Start-up Restaurant Business Plan

Business Environment

A start up business needs an in depth planning in order to make it a successful one. This assignment describes a start up business plan for a restaurant,  highlighting the business environment, the goals and strategies that needs to be adopted by the company. The milestones that the start up business needs to cross successfully are also highlighted. The products and services offered, along with the strengths and weaknesses, threats and opportunities that might be faced by the business is highlighted in this assignment. A financial forecast that is presented estimates the profit that might be incurred by the start-up business.      

The vision of the start up restaurant is to serve the community with high quality healthy food, at a fair price.

The mission of the restaurant is to ensure that all the customers are served with healthy and hygienic food, along with providing a good ambience, such that the dining would be an experience to remember.   

The goals of the start-up restaurant are divided into short term goals, mid term goals and long term goals. The short term goal is to make the restaurant popular by using unique marketing strategies and to earn profit. The mid-term goals include opening few more outlets at areas of public gathering such as office areas, market places, shopping malls (Barton 2016). The long term goal is to serve the community with hygienic, healthy as well as tasty food, at a reasonable price.  

The products of the restaurant would be multi-cuisine food, with Chinese and continental dishes dominating initially. The other cuisines would be introduced gradually. The services include free home delivery services along with catering to small office canteens.  

The start up company would initially recruit 3 chefs, with 2 being specialists and 1 assistant chef. 1 manager would be recruited who would manage the restaurant, along with taking care of the billing system. 3 waiters and 2 delivery men are to be recruited to make the restaurant operational. This would gradually grow into a business organization.       

The financial structure includes an initial investment of $15,000 as capital. This capital is self-funded.

The premises is small to start the restaurant business. However, the interior would be decorated as three themes such as a forest theme, a sea side theme and a desert theme. The equipments include a commercial kitchen set up with ovens, fridges, cook tops, dishwasher, juicers and coffee machines.

The information system includes the use of computers with a billing software and online booking tracker system. Moreover, free wifi is offered to the customers as a promotional offer. Hence, the wifi needs to be set up. A telephone is also used to receive orders over phone.    

The intellectual properties for a restaurant includes brand image of the restaurant along with protection of the signature recopies of the restaurants (Parsa et al. 2015). The licence needs to be obtained following the legal procedures such that legal complications do not arise (Steingold 2015).  

Financial Structure

The milestones include earning a profit after the business has completed one year. The next milestone is to expand the business and open 3 more outlets at the places of public gathering. While this milestone is achieved, the business needs to staff up for all the outlets to be operational and running successfully. Finally, a target of 1 billion customer is set as a milestone, as the business expands.    

Since the business is a start up restaurant business, marketing would play an essential role to promote the business and attract customers. First a market research needs to be done to determine whether the present market scenario is good enough tp cater to the start up business. As the market survey and market research is done and a positive feedback is obtained, the marketing activities need to be initiated. As the marketing activities are initiated, the 7Ps of marketing mix needs to be followed. These are:

Product: The products of the restaurant need to be healthy and tasty such that the restaurant starts off well.

Place: Since the restaurant would be a start up, hence the place where it is launched plays an essential role. The restaurant needs to be placed in a public gathering place such as a market, or near a shopping mall, to be easily located by the potential customers.  

Price: The price of the products of the restaurant needs to be reasonable. Promotional offers such as discounts need to be provided to attract more customers. However, very low price might deflect the customers instead of attracting them.  

Promotion: Promotion of the restaurant is important since it is a start up company. As promotional tools, pamphlets, leaflets, hoarding could be used. Discounts and special offers such as free desserts or starters could also be offered.   

People: The people include the customers who need to be provided sufficient offers to attract them (Mullins 2013).  

Process: The process refers to the efficiency of delivery of the products to the customers within the stipulated time.

Physical evidence: The physical evidence includes the food that is served to the customers.   

The sales promotion is important for the start up restaurant and in order to initiate sales promotion, lucrative offers and discounts needs to be given. Moreover, free gifts or food items might also be used as sales promotion.   

Customer management is an essential activity in the start up business. The management of the customers is needed in case of sudden unexpected rush of the customers (Moreno et al. 2016). If the customers have to wait a lot before the food is being served, then complimentary appetizers might be offered to the customers. Thus, efficient customer management is important and needs to be done efficiently.       

Customer retention refers to ensuring that repeat customers are obtained by the restaurant. As customer retention policies, discounts and loyalty offers might be incorporated to ensure customer retention. As a start up business, the customer retention plays an important role, to enhance the business.

SWOT

The price of the food items of the restaurant needs to be kept low initially. This would ensure attraction of the customers due to the low price (Eagle 2016). However, it is important to ensure that the lower price does not make the restaurant run in loss. High pricing might prove to be disadvantageous for the start-up business.  

One of the most important strategies that the company needs to adopt is to choose the correct team, with the correct skills, in order to start the business. Proper planning is also one of the essential business strategies. Another business strategy that needs to be adopted is to use something unique, that none of the restaurant has adopted. In this restaurant, theme based interior design is an unique business strategy that would make the restaurant different from the others.     

The start up business is a restaurant. Hence, it operates in the tourism and hospitality industry.  This industry is a fast growing one. Hence the business needs to be constantly improving in order to keep up with the increasing developments and advancements. The rise and fall of the industry and the industrial instability would highly affect the business of the start up restaurant.  

The target market of the restaurant is the middle to higher-class people who prefer eating out often or occasionally. Since the restaurant ensures that the food being served is of good quality and fresh, hence office goers might also be targeted by the restaurant (Leon and Marriaga 2016). Moreover, the target market also refers to the food lovers, since the restaurant offers an unique dining experience along with various unique recipes.    

The food industry is a highly competitive sector, with new restaurants and cafes growing day by day, along with offering various special food items. Thus, in order to stay ahead in competition, the business needs to update their skills and efficiencies constantly (Hair 2015). Moreover, the owner needs to ensure that the chefs are well paid such that they are not lost to the competitors. Employee satisfaction needs to be ensured as well, such that employee retention could be done. In case of loss of chefs to the competitors, the secret recipes would be leaked to the competitor restaurants, giving a strong blow to the business (Tran 2016).  

The Porter’s five forces play an important role in affecting any business. In case of the start up restaurant business, the influences of the five forces are as follows:

The threat of new entrants: This threat has a strong and significant effect on the business. Since it is a start up business, hence, threat of new entrants is a big threat that might affect the business negatively (Lam and Harker 2015). Moreover, in the worst situation, the threat of new entrants might cause the start up business to be closed down as well.    

The threat of substitutes: This is a major threat to the business since substitutes might degrade the sale and profit of the start up restaurant.

Premises and Equipments

The bargaining power of the customers: Since it is a restaurant, there is no scope of bargaining with the customers. Hence, this factor does not affect the business.

The bargaining power of the suppliers: This is an essential factor. If the bargaining is not done well, the suppliers might not supply the raw materials to the restaurant (Dey 2016). However, if the bargaining is not done well, the suppliers might charge excessive money to supply the raw materials.  

The threat of competition within the industry: The start up business is vulnerable to the threat of competition in the industry. This is because, the competitors are already ahead of the start-up business. Thus, a very strong competition might result in the business ceasing to exist.

The set up cost of a start-up restaurant consists of one-time costs as well as ongoing monthly expenses. The one time start up costs includes the purchase of the property for setting up the restaurant. The cost for obtaining a license, is also a one time cost. The purchase of the furniture, computer hardwares as well as the softwares is also part of the one time investments (Zhang 2016). The other onetime investments include the setting up and installation of the computers, decoration and modelling of the restaurant, fixtures and counters, legal fees, rent and security deposits, operational cash. However, the monthly expenses include salary of the workers, electricity and water bills, internet charges, raw materials for the restaurant, advertisements.      

First the future revenue needs to be estimated. Once the monthly expenses are estimated, the monthly variable costs needs to be forecasted. They are variable, since they might slightly increase or decrease. The gross profit is to be estimated. Finally the net profit could be calculated. If the total budget allocated for the start up company is $15,000, then the monthly expenses is forecasted to be $500. If the variable costs range between $200-$250, subtracting the inventory costs of $500, and if the estimated sales per month is $3000, then the profit per ,month would be $1750. However, if the restaurant does not yield the expected sale per month, since the other costs remain same, it is likely to run in loss.   

This is made by the forecast of the sales and the expenses. This records the changes in the cash flow, where the cash flows from, and where it goes to. In this business $15,000 is invested as capital (Rose 2016). The profit earned at the end of the year would determine the cash flow forecast.

Break-even analysis refers to the calculation of how much is needed to be sold in order to cover the costs of doing the start-up business. In order to calculate the break even points, the average per-unit revenue, average per unit cost and the monthly fixed costs need to be calculated. If the estimated average per unit revenue is $10, and the estimated average per unit cost is $6, and the monthly fixed costs are estimated to be $500, then the break even formula in sales is

The break even analysis is significant, since it determines whether the business would be successful in recovering all the expenses, and begin to run in profit. In case of start up companies, the break even analysis is important since in case of start up companies, the estimate is to be made accurately.  

Conclusion

The start up business needs a well-documented plan to be executed successfully. This assignment provides a detailed plan of a start-up restaurant highlighting the mission, vision, strengths and weaknesses of the business. Moreover, a detailed business strategy along with the influence of the Porter’s five forces on the restaurant has been mentioned.  

References

Barton, A., 2016. The Munch: An Integrated Business Plan.

Dey, K., 2016. The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN and Porter’s Five Forces.

Eagle, K.A., 2016. Encouraging Entrepreneurship: Resources Supporting Small Business Startup and Growth.

Hair, J.F., 2015. Essentials of business research methods. ME Sharpe

Lam, W. and Harker, M.J., 2015. Marketing and entrepreneurship: An integrated view from the entrepreneur’s perspective. International Small Business Journal, 33(3), pp.321-348.

Leon, E. and Marriaga, D., 2016. Utilizing entrepreneurs’ cultural capital as marketing strategies in the restaurant industry.

Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of the European low-cost carriers explained using Porter’s Five Forces Model. Tourism Economics, 22(2), pp.293-310.

Mullins, J., 2013. The New Business Road Test: What entrepreneurs and executives should do before launching a lean start-up. Pearson UK.

Parsa, H.G., van der Rest, J.P.I., Smith, S.R., Parsa, R.A. and Bujisic, M., 2015. Why Restaurants Fail? Part IV The Relationship between Restaurant Failures and Demographic Factors. Cornell Hospitality Quarterly, 56(1), pp.80-90.

Rose, D.S., 2016. The Startup Checklist: 25 Steps to a Scalable, High-Growth Business. John Wiley & Sons.

Steingold, F.S., 2015. Legal guide for starting & running a small business. Nolo.

Tran, L.Q.P., 2016. Business Plan: Elpis Restaurant.

Zhang, W., 2016. Business Plan for an All You Can Eat Korean Restaurant in Ontario, California.

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