You Restaurant Business Plan Reality Check

After publishing my book "Restaurant Gravy", I started receiving restaurant business plans from all over the world. Most people were looking for suggestions or critiques. Many were asking if I thought their plan was good enough to get them financing for their restaurant. I still receive quite a few restaurant business plans every single month.

A Restaurant Business Plan or A Fairy Tale?

Out of the hundreds of business plans I've been privilege to look at I would say 95% of them are simply not based in reality. Here's what I see happening over and over again:
- A person gets an idea to open their own restaurant
- They become passionate about their idea and start refining their vision
- They read somewhere that every successful business starts with a written business plan
- The surf the internet and obtain a "sample restaurant business plan" or buy software that has a generic "restaurant business plan template".
- They input their assumptions and out comes their shiny, new restaurant business plan!

99% of the template or altered sample restaurant business plans I've seen are fairy tales!

Why, because they are nothing but a generic template full of assumptions.

What is an assumption? In a restaurant business plan an assumption is anything that can't be backed up with hard data. You are probably saying, "you can't prove future forecasts with hard data, you have to guess!" Well, that's partially true, however the truth is, most would-be-restaurateurs don't even try.

Try This Test With YOUR First Restaurant Business Plan

Sit down at a table with your restaurant business plan. Imagine you are on "The Apprentice", or sitting across the desk from a powerful banker. Look at the first number on your business plan and state that number out loud in a factual tone, "This restaurant will cost $80,000 dollars to get open!"

Now imagine Donald Trump or the banker saying, "Prove it!"

Do you have a detailed explanation of every expense? If not, you are making assumptions. Even if you have a detailed explanation of every item, do you think a veteran restaurant business person could get the same results for less money? Have you sourced multiple resources and options?

Imagine you are getting grilled and have to explain every single number on your business plan!

In reality there are a few numbers that you will have to guess. For example, "what is the projected growth rate, year to year, of your restaurant business?"

This is another number everyone over estimates on their first restaurant business plan. And, if you really dig, you can probably find statistics that will tell you what the restaurant industry growth rate for the past few years have been. You might be able to find this information by locating a franchise in a similar niche to yours and researching their same stores sales growth the passed few years.

When you start tearing apart your first restaurant business plan you'll realize that you've made way too many assumptions. This is why most restaurant business plans don't get funded!

The good news is, once you realize your are guessing you can start doing a much deeper level of research and investigation. You might have to pay for a market and demographic study. You'll need to go to your local planning department and see what projects are slated in your target area over the next 5-10 years. There's a lot of work involved in turning those assumptions into provable, data based estimates.

The Benefit of Taking Your Assumptions Out
Of Your Restaurant Business Plan

As you turn the vast majority of assumptions into well researched estimates (with facts to back them up), you'll find your confidence in your new venture grow. Or, you'll realize that your business isn't viable and make the necessary changes. It will take some time and effort. You'll end up with a much more personalized business plan, and an amazing feeling of confidence in your new venture.

That feeling of confidence is usually the difference between obtaining restaurant funding from a lender, and being told "NO".

Before you show your restaurant business plan to anyone realize it isn't a high school homework assignment. It is the next few years of your life you are planning. Make sure you go through each and every item and prove those numbers to yourself first. Once you are totally confident that is when you can show it to someone else.

Your Restaurant Business Plan Should Be Written For YOU!

A well thought out, well researched restaurant business plan will provide you with the assurance, energy and direction to create your own restaurant. Most people won't put in the work, and they won't open a restaurant. The restaurant business plans I've seen that have been meticulously written have, in most cases, been turned into bricks and mortar businesses.

One last thought: Remember that every dollar you spend opening your restaurant will have to be paid back (with interest) from the profits in your restaurant. If you can find a less expense way to open or create your restaurant that will be less money you'll need to bring through the front door to reach your break even.

Another way of looking at this is, you'll be profitable much sooner. That is another advantage of creating an extremely well researched restaurant business plan, not a fairy tale!