Doug Radkey

Restaurant Business Plans – Deconstructed

Originally Posted on FoodableTV – By Doug Radkey 12/07/2016

It’s no secret. The failure rate among restaurant startups is significantly higher than many other industries. The question is: How can you position yourself to increase your chances for long-term success? The answer starts with having a sound business plan.

The old adage “Failing to plan is planning to fail” has never been more true. Many people think that a business plan is only used to obtain funding, and that couldn’t be further from the truth. A business plan, when properly written, will also guide you through the start-up stages and prepare you for the challenges you’re about to face.

Would you build a house without a blueprint? Let’s hope your answer was an emphatic no. Then why build a restaurant without a business plan? A restaurant is a business and needs to be thought of as that, first and foremost. However, there are components of a restaurant-focused business plan that are different than that of a traditional “small business” business plan. Let’s have a look!

Executive Summary

Write this section last. Be creative with your writing and tell a story that will leave future readers intrigued. Outline the overall concept, food and beverage focal points, key market statistics, and financial objectives.

Business Objectives

Describe what will define your restaurant or bar. List three to five first-year goals and list three to five long-term goals. What action will be done to reach these goals? Use the SMART acronym when describing each of your goals (Specific, Measurable, Attainable, Relevant, Timely) to hold yourself accountable.

Competitive Landscape

Describe your top five competitors plus what advantages and disadvantages you will have in terms of marketing, food and beverage, service, and any other areas of concern. From there, outline three to four keys to success that will make your restaurant competitive and successful long-term.

SWOT Analysis

A SWOT (Strengths, Weaknesses, Opportunities, Threats) evaluation is a popular tool to specify the objective of the restaurant venture while identifying the internal and external factors that are favorable and unfavorable to achieving your noted objectives. Try to list four to five for each section, at minimum. Consider using the SWOT evaluation against each competitor, as well. It is also a great exercise to use on yourself as an owner — what are your strengths and weaknesses?

Operational Analysis

Outline your location specifics and/or needs. To name a few, this would include total square feet, kitchen size, front-of-house size, total occupancy, washroom facilities, square feet per customer, summary of leasing requirements, and required customer parking. You also want to describe potential hours of operation, training programs, certificates needed, and permits required for start-up and day-to-day operations.

Personnel Profile

Describe the ownership team while including their qualifications and background. Outline the management team, their roles, and their salaries. Outline the remainder of the team, both FOH and BOH, to determine hiring requirements such skill-set needs and wages over the next three years. With this data, you can estimate the necessary working hours per week and your future labor costs.

Menu Development

You may not have your entire menu formulated at this point, but you should have the concept and key items completed. Outline your menu, describing core items in detail, while describing potential suppliers, cost objectives, supplier deliveries, quality control, pricing strategy, and average revenue per customer. You also want to outline specific equipment needs, costs, and equipment specs needed to execute your proposed menu.

Industry Trends

Look at industry trends for your region, service style, and overall concept. Discuss flavors, technology, growth patterns, and more. Combine as much detail as possible, and as always, outline your sources of information.

Market Summary

Arguably, this is one of the most important sections of the business plan. Define your market segments, overall demographics, hyper-local analysis (5-10 mile radius), market growth patterns, market spending habits, and much more. Use graphs and charts to help describe your collected data.

Brand Development

How do you want your customers to remember you and your brand by? List out colors, fonts, atmosphere, customer experiences, and the development of stories you want to see come to life at your restaurant.

Marketing Plan

Using the previous data and knowing your target customer(s), describe how you will generate awareness, maintain and increase your average revenue per customer over time, and generate repeat business. How will you position your restaurant or bar within the market? What external tactics will you use for promotions? What internal tactics will you use for promotions? Describe your perception of value. Outline your marketing goals and proposed budget for start-up and ongoing campaigns. A separate marketing plan (document) should then be completed, prior to opening.

Sales Plan

Working alongside your marketing strategies, what sales objectives and tactics will you use? Will you have a gift card program? Will you have day-break menus? What programs will you use to develop your business? Will you use online ordering? What will you do to combat typical slow periods within the industry? What industry and community related partnerships will you need to make?

Business Development

Starting a restaurant is a monumental undertaking and it can be intimidating to do it alone. In this section, set up a timetable of milestones for completing tasks and their proposed completion dates, as well as who should be responsible for these goals. These should be broken down into start-up and growth categories, plus potential exit strategies.

Financial Highlights

Now the “fun” begins. Outline all of your start-up costs in detail, complete your opening day balance sheet, and define your financial management strategies. Describe the investor/lender strategy plus potential return on investment.

Financial Analysis

In this section, describe your key performance indicators, financial goals, and financial assumptions. Complete your break-even analysis, daily foot traffic report, sensitivity analysis, RevPASH (Revenue Per Available Seat Hour) analysis, and three-year financial projections. Complete these month-by-month in the first year and quarter-by-quarter in years two and three with a three-year financial summary (year-by-year).

Remember, your business plan should be revised as you move along — this is why many call it a “living document.” This minimum 30-40-page document should be reviewed monthly, adjusted accordingly, and measured against results to be most effective!

Developing Your First Restaurant Menu

Originally Posted on FoodableTV – By Doug Radkey 11/09/2016

Designing your restaurant’s first menu should be a fun and exciting task, but it is also a potential turning point for your venue’s long-term success. A process this significant needs to be a thought-provoking one, and one with thorough planning.

There needs to be a strategy behind your menu, not only with food, but also beverages. Every plate, bowl, and glass delivered to each table and to every guest needs to deliver a visible, positive emotion. If it doesn’t, you and your team will have some crucial work to do.

The process to developing your first, memorable menu starts here:

The Concept

If you’ve developed a conceptual plan for your new restaurant or bar, you would have shaped your idea into a tangible form with character, heart, and soul, giving your concept a visual personality. Using these characteristics will help you to define the style and size of your first menu.

Target Customers

If you’ve completed a feasibility study and business plan, you will undoubtedly know who your target customers are. One of the first steps in menu development is simply knowing what your customers want and how much it is they’re willing to spend for a meal, away from home, based on their chosen lifestyles. The mistake many aspiring restaurateurs make is designing a menu they want, not what their customers want, which often leads to early challenges or failure.

Competitive Analysis

At this stage of the process, you will now know the fundamentals of your menu and who will be your direct and indirect competitors. Take your research to the next level and analyze your direct competitors in terms of their menu. Look for menu size, menu style, day-part strategies, portion sizes, ingredient quality, and price points.

Economic Factors

Complete a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to determine the opportunities that present your concept, based on the research from your target customers and competitive analysis. You want to list 5-10 potential opportunities and prioritize them in a way that will deliver a winning menu for your concept.

Ingredients and Items

Which menu items will define your brand and your success? What quality of ingredients will you need to use? How can you re-purpose ingredients to maximize supplier buying power in addition to reducing waste plus your food & beverage costs? What will be your nutritional and flavor profile based on your target customers? How will you maximize productivity within your venue? Remember, you want to keep your menu small (ideally less than 32 items), memorable, and easy to navigate.

Culinary Experience

What experience do you need in your kitchen and bar to deliver your desired menu items on a consistent basis? What roles or specific qualifications will you need? What is the starting salary for these types of positions? What is the personnel availability like within your region for these qualifications?

Vendor Selection

Having the right vendors is an essential key to success, especially if you’re producing much of your menu in-house. You need to ask if they’re in a position to consistently deliver the quality product and ingredients you need each and every time. Do they only deliver on specific days? If yes, how will it store in your kitchen? Do the vendors have quality control and recall systems in place? Can they grow with your brand in terms of quantity? Will suppliers and ingredients need to change based on seasons?

Pricing Strategy

How will you position your concept and menu within the market? Do you want to be a leader in value and quality, or are you reaching a specific high-income or low-income demographic? What is the economic state of your hyper-local area and target customers? What are your prime food and beverage costs? Take this time to re-examine your proposed pricing, portions, and menu quality against your competitors.

Kitchen Layout

Now that you know the core of your menu, you can plan for the kitchen equipment, bar equipment, square footage needed, and productive layout of your stations. You will want to work with an engineer plus an experienced chef, consultant, or equipment supplier to maximize your productivity, storage, and revenue per square foot.

Plating and Glassware

Presentation is equally as important and will help deliver the “wow factor” when a plate, take-out container, or drink is delivered to the guest. Put passion, excitement, and care into each dish or beverage, even for take-out. Look for innovative plate, to-go, and glassware designs while keeping into consideration your portions and the color palette of your menu items.

Marketing and Engineering

Your menu is the number one form of marketing — without it, you have nothing. You want to artfully describe the story behind your brand and each one of your dishes with powerful, meaningful descriptive that will match the physical design of your menu. Using winning menu placement, product mix, and other engineering strategies that will deliver a consistently high level of revenue and profit for your restaurant or bar.

Training and Soft Opening

Create a menu training schedule for both, prior to opening period and for your future day-to-day operations. Take advantage of soft openings to make any last-minute adjustments and don’t forget about ongoing menu training for not only the back-of-house, but the front-of-house staff as well. Create inventory systems and pull-lists plus in-house quality control systems for all menu items to promote financial control.

Utilize these steps and answer these questions to develop a documented menu strategy that you can use not only for your first menu, but future menu developments as well.

Developing Your Restaurant Start-Up Support Team

Originally Posted on FoodableTV – By Doug Radkey 10/21/2016

You’re determined, positive, confident, adaptable, and you crave learning experiences. Being an entrepreneur — or more specifically, a restaurateur — combines an enormous amount of passion and vision for creating food, drink, experiences, and a drive to be undeterred by a high level of unprecedented risks.

Ask any restaurateur and they will tell you it’s hard to give up a certain level of control on decisions being made during the start-up phase. After all, this is your dream and your vision. Successful restaurateurs, however, will also tell you not to do it all yourself and to let go of the smaller tasks while working with an expert on the overall bigger picture.

Simply said, here’s who you need in your supportive start-up cast to save time, money, stress, and most importantly, your sanity.

Work with a Mentor

Do you have someone locally within the industry who you look up to? Ask them if they’d be interested in being your mentor throughout the start-up process. Turn to them to lean on for tough questions surrounding concept, menu, staffing, and marketing ideas. Remember though, they likely can’t be there for you every minute of the process, as they’re most likely operating a successful restaurant themselves. Work with them but use them sparingly, for the most important questions.

Hire a Consultant

If you’re looking for a project manager and someone with hands-on experience to provide day-to-day leadership plus a non-biased, educated opinion combined with a solid strategy plan, this may be the route for you. A reputable restaurant consultant will also provide an array of resources, relationships, and value while working with you on your start-up project. But keep this in mind: Don’t let them take full control. This is your project. Your consultant should work in tandem with you and you should still have the final say.

Hire an Accountant

Many aspiring restaurateurs wait until they’re ready to hire their start-up staff to find themselves a bookkeeper and accountant. In reality, you should do this at the very beginning. Once you have your location, or even before, work with an accountant to stay on top of your expenses. You want to control your costs, not cut them. A seasoned accountant will ensure you stay on budget, leaving you adequate financial resources for opening week.

Trust a Commercial Lawyer

It’s no secret that lawyers are costly, but so is overlooking an important piece of information on your property lease, partnership agreement, corporate registration, or investor agreement. Budget approximately $2,000-$4,000 for a commercial lawyer when completing your business plan and if possible, look for a lawyer with restaurant-related experience.

Hire a Designer

Being creative is fun and this creativity is a reason why so many people love the restaurant and hospitality industry. However, if you want to create an unforgettable image in your graphics, interior layout, and curb appeal, consider hiring a professional designer to give your restaurant the edge it needs to stand out from the competition. Remember, the restaurant industry is unique, so consider hiring a designer with a strong foodservice-related portfolio who can also complete 3-D renderings for you to visualize your concept.

Consult Qualified Engineers

If you’re taking on a large restaurant renovation project, you definitely need an engineer and architect to complete the necessary drawings for city approvals and to direct your team of sub-contractors. Just like designers, it’s best practice to look for engineers (and renovation team members) who have worked with restaurants and understand the industry specific HVAC, plumbing, kitchen exhaust, fire safety, and electrical requirements.

Collaborate with a Certified Chef

If your strong point is not in the kitchen, ensure you work with a chef, consultant, equipment specialist, and/or hire your chef ahead of time to not only develop a winning menu your market wants and needs, but also to ensure the correct equipment and smallwares are purchased and expertly laid out to maximize productivity.

Listen to Bar Experts

This same practice can be used if you’re experienced in the kitchen, but not in the front of house. If the plan is to have a wine, cider, craft beer, and/or cocktail-focused bar that will deliver an experience customers won’t soon forget, consider hiring a sommelier or bar expert for proper pairings, equipment, and productivity layout.

Thank Your Friends and Family

Arguably the most important of all, make sure you have the support of your immediate family and friends. There is undoubtedly going to be some stressful days, weeks, and even months during the beginning phases of your startup and after you’ve opened your restaurant, where you’re going to question if it’s all worth it. It’s critical to lean on them for support — but not answers. Leave that to the professionals within your team.

There is no shame in asking for help and collaborating on a project with a variety of qualified professionals. Build your supportive cast, lead your sub-contractors, and delegate your areas of weakness to make your restaurant start-up process a less stressful, more positive experience.

Building Restaurant Buzz Before Opening

Originally Posted on FoodableTV by Doug Radkey – 10/04/2016

The restaurant start-up period is a hectic three to four months, sometimes more. With a lot of moving components, it’s easy to get caught up in it all, but an area that you simply don’t want to overlook is your restaurant’s pre-opening marketing and promotional-based strategies.

As with much of your start-up phase, it is mostly about proper planning, budgeting, and execution.

The worst thing you can do is start your marketing and promotional tactics one week before opening, like a majority of independent restaurateurs do, or expect a “if you build it, they will come” type scenario. (Hint: This doesn’t work.)

If you don’t start one to two months before opening, you may just have to wait three or four weeks, maybe even more, before seeing a full house, list of reservations, or profitable level of phone and online related take-out orders.

Marketing comes down to three things: creating awareness, increasing revenue per customer, and ensuring a return customer. The goal of your pre-opening effort is to create as much awareness as possible, all while building on the foundations for sustainable marketing and promotional efforts for the many weeks and months after opening.

Let’s look at eight ways to generate buzz throughout your community with very little investment!

Be Creative & Imaginative

People are bombarded with advertisements and marketing-related messaging each and every day from a variety of businesses and industries. The advantage you have is that you’re new and people will take notice of you more easily — at least at first. However, how will you plan to be memorable and stand out from the others as time goes on? Start early and be creative, imaginative, and bold in all of your efforts.

Create Suspense

Using the above creativity, ensure you build suspense and anticipation. Keep the community and target customers wanting to know more about you and what you will be offering. Use creative temporary window and road signage while the renovations are being completed in addition to other community and online efforts. Remember, though, don’t give away all of your secrets too early or the suspense will fade away.

Reach Out & Amplify

A key piece to marketing and advertising is amplification. How can you reach the maximum number of targeted customers with the least amount of spending? Reach out to leading bodies within your community in addition to industry professionals in your area, including restaurant-related bloggers. You also want to reach out to local community-focused publications and invite them for a tour, tasting, interview, and photo opportunity before you open.

Establish Online Presence

This should not be a surprise. Start your social media presence very early, right when leasehold improvements begin. Share photos and videos of renovations and other behind-the-scene moments to capture the interest of your local audience while creating the aforementioned suspense.

It’s important to create content and posts that will generate engagement and dialogue about your concept, and make sure you respond to each and every comment to further build community relations. It is very easy to have hundreds or even thousands of online advocates before you even open!

Equally, you want to create a website that is intriguing and suspenseful with a call-to-action to gather even more data before opening. Along with your site, begin setting up your other online directories and review site profiles two to three weeks before opening so they’re up and properly indexed for your opening weekend.

Pre-Opening Reso’s

If your concept plans to accept online reservations, why not accept them long before you open? Create a waitlist so that you can plan more accurately for the first week or month. This is also an excellent method to create an email list with other marketing-related data! Use effective social media, partnerships, media relations, and web campaigns to drive this traffic.

Picture-Worthy

Create dishes and drinks so picture-worthy, they just need to be shared online! Get your start-up staff to share photos and videos online to their personal network after scheduled menu testings. This will entice their friends to share with their network as well, leading to brand amplification. Create dishes the local publications will want to add to their content, too. These memorable plates should be so alluring that guests during your soft opening will be proud and excited to share what they just enjoyed, helping spread the word early.

Execute a Solid Soft Opening

Your restaurant’s soft opening is an excellent way to further spread the word before you open. Create methods to maximize your soft opening with engaging and consistent messaging within the four walls of your restaurant.

Make sure each of your soft opening guests leave with a way to help spread the word for you after their departure, and with an experience to bring them back in the following months.

Get Involved

Hit the pavement with your team and introduce your brand to the local community. Give local businesses a copy of your menu, or better yet, a sample or two of the delicious food off your menu!

Consider creating a campaign alongside your soft or grand opening that will generate donations for a local charity or cause that you and your staff are passionate about supporting.

This is an opportunity to generate solid public relations.

Use these simple, cost-effective strategies in the weeks prior to opening to create the buzz you want (and need). These methods will also maximize exposure and revenue opportunities during your upcoming honeymoon period.

Restaurant Location; Where to Build & What to Consider

Originally Posted on FoodableTV by Doug Radkey – 09/20/2016

Choosing a location for your restaurant can be both an exciting and daunting task. Mistakes happen, and many scenarios within the start-up phase can be fixed later, but the same cannot be said in terms of your location choice.

Once you’ve signed your lease, you’re typically locked in!

Completing an accurate and detailed feasibility study is the first step in finding your ideal location. This study will help you determine the most opportune neighborhood for your startup and will outline your primary and secondary target markets, in addition to matching it toward specific demographics within a hyper-local area of your host city. Needless to say, this information is vital in determining where to begin your property search.

The next step is to complete your concept development plan and begin visualizing your restaurant, while understanding the square footage needed to deliver on productivity and revenue-generating opportunities. This process will assist in developing your property wish list.

Overall Requirements

How much square feet do you anticipate needing? What is your budget, not only for the start-up phase (renovations and leasehold improvements), but for ongoing operations (lease payments)? What is your break-even point? How many transactions do you need? Is there going to be a bar or patio? Do you need a liquor license? How will you maximize the space in terms of revenue per square foot? These questions need to be answered in detail with strong projections (knowing what you can afford) to help define your property search parameters.

Kitchen / Bar / Counter Size

Once you’ve also determined the details surrounding your menu and overall concept, it’s best to outline each piece of kitchen, bar, and counter equipment needed to deliver your menu. With proper research, you can lay out your kitchen and know the square footage needed to deliver consistent service. A rule of thumb is to keep your kitchen between 25 to 35 percent of your overall space requirements.

Exhaust Hood & Ventilation

Based on your menu and equipment needs, does your restaurant need an exhaust hood? This is an expensive decision and piece of equipment that requires a lot of engineer drawings and installation approvals. If you’re a startup on a tight budget, it may be ideal to look for a space that was previously a restaurant that comes with an existing (and working) hood and ventilation system.

Washrooms

These requirements alter between each province and state, but washroom requirements are typically based on your square footage, seating, and overall capacity. Depending on the number of staff you plan to have, you also need to have staff-dedicated facilities. Contact your local building department once you have an idea on size and seating to receive requirements for washroom facilities. This information can be added to your search and be budgeted for accordingly, if you need to build out more room.

Visibility

You obviously want the best visibility for your restaurant, but what type of visibility do you need? Are you going to be a destination restaurant or will you be located in a downtown area? How about in a plaza with numerous other businesses and high-pedestrian traffic? What is the traffic like in the morning, afternoon, and evening? Pull vehicle traffic reports on your possible locations (yes, these are often made available online) to develop the best case-study for your future restaurant.

Parking

Limited parking can deter guests from visiting your restaurant. Where will your guests park? How many spaces would you need if your restaurant was at full capacity? Where would they park during peak hours if you’re a take-out restaurant? Where will your staff park? Where will your suppliers park to make deliveries? Answer these questions and add them to your property wish list.

Competition

Let’s hope at this point that you know your direct competitors. Most aspiring restaurateurs think they need to be a fair distance away from the competition. Don’t shy away from being located near them. This is where a strong S.W.O.T analysis, competitor profile, and understanding of unique advantages are essential. Is the market large enough for you to enter and be sustainable, profitable, memorable, and scalable?

History

What is the history of your possible location? Did it previously host a restaurant, and how many restaurants has it been prior? If the location was a restaurant, what type of concept was it and why did it close? Complete your due diligence on the space in addition to the property managers. There may be underlying issues that need to be addressed.

When looking for a location, know your wish list but keep an open mind as you may need to weigh a variety of options. Once you have these answers and a specific location in mind, complete the remaining portion of your business plan (financial projections) to ensure this space is 100 percent feasible.

Finally, consider hiring a commercial realtor to assist you in negotiating specific concessions and exit clauses. Following these steps will ensure your choice of location is not a daunting one, but an exciting milestone for you and your entrepreneurial dreams.

Hidden Restaurant Start-Up Costs; How to Prepare for the Unexpected

Originally Posted on FoodableTV – By Doug Radkey 08/22/2016

If you’ve always dreamed about starting your own restaurant, it’s imperative that you understand expenses. Even with thorough research and planning, an unexpected or slight oversight could happen, resulting in costs being added to your ever-expanding, start-up budget.

One of the many headaches aspiring restaurateurs face is the simple fact of running out of money before the restaurant opens. There are obvious expenses when starting a restaurant, however, you can’t ignore the often hidden costs that arise — ones that could total well over $20,000-$50,000.

Here are some hidden start-up costs you should address while you’re in your planning stages.

Permits and Licenses.

Make sure you receive the full list of permits that your local municipality requires for starting a restaurant. Unfortunately, like everything in life, many of these are not free. Visit your city clerks office to receive the entire list, their associated fees, and timeline for approval.

These include business licenses, overall building permits, zoning adjustments, occupancy certificates, electrical and plumbing permits, outdoor signage permits, health and safety inspection certificates, liquor licenses, and others. Each municipality, province/state, and federal government will be different, so ensure you receive the correct information for your specific location.

Next, one of the most often overlooked costs is the design approval from an engineer, even if you’re doing fairly simple renovations. Ensure a certified engineer (an additional cost) reviews and approves that your plumbing, electrical, and hood/fire suppression system will efficiently work and meet local codes.

The last license that 9 out of 10 startups overlook is music. Without a music license, you simply cannot play music in your restaurant or bar, even if you purchased a CD album or legally downloaded the song.

In Canada, you can receive your license through SOCAN and in the United States, you can receive your license through ASCAP.

Hood, Ventilation, Fire Suppression, and Washrooms.

Whether you’re planning to take over an existing restaurant space or build up from an empty shell, ensure you have budgeted for inspection, repair, and/or installation of these four costly areas.

You also need to confirm the number of washroom stalls your facility needs based on size and capacity, the correct air-flow calculations, and size of hood + suppression system.

Prior to signing your lease, have an experienced contractor or engineer walk through the space with you, making you aware of any further potential costs.

Hidden Deposits

Starting your first restaurant will result in the need to leave plenty of deposits, which are often an oversight when developing a budget. For all of your major utilities, prepare to pay a deposit for setting up a hydro, gas, and water account; for example. A majority of insurance providers, realtors, and accountants will also have an account ‘set-up fee’ or required deposit.

When taking over an existing space, ensure you receive confirmation that there are no longer any outstanding utility bills (debts) on the property from the previous tenants or any claims against the property with your provincial/state liquor control board that could result in surprise costs down the road.

Freight/Shipping

Unless you are planning on picking up the kitchen and bar equipment, tables, and chairs yourself, prepare to pay for freight/shipping costs. When completing your budget for equipment, don’t just add up the basic equipment costs and taxes. Consider how it will be delivered to your restaurant, as well – something can cost well over $1,000.

Training Costs

Simply estimating this cost will often result in inadequate training. It’s best practice to complete a mock training schedule during your planning and budgeting phase to determine staff training costs.

You also want to include food and beverage costs for training. Whatever the budget is, add one more week’s worth in case your training needs to be extended.

Credit Card Processing Fees

When completing your budget and operational forecast, don’t overlook the credit card processing fees which often range between 1.5 to 3 percent of the transaction. Know your target customer and average transaction in order to budget accordingly. Don’t be afraid to receive quotes from different merchant vendors to receive the best rate and service possible.

Clean Up Costs

When the interior renovations are completed at your restaurant, it’s ideal to have it professionally deep-cleaned before getting started with your training and soft opening. This may seem odd since everything is new, but there is a lot of dust and other particles that will land on your new walls, light fixtures, furniture, windows, and your new flooring. This will often set back a startup approximately $1,200-$2,000, depending on the size of establishment. If you’re lucky however, this may be included in your contractors list of services.

Operating Capital. 

You don’t want to open your restaurant with no money in the bank. This is setting yourself up for early failure. It’s ideal to have a minimum of 1-3 month’s worth of operating expenses for opening day capital.

You also want to budget for a possible extension in renovation time, in case anything during the start-up phase is delayed; for example any permits, approvals, deliveries, or unexpected structural problems.

Include expenses such as lease payment, utilities, loan payment, insurance, and any other administration costs into this budget.

Don’t allow your dream to become a nightmare before you even open.

Complete your feasibility study, concept development plan, and overall business plan with accurate financial projections and budgets. Review these numbers with industry experts or an accountant to feel confident and be prepared for the unexpected!

7 Tips on Pitching Your Restaurant Concept to Investors

Originally Posted on FoodableTV – By Doug Radkey 08/09/2016

You’ve developed your restaurant concept plan, you’ve completed a feasibility study, and you’ve written a pretty solid business plan. Or maybe you’ve been successfully operating a restaurant for years and are looking to expand. Fantastic! But now what?

Due to the high level of risk for independent restaurant related start-ups, the traditional bank loan is never an easy option. A majority of food service start-up or growth projects need an investor or business partner with the financial means to assist an aspiring restaurateur through the development stages.

However, you cannot approach an investor or potential partner without being prepared with factual research, a strategic forecast, and an execution plan. Investors are looking for opportunities that present scalability, profitability, consistency, and sustainability-related characteristics.

Here are a few tips to assist you through your first pitch!

No. 1 Perfect Timing. 

The first thing to keep in mind when pitching to an investor is their time. They will likely not want to read through the 100+ pages of feasibility, concept, and business planning content you’ve accumulated.

You need to first develop a “pitch deck,” a 10-15 page document (print and/or slideshow) that showcases the most relevant and important data from those plans. These points should quickly attract the investors attention, further exciting them and engaging them in key points of conversation.

No. 2 Being Prepared. 

Delivering a winning presentation starts with practice. Create a series of “pitch tests” to speak in front of friends, family, and other business or restaurant industry acquaintances. Adjust your timing, look for questions the investors may ask, and receive feedback on your presentation style (voice level, eye contact, posture, and more).

You can also watch episodes of “Shark Tank,” “Restaurant Startup,” or other investor-related shows and look at the questions they ask of the pitchers. Formulate a list of frequently asked questions and ensure you know the answers to them for your restaurant…quickly!

No. 3 Being Passionate.

As much as you’re selling the restaurant concept and explaining the gap it will fill within the market, you are also selling yourself. This is the opportunity to tell your story — a great way to start your presentation. Show your passion for food, beverage, hospitality, and general business.

Quickly highlight your education and industry experience. Why do you want to open or grow this restaurant? What makes you the best fit for this concept? Why did you choose that specific name? If there is a story, tell it!

 No. 4 Simple & Memorable. 

Include only key points within your pitch deck while using photos, graphs, and even quick video clips if it’s a digital presentation to help visualize and explain. Use investor and industry-related keywords while also leveraging any current food and beverage industry related trends.

If possible and safe to do so, have a small sample of your proposed and unique food or beverage offerings for the investor(s). This will help drive your value proposition points while indicating to the investor an element of your secret to success.

No. 5 Strategic Content. 

Keeping it simplified, along with it being approximately 30 minutes in length, will force you to concentrate on the most important points. Ensure that you identify the following:

• The gap within and size of the market
• How you will deliver a solution to the market
• Your secret(s) to restaurant success
• The overall concept and revenue model
• Your unique F&B menu options
• The summary of your marketing plan
• The current competitive landscape
• The structure of the management team
• Your projected key performance indicators
• Start-up or development costs plus exit strategies

For each key point, formulate three levels of time for discussion. Each point should be delivered or described in 5 seconds. However, you should be prepared to explain the point in detail over the course of 30 seconds and also 90 seconds if the investor would like to discuss it further.

No. 6 The Numbers.

Ensure you know your numbers. Know your market size, ideal customer counts, break-even points, seasonal fluctuation, total square footage needed, total kitchen size, detailed start-up costs, value of assets, interest rates, return on investment, food costs, labour costs, and the list goes on.

Yes, it’s hard to memorize all of this data. Most investors will not penalize you for having a ‘cheat sheet’ with all of the summarized data points for yourself. Include the most important ones within your pitch deck.

No. 7 No Guarantee. 

Nothing in life is ever guaranteed. If your pitch fails, don’t be discouraged. Note areas of concern for the investors, learn from any lessons during the presentation, and adjust your pitch for the next one. Look for other investors, visit local start-up incubators, attend industry-related trade shows, and build your network within the industry.

First impressions count, but good things also come to those that work towards a second opportunity!