5 steps to put together the perfect restaurant business plan

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Dreaming up your dining room, crafting your menu, and designing your guest experience are some of the most fun and rewarding parts of your first year in the restaurant industry.

But it’s wise to 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.

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

How to write a restaurant business plan in 5 steps

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. 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, use photos and keep 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. You can also go all out and create a beautifully designed, printed business plan complete with a branded cover, table of contents, and more. Hiring a graphic designer could help make your business plan look legitimate and respectable. 

Whatever format you choose to share your business plan, include these five steps in the development of your business plan.

Step 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 summary of your restaurant concept, service style, and restaurant location as well as type, e.g., sole proprietorship.
• Mission statement: A sentence describing your restaurant’s customer experience goals and noting your competitive advantage. 
• Expected costs and returns: What do you think it will cost to start up? If you were to give an “elevator pitch” to an investor, what numbers could you rattle off quickly? 
• Execution: How will you implement your plan? How involved will you be past the opening phases of the restaurant? Do you already have a management team involved? If so, describe your team and how you expect it to operate. 
• A message to investors: What was the original idea for your business? Why do you think it will succeed? What experience do you have, and what can you bring to the table? This part is the “hook” of your business plan that many readers may never get past. It’s your opportunity to show some flair. This section doesn’t need to be detail-heavy, but it does need to be inspirational. 

One-page executive summary template example:

• Company name
• Company description (3-5 sentences)
• Mission statement (3-5 sentences)
• Expected costs and returns (overall numbers: Startup costs, expected break-even point, expected time to profit)
• Execution (1-2 paragraphs)
• Message to investors (1-2 paragraphs)

Step 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 ideal customer base’s preferences. 

Also consider how broad your reach is. Will you be mostly attracting people from your local area or from a much broader area? For example, do you expect most of your customers to be from your neighborhood, or do you intend to attract customers from across your town or further? 

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. 

Higher quality food is another solid competitive advantage, but only if it is financially feasible and well-marketed. Additional considerations like entertainment options, location, opening hours, a unique atmosphere, or partnerships with other local businesses should also be considered. 

Market conditions

What niche do you fill that needs filling? What demand is there for your product? If the niche is already crowded, be ready to share competitive advantages you will lean on to ensure your success. 

How much of your market currently exists, and how much can you create through marketing? Consider whether your concept comfortably slides into an already-existing market or if you’d need to work to build additional demand for your services. If you need to rely on marketing, you can add more to your marketing budget in your business plan. 

Location

What can you expect from your location? What are the demographics you serve? How much can you expect local patrons to spend? 

Whether you’re in a high-density area or a suburb, looking at real estate prices in your area compared to other parts of your city and the country can give you an idea of what kind of wealth you should expect to find in your area. 

Consider also accessibility, visibility, neighborhood prestige or desirability, and the proximity of other restaurants or entertainment venues. Being in a nightlife hotspot, for example, can be a plus-sum game for restaurants rather than a zero-sum game, as a popular area will draw more customers and thus provide more business for all. 

Market analysis 2-page template

• Introduction (1-2 paragraphs)
• Target audience (2 paragraphs with specific numbers)
• Competitive advantage (1-2 paragraphs with specific concepts)
• Market conditions (2-3 paragraphs describing your local market)
• Location (2-3 paragraphs with specifics on demographics, location traffic, visibility, cost, and fashionability)

Step 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. Consider also how much you’ll need to pay staff before you open your doors, like chefs, managers, and servers for training and pre-opening work. 
• Break-even analysis: A break-even analysis shows potential investors and lenders how long it will take to get their investment back and further see return on investment. 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.
• Profit and loss statements: Draft some mock profit and loss statements for a few months out to see what you’d need to do to succeed. This can reveal what your restaurant needs before that need materializes in the real world. Consider different scenarios, like a downturn in business, having to hire extra staff, or other potential hiccups. 
• An overall budget: Your restaurant budget is a crucial part of your financial plan, even if your restaurant has never seen a customer yet. Planning based on financial projections and can give you an idea of how much you’ll need to spend not just to start up but to run your restaurant over the long haul.

Basic restaurant financial template:

Yearly revenue (projected)

• Total food and drink sales
• Total other sales

Yearly costs (projected)

• Cost of goods sold
• Labor cost
• Equipment + software purchases
• Rent/mortgage
• Utilities
• Taxes

Yearly profits (projected)

Step 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 restaurant 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. 

Bear in mind that labor costs usually are around 30% of a restaurant’s total costs, and keeping it below that can help remain profitable. However, paying up for top-notch staff can often be a thoroughly worthwhile investment, since…well, without a staff, there is no restaurant. 

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. 

When drafting your sample menu, enlist friends, family, colleagues, and staff to test your price points. How do they hold up to your competition, and where can you find room to carve out space for yourself amongst competitors? Finding strategic ways to lower and raise prices on certain items can increase profits. 

For example, lowering prices on menu items that require little staff labor can help improve sales in those items without overly taxing your staff. So, when you’re considering menu prices, look beyond ingredient cost: Consider labor costs, turnover time, item popularity, and more. 

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. A good front-of-house system can save huge amounts of time and labor for staff, making potentially stressful busy nights easier. Further, a good system prevents errors in communication and keeps customers happy. 

Multi-page operations plan template:

• Management and staff description (focusing on leadership roles, e.g., management, head chef)
• Sample menu (including expected graphics + restaurant branding)
• Software and table management strategy description (why you’re choosing the software you’ll use and how it’ll help your business)

Step 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! A good loyalty program should reflect your brand and overall vibe, and thus is a great way to position yourself as unique. 
• 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. Get in touch with your local Chamber of Commerce to familiarize yourself with their offerings—their purpose is to help businesses thrive. 
• Restaurant brand: Get your restaurant branding in order. That means creating a compelling logo, choosing a color palette, consistent brand imagery, and more. Think of what can make your brand instantly recognizable in your area, and how it ties into your niche in the industry. You can test this on potential customers like friends or relatives to see what logo and color scheme stands out the best, or what they’d be most happy wearing on a T-shirt.

Marketing plan template (2 pages):

• Social media strategy, including currently operating accounts + followers
• Loyalty program strategy (if applicable): High-tech, low-tech, or a combination of the two. Needs to demonstrate to investors how you plan to retain customers
• Marketing strategy via public relations and local community outreach
• Restaurant branding guide: Logo, color scheme, font, ethos/sense of self

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.

Most importantly, make sure 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 Yelp Guest Manager.

Your online presence matters more than ever as you’re launching, so be sure to also 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.

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.