How to create a restaurant business plan We’ll help you cook up a restaurant business plan in no time with this easy to follow recipe Henry Williams May 12, 2021 7 min read Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. This article was authored by: Henry Williams Content Manager According to a 2017 Harvard Business Review study, entrepreneurs who write ‘formal business plans’ are 16% more likely to succeed. But why is this?Well, if you’ve never made coq au vin before and you just decide to wing it, it might go well – but more than likely, you’ll make a pig’s ear of it.Following a business plan is like following a tried-and-tested recipe. It allows you to understand exactly what you’ll need, and what it is you want to achieve, before you embark on your venture.The very process of writing a business plan forces you to finetune your idea, address any weaknesses in your proposition, and foresee any possible challenges.And if you’re not the most financially astute, it’s also an opportunity to dig down into the numbers and make sure they’re sound before committing cash to launching your restaurant. This article will spell out everything you need to include in a restaurant business plan: How to draw up a business plan for a restaurant: key elements Milestones for a restaurant business plan Restaurant financial plan: startup and ongoing costs Writing a business plan for a restaurant: further support McDonald's brand mission statement is:“To be our customers' favorite place and way to eat and drink.” How to draw up a business plan for a restaurant: key elementsFor the purposes of this article, we’re going to use a fictional establishment – let’s call it The Goodfare Restaurant – to show you exactly how a restaurant business plan should work in practice.You can find a more comprehensive breakdown of what to include in a generic business plan here.*Any resemblance to a real restaurant is entirely coincidental!Executive summaryThis is a brief snapshot of the key information the reader needs to know about The Goodfare Restaurant.The restaurant – The Goodfare Restaurant is a 100-seat family eatery in North London, serving moderately-priced comfort food classicsYour mission statement – The Goodfare Restaurant exists to bring hearty, reasonably-priced grub to the massesObjective(s) – to be the most popular moderately-priced eatery in North LondonValues – the customer is almost always rightThe companyThis section should go into detail about the management team, the legal structure of the business, and operations.Founders/management team – Founders Stelmo and Philip Blimp are brothers with a combined 25 years’ experience working in some of the UK’s most successful restaurantsOwnership structure – The Goodfare Restaurant will be 100% owned by the Blimp brothers (unless equity is given away as part of an investment deal)Legal and insurance – The restaurant will abide by all UK health and safety laws, as well as food hygiene legislation etc.Startup costs – We estimate initial startup costs for The Goodfare Restaurant will total £150,000, self-funded by the BlimpsProperty – The 2,000 square foot property has space for 100 covers. It comes fitted with a functioning kitchen and bathrooms, but will require some minor renovationLocation – The restaurant is located on the high street in an area of high footfallOpening hours – Monday to Friday – 11am to 11pmResponsibilities – Stelmo will be responsible for stock management and finances, while Philip will be in charge of managing staff and payrollSuppliers – Thanks to their years of experience in the industry, the Blimps have excellent relationships with a number of quality local suppliersMarket analysisThis section is where you prove the viability of your proposition with thorough market research.The industry – over the last two years, London’s restaurant industry has seen the highest level of closures in decades, as well as very high staff turnover. Chains and high end establishments have been hit particularly hard, with consumers hankering for more authentic independents like The Goodfare RestaurantThe target market – The local population of around 260,000 people is comprised of young professionals and families, with a median annual income of £40,000Competitors – There are three direct competitors within a five-mile radius, including: BingosCrunksSlatersSize200 covers120 covers70 coversProduct / Service offeredStandard fareOverpriced swillHearty grubPrice of comparable product / serviceMenu prices range from £6-£17Menu prices range from £12-£25Menu prices range from £5-£12StrengthsFamiliar chain restaurant Great locationVery affordable pricesWeaknesses High staff turnoverOverpricedPoor locationThreats posed by competitorMuch better name recognition than Goodfare None Attracts a similar crowd to The Goodfare RestaurantOpportunities presented by competitor Consumer shift towards independent restaurantGoodfare offers better food at a more reasonable price pointGoodfare is in a much better locationMarketingThe Goodfare Restaurant will position itself as the number one mid-range family restaurant in North London.We will incorporate traditional and digital marketing elements in our strategy. Primarily, we will:Develop relationships with local businesses by offering lunchtime dealsImplement a loyalty schemeEncourage repeat visits through our email databaseFinancialsThe below is a rough breakdown of the expected costs of starting and running The Goodfare Restaurant, and the revenue generated assuming an average table turnover rate (i.e. the number of daily sittings at each table) of 2.5.A good rule of thumb is that you want to be turning over your tables every 45 to 90 minutes during busy periods.Here are some other restaurant metrics you could track.Startup costs – The Blimp brothers will provide the estimated £150,000 startup costsImportant assumptions – For the purposes of this business plan, we will assume the following:Average customer spend of £20Average 250 covers served per dayAverage meal cost of £3.50The restaurant will employ 25 people:10 waiting and bar staff on average salary of £18,000*10 kitchen staff on average annual salary of £24,000Two managers and one head chef on average annual salary of £30,000Two cleaners on average salary of £17,000Sales forecast – Based on assumed daily covers and average spend, we estimate an annual revenue of £1,825,000 in the first yearStaff salary cost: £544,000Average variable meal cost: £319,375Annual rent: £365,000Other running and maintenance costs: £91,250**Total annual expenses for year one = £1,319,625Startup costs = £1,469,625Estimated year one profit of: £505,375*Salaries based on data from Glassdoor**The average restaurant budgets 1-3% of revenue for maintenance, according to restaurantequipmentrepair.org This is a very basic (and perhaps generous) breakdown of the estimated revenue and running costs of a restaurant in London.You may have to provide a more granular account of your monthly expenditure and revenue sources in order to convince investors that your financials are sound. Milestones for a restaurant business planMilestones are clearly defined targets you hope to achieve within a given time. Not only are they a way to measure the progress of your restaurant, but they’re a good way to motivate your team towards a common goal.You can set milestones in a table like the one below.Think SMART. For each milestone, you should:Clearly define a completion targetSet a realistic deadlineAssign a responsible stakeholderMake sure it’s actually achievable!Milestone Deadline Stakeholder Full capacity day10/08/20Stelmo BlimpBreak even14/12/20Philip BlimpOpen second site3/04/21Lynton Snitch Restaurant financial plan: startup and ongoing costsYour monthly costs and revenue can fluctuate wildly throughout the year at the mercy of seasonality, tightening purse strings, scarcity of supplies, and fierce competition.The only certainty is that you can break your costs down into three types:One-off costs – licences and permits, property deposit, equipment, fixtures and fittingsFixed costs – rent or mortgage, salariesVariable costs – food supplies, hourly wages, utilities, maintenance and repairsIt’s easy to budget for those one-off and fixed costs, but make sure your financial planning is sufficiently flexible to account for the variables, as well as any other surprises.You don’t want to be broadsided by some act of god (fire, flood etc.) or a sudden dip in customers, and not have the cashflow to ride it out.Gross profit margins – pricing your foodGross margin is the difference between cost of goods sold and revenue, divided by revenue.Expressed as a percentage, it shows how effectively your restaurant is generating revenue for each pound spent.Most restaurants aim for a gross profit margin of 65%. So, if it costs you £3.50 to produce a meal, you should sell the dish for £10.It might look like a decent profit percentage, but a good portion of that 65% is going to be eaten up by your other ongoing expenses.Securing funding with a restaurant business planSo, how can this document help you to secure funding?Investors are looking for unique ideas with high potential to deliver significant returns. They’re also looking for a talented management team with a clear and compelling vision for their business.A comprehensive business plan should be proof that your business meets these key criteria. If done right, your plan says: “This is why you should invest in my business over any other.”If you’ve already written your business plan, you could be eligible to win investment from the Start Up Series – a monthly equity seed funding competition that gives early and growth stage businesses the chance to receive up to £150,000 and £250,000 respectively in SEIS or EIS funding.Veggie hot dog startup Not Dogs secured funding in December 2016, which it used to employ 12 new team members and revamp its Birmingham restaurant. Writing a business plan for a restaurant: further supportThere are countless restaurant-specific templates online that you could base your business plan on.But there’s no perfect industry standard you have to meet.Most importantly, your financials must be credible, your goals should be ambitious but achievable, and your plan needs to be comprehensible to someone who isn’t you.Don’t get too obsessed with meeting targets and sticking rigidly to the original plan. Circumstances are bound to change, so you should allow yourself the freedom to alter your course and bounce back from setbacks with a new approach.This is never more true than in the restaurant sector, where circumstances can change faster than you can say “ready, steady, cook”.We have a whole suite of pages on every aspect of starting and running a restaurant, which you can find here:How to start a restaurant Restaurant marketing Restaurant website design Restaurant management software Share this post facebook twitter linkedin Henry Williams Content Manager Henry has been writing for Startups.co.uk since 2015, covering everything from business finance and web builders to tax and red tape. He’s also acted as project lead on many of our industry-renowned annual indexes, including Startups 100 and Business Ideas, and created a number of the site’s popular how to guides.