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Building a Food Services Business Plan

If you're new to the world of entrepreneurship, the idea of creating a business plan can be daunting indeed. A single Internet search will yield countless how-to guides and manuals about how to create this essential document. What exactly is all the fuss about? And why is a business plan so important?

Think of a business plan as the map to your success. In this map, you'll have the framework for what your restaurant, bar, catering company, or bakery will become – from your mission statement and menu to your target market and projected profits and losses.

Your food services business plan is also the ticket to receiving your start-up capital. Small business lenders will always require you to submit your business proposal to assess whether you qualify for a loan. The more thorough the plan, the better your chances of turning your dream of owning a food services business into a reality.

Ready to get started? We're here to help. Though this isn't the final word on what your business plan should include, this guide should help you create the basic outline of your document and know what to include in each section. Let's dive in!

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Business Planning for Food Services Businesses: The Basic Components

Business Planning for Food Services Businesses: The Basic Components

Food Services Business Plan Part I: The Executive Summary

The executive summary is the overview and introduction to your plan. It should concisely summarize your business plan components for the reader. Though it is the first section of your plan, you may want to wait until you're finished with everything else to write it so you don't miss any important points.

Make sure your executive summary includes your…

  • Confidentiality statement (to protect your ideas and compiled research).
  • Identity.
  • Concept.
  • Reasons why the concept will work.
  • Plans to make the concept a reality.
  • Projected costs.
  • Anticipated return on investment (ROI).

Remember, this is your first opportunity to make an impression on the reader – one who may have the final say on whether or not the plan deserves financing. So keep this section interesting by not getting into too many details. You'll get to the nitty-gritty soon enough. Hit the key talking points to entice your audience to keep reading.

Food Services Business Plan Part II: Company Description

Here's your chance to break down the logistics of your business operations. You'll want to include the following components:

  • Your mission statement. Describe the goals of your food services business. Financial goals are a fine starting point, but you'll also want to include your company's "vision."
  • Your food business's legal structure. Is your business a sole proprietorship, partnership, limited liability company (LLC), or S-corporation? You may want to disclose your rationale for structuring your business as a sole proprietorship or partnership, since these two structures mean you can be held personally liable for business losses. To learn more about business structures, check out SBA.gov's page "Choose Your Business Structure."
  • Your leased or purchased commercial site. Though you may not have a specific location yet, list the area or city where your establishment will be. Where you choose to open your doors is integral to the success of your food business – and your lender will be sure to pay attention to this detail. You'll also need to note whether you plan to lease or purchase the property and why.
  • Startup capital needs. Offer an estimate of the capital needed to open your doors and how you plan to obtain it. You'll go into greater detail in "Financial Projections," the last section of your business plan.
  • Business concept. This is one of the most critical parts of your plan. Your business concept has the ability to truly "sell" your reader on your vision. Try to write this section the way a favorable critic may write a review of your establishment. Paint a picture with your words to describe the following features:
    • Service style (e.g., fine dining, bistro, casual upscale, or quick service / fast food).
    • Size of the establishment and seating capacity.
    • Operating hours and meal periods.
    • Interesting decor, design elements, and furnishings.
    • The "feel" of your establishment (atmosphere and ambience).
    • Lighting and music.
    • General menu theme.
    • Unique selling points (e.g., signature dishes or cocktails, entertainment, ethnic cuisine, or unique service style).
    • Additional services (such as catering options or delivery).
  • Sample menu. Your sample menu is one of your foremost selling points. Take the time to make it look attractive, and pay special attention to your descriptions – if your reader's mouth is watering, you're on the right track. Remember that epic menus tend to overwhelm customers. Rather than quantity, opt for variety.
  • Building design. If you have a floor plan or artistic rendering of your establishment, include it.

Food Services Business Plan Part III: Management and Organization Overview

No matter how innovative your concept is, the success of your food services business hinges on the skilled team that can make it run. This is the part of your plan that shows prospective investors or lenders your team's business savvy, experience, and ability to manage operations. Be sure to include…

  • Key employees' and principals' resumes. Include a resume-styled summary for each of your key owners and managers. Begin with the name of the person, then write a brief summary of their role in your company and the experience they have in management roles. The goal here? Show how your top-quality team will help your business succeed.
  • Management agreements. This section should include brief descriptions of…
    • Compensation and incentives for all employees and key personnel.
    • The board of directors, if applicable.
    • Third-party involvement, such as outside consultants.
    • Management to be added.
    • Management structure and style (e.g., who reports to whom).
    • Ownership and stock options.

Food Services Business Plan Part IV: Industry Analysis

The industry analysis section of your business plan should substantiate that there is a demand in the market for your food services business concept. You will rely on market analysis, current industry trends, customer spending habits, target market, location, and your potential competition as evidence that your concept has measurable appeal.

Your industry analysis should include…

  • An industry overview. There are countless resources you can use to illustrate the growth of the U.S. food services industry. For example, the National Restaurant Association offers in-depth research about industry projections, operational trends, and customer spending habits. Use these figures to paint an optimistic outlook for your food business.
  • Target market research. Use this section to describe the characteristics of your potential clientele (i.e., income, age, industry, education, household size, etc.). Include demographics, dining habits, and preferences to demonstrate your concept's appeal to this market. Also, detail how certain industries, such as tourism or universities, will help drive traffic to your doors.
  • Location analysis. Many business plans are developed before a commercial site is finalized or even selected. But you should never underestimate the power of location – it can make or break your business. In this section, present demographic statistics and describe the local industry and economic outlook. Examine location traffic counts, traffic generators (such as shopping centers), and proximity to residential and commercial areas. (Your real estate broker can help you pinpoint this kind of information.) The point is to demonstrate your location's ability to draw traffic to your doors.
  • An overview of the competition. To succeed in the food services business, you have to know your competition. Why will your target market choose your restaurant or bar instead of competitors'? Dedicate this section to research on the local competition so you can estimate your market share. Key points may include the extent of market saturation, the type of other restaurants in the area, and restaurants that are targeting your ideal consumers (i.e., your main competition). For each point, offer a reason why your concept has the competitive advantage.

Food Services Business Plan Part V: Marketing Plan and Sales Strategy

Investors and lenders will want to know how you plan to draw customers to your establishment and keep them coming back. Use this section to describe how you plan to market your food services business. For example, your strategy may include plans for…

  • Opening day marketing.
  • Holiday specials or events.
  • A customer database.
  • Frequent diner programs.
  • E-mail campaigns.
  • Community involvement and charity events.
  • Building business relationships.
  • Advertising.

Food Services Business Plan Part VI: Operations Plan

Now we're down to the nitty-gritty details of how your food business will run. In this section, give a general impression of how your establishment will run on a day-to-day basis. You can think of this part as a kind of operating manual that you can later share with your management personnel and employees.

Be sure to describe your operational processes, dedicating a brief section to each of the following points:

  • Staffing.
  • Training.
  • Daily operations and production.
  • Customer service.
  • Suppliers.
  • Management controls, such as:
    • POS system to track sales.
    • Time and attendance tracking.
    • Scheduling.
    • Operations checklists.
    • Ordering procedures.
    • Inventory control.
    • Cash control procedures.
    • Security measures.
    • Safety policies.
    • Liability reviews.
  • Administrative controls, such as:
    • Accounting.
    • Payroll processing.
    • Daily and weekly reports.
    • Profit-and-loss (P&L) reporting.
    • Bank reconciliations.
  • Daily cash control.
  • Weekly prime cost report (i.e., the gross profit margin after the cost of goods sold and labor costs have been deducted from sales revenue).
  • Purchasing records and accounts payable.
  • Accounting system / service.
  • Payroll processing (i.e., how and when the payroll checks will be processed).

Food Services Business Plan Part VII: Financial Projections

Your food services business's financial statements let your reader know you can properly plan for your business's future. Make sure you provide realistic projections and accurate information. Misinformation may hurt your chances of securing loans or funding.

Consider including…

  • Personal financial statements for the business's owners.
  • Projected funding and uses of cash.
  • Capital budget.
  • Sales projections.
  • Hourly labor cost projections.
  • Assumptions to the financial projections.
  • Annual operating projections.
  • Five-year operating and investment projections.
  • Profit and loss balance sheets and projections.
Final Tips for Creating Your Business Plan

Final Tips for Creating Your Business Plan

Now that you have a basic outline of what your food services business plan should include, let's review some general pointers to guide your writing:

  • Proofread, proofread, proofread. Spelling errors and grammatical mistakes look unprofessional and can hurt your ability to secure financing.
  • Organize your plan in a logical manner. Remember, your goal is to have your prospective investor or lender read your plan in its entirety, so be sure to organize your ideas and research in a way that is easy to grasp.
  • Develop your ideas, but keep it concise. If your plan is too short, it may be seem underdeveloped. On the other hand, plans that are too long may lose your reader's interest.
  • Spend time creating a feasible financial projection. This part of your plan demonstrates your ability to plan for the future, so be sure it is grounded in factual information.
  • Make sure your plan is well-written. Again, the goal is to pique your reader's interest, sustain that interest, and move them to action. When you utilize descriptive and clear language, you have a better chance of engaging your audience and selling them on your ideas.
Additional Resources for Food Services Business Planning

Additional Resources for Food Services Business Planning

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