you're going to retain top talent. How you plan to recruit and train your team is going to have my attention, because that's the elements that are going to protect my investment. Step number seven. Ooh, this is the good part. The financial projections. It's time to crunch the numbers. In this section, you want to provide a financial forecast for your restaurant, including sales, expenses and profit margins. Here you want to be realistic, but also a little bit optimistic. I've seen enough financial projections to know if you're being realistic or you just got pie in the sky. Dreams of being the next Chick Fil A? You're going to also need to prepare some projections, like income statements, cash flow statements, and a balance sheet. And I'm also probably going to look for projections for five years. Remember, if you really want to truly impress your future investors, talk about specific key performance indicators that you can help increase profit margins with. Just so you know, there are some average KPIs and there are some great KPIs. The difference translates into 5% profit or 20% profit. So choose your KPIs very, very wisely. And step eight is the exit strategy. Now, it may seem strange to plan for the end of your restaurant journey, but it's essential to have an exit strategy in place. I'm always shocked when I talk to restaurant owners and I ask them, what's their exit strategy? And they don't have an extra strategy at all. An exit strategy really helps investors see that you know how to manage your risk and plan for the future. Your exit strategy could include selling the business to someone on your team. Selling to a family member. Merging with another company could be also passing it down to someone in the family. Key is you really want to have a well thought out exit strategy because it's going to maximize your return on investment and secure your financial future. It just makes investors really more confident in your brand. And there you have it. A step by step guide to creating a restaurant business plan without the traditional dread, doom and gloom. By following these steps and incorporating this advice, you'll be well on your way to launching a successful restaurant in no time. Now, if you found this video helpful, be sure to like, comment and subscribe for more restaurant tips and tricks to make more money while working less in your restaurant. Next video I'm going to go over restaurant marketing strategies that you can help finish out the year strong, drive more traffic, get more butts in the seats, and until then, happy business planning.