Many people on my apps dream of starting their own restaurant. In fact, a restaurant is one of the most common businesses that people try to plan and start. Unfortunately, it is also one of the most difficult types of businesses to start because it requires quite a bit of capital, experience, an immense amount of hard work, and some luck. In this article I will explain how to write a business plan for a restaurant, and to then start that business.
Dream vs. Reality
Many people dream of owning a restaurant. It is a little bit of a glorious business. You get to host people and make them happy. You daydream of lots of laughs and good times. And you are at the center of it all. Here is a video about what daydreaming about business success and the future does to our mental state.
The reality is a little bit different from that. Owning a restaurant means that you have an immense financial responsibility. It also means that you will work at least 6 days per week if you are lucky enough to actually open your restaurant. And your workdays will be closer to 12 hours than 8. And that may go on for years. And every day there will be stress and issues you will have to deal with that will come from seemingly every direction. Since a restaurant is such a demanding business, the stress and financial difficulties will likely spill over into other parts of your life like your personal life.
So think long and hard about how much you really want to open and own a restaurant. And by the way, the costs of opening a restaurant are immense. We’ll get to that soon. Here is an article about how daydreaming about your business and actually working on it is different. And here is a general business psychology article.
Business Plan For a Restaurant
The key sections of a restaurant business plan vs. other types of business plans are the financials, target market and a look at the geographical location of the restaurant, the kind of food and vibe the restaurant will have, and how you will market and promote that restaurant.
I will leave it up to you to explain what kind of food and atmosphere the restaurant will have. The marketing for a restaurant is pretty simple. Here is a video that covers many of the ways a restaurant can be promoted.
Now, let’s get to the slightly more complex parts of a business plan for a restaurant. As a part of your marketing, you will need to identify the target market of your neighborhood. Here is a video on how to identify your target market.
And here is a video on how to actually calculate your target market size.
Now let’s get to the most challenging part of writing a business plan for a restaurant. And that is the financials.
Restaurant Business Plan Financials
It is extremely important that you understand the financials of a business plan. The best way to start to look at your financials is to do something called cash flow analysis. This might sound like an intimidating term, but it is simple. A cash flow statement is really a glorified itemized list. Here is a video tutorial on how to create your cash flow statement.
You should create two different cash flow statements. The first would be for the months prior to opening the restaurant, and the second cash flow statement should be for the months after you open the restaurant. Try to calculate all the costs. For the second cash flow statement, you will also have revenue that comes in to offset the losses.
You should give yourself about 12-18 months of financial runway after the restaurant has been opened in order to give yourself time to make it a stable, profitable business. So just add up all the cash you will need from your two cash flow statements, and protract it to 12-18 months after you have started the business. That is how much cash you should have before you get started. It comes up to a very large number, right? Here is a full blog post about how to calculate how much money you need to start your business.
How To Start A Restaurant
If you are brave enough to proceed with starting your restaurant even after calculating the amount of money that will be required to see this plan through, then you are brave. If you are like most people, you do not have that kind of money. So you need to find ways to raise that money. Here is a video tutorial on the different things you can try to do to raise money.
Of course, money is not the only thing you will need. You will also need to begin applying for various licenses and permits. Permits and licenses are something that is required by your city and state. So it is different depending on where you are located. So you must find out that information with your local government. If you are based in United States, it would be the secretary of state office, city hall, and your county.
Lastly, someone on your team should have experience starting a restaurant. If no one on your team has experience successfully starting a restaurant, that will cause you to learn from your own mistakes which will be extremely expensive. So my advice is to add mentors or co-founders who have experience starting a restaurant before. I would almost not start a restaurant at all before having such a person on the team.
Just in case, here is a video tutorial for how to start a business.
Further Business Resources
For more business-starting resources, please take a look at our business planning mobile apps. Here is the iOS business plan app and here is the Android business plan app. Additionally, here is the iOS fundraising app. And here is the Android fundraising app. And here are our business apps on the Kindle. And here is an article where I give the argument that our Android apps are the best business apps on Android.
And please check out and subscribe to my YouTube channel where we cover many marketing topics.
Author: Alex Genadinikby