franchise restaurant business plan

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Food Franchise Business Plan

If you are planning to start a new food franchise in your town, the first thing you will need is a business plan. Use our food franchise business plan example created using upmetrics business plan software to start writing your business plan in no time.

Before you start writing your business plan for your new food franchise business, spend as much time as you can reading through some examples of food and restaurant business plans .

Reading some sample business plans will give you a good idea of what you’re aiming for and also it will show you the different sections that different entrepreneurs include and the language they use to write about themselves and their business plans.

We have created this sample food franchise business plan for you to get a good idea about how a perfect food franchise business plan should look like and what details you will need to include in your stunning business plan.

Food Franchise Business Plan Outline

This is the standard food franchise business plan outline which will cover all important sections that you should include in your business plan.

• Introduction
• A BON Fide Enterprise
• Marginal Enterprise
• Irrevocable Commitment
• Doctors Associates, Inc.
• Company Values
• Business Model
• Keys to Success
• Summary Operating Forecast
• All Day Value — includes the famous $5 foot long and the $3 Six-Inch Select
• Featured Products
• All Sandwiches
• Fresh Fit Choices
• Fresh Fit For Kidz
• Sides, Drinks, Extras
• The Subway Old Cut
• The Subway PM Sub
• The WM Meer
• Demographic Trends
• Health Consciousness
• Convenience
• Lithe Rock, AR Demographics
• Operating Policies
• Operating Philosophy
• Strict Inventory Controls
• Purchasing Cost Controls
• Recipe a Portion Controls
• Sanitation a Food Handling
• Management’s Role
• Software a Systems
• Money a Profit Management
• Hiring the Best
• Training for Excellence
• Retaining the Best
• Staff Turnover / Training Costs
• Target Market
• Market Positioning a Branding
• National Advertising
• Local Marketing
• Grand Opening Budget
• Competitive Landscape
• Direct Competitors
• History and Structure
• Professional Services
• Tarek El Amarani
• Staffing a Compensation
• External Issues
• Pre-Ownership Expenses
• Revenue Assumptions
• Direct Costs
• Income Statement
• Balance Sheet
• Cash Flow Statement

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After getting started with Upmetrics , you can copy this food franchise business plan example into your business plan and modify the required information and download your food franchise business plan pdf and doc file. It’s the fastest and easiest way to start writing your business plan.

Download a sample food franchise business plan

Need help writing your business plan from scratch? Here you go;  download our free food franchise business plan pdf  to start.

It’s a modern business plan template specifically designed for your food franchise business. Use the example business plan as a guide for writing your own.

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How to Franchise a Restaurant: A Step-by-Step Guide

Table of contents.

If you’re looking to learn how to franchise a restaurant, congratulations are in order—your business is ready to grow. 

While it’s only one of many ways to grow, franchising your restaurant can help you reach new customers, gain brand recognition in a new region, develop merger or acquisition opportunities, and so much more. 

If you think your restaurant is a good candidate for franchising—what’s next? In this guide, we’re breaking down how to open a franchise restaurant. To clarify, we’re teaching existing restaurant owners how to start a franchise operation—how to start a franchise restaurant as the parent company. 

Explore the franchising process step-by-step below. 

Introduction to restaurant franchising

Restaurants can expand in various ways, but three of the most common growth tactics are:

• Self-funded growth (re-investing business proceeds into growth measures)
• Investor-supported expansion (growing a restaurant with outside funding)
• Franchising

The latter will be our focus in this guide. Simply put, franchising allows business owners to lean on a parent company’s resources, knowledge, and expertise as they grow a “branch” of that parent company. Meanwhile, the parent company (that’s you) gets to expand its brand, access startup capital from franchisees, and more. 

You’ve probably heard of some of the biggest names in restaurant franchising (even if you can’t find one of these franchises near you):

• Domino’s Pizza
• Outback Steakhouse (and other Bloomin’ Brands outfits)
• Olive Garden (a subsidiary of Darden Restaurants Inc.)

If these international household names are any indication, franchising has the potential to become a highly successful model for your growing restaurant business. 

Pros and Cons of Restaurant Franchising

Pros of starting a restaurant franchising, 1. brand awareness.

Creating a new brand or business is both expensive and demanding. It requires substantial funds, tools, and a dedicated team. By harnessing the established brand of the franchisor, developed over the years, you can reduce the initial cash investment burden and concentrate on delivering excellent cuisine.

2. Customer Base

Similar to brand awareness, the franchisor has cultivated popularity and demand over the years, making it the go-to choice for specific types of food such as pizzas, burgers, and tacos. Therefore, you don’t need to worry about lacking demand or spending money to acquire customers.

3. Product Market Fit & Returns

The franchisor has iterated multiple times, demonstrating a proven product-market fit (PMF). The ability to build a strong brand and sustain market presence over an extended period indicates customer satisfaction with their food. As a franchisee, this implies better returns from the outset.

Cons of Starting a Restaurant Franchising

1. high costs.

Starting a franchise restaurant isn’t feasible for everyone. The costs vary based on the chosen franchisor, ranging from $20,000 to $100,000 or more. In addition to these initial fees, there are additional expenses like real estate, equipment, staffing, marketing, and more. Learn more about the associated costs of starting a franchise here.

2. Limited Innovation

The franchise contract, aimed at protecting the parent brand and its products, imposes limitations on the franchisee’s ability to easily modify the menu or introduce new products. While some localization might be permitted upon approval, this hinders franchisees from making swift iterations to address local customer needs.

3. Poor Financial Privacy

Many franchise agreements include a provision allowing the franchisor to have full oversight of the franchise’s financial aspects. If you’re uncomfortable with others closely monitoring your financial matters, franchising might not be the ideal business venture for you.

Restaurant franchising: a step-by-step guide 

What does it take to become the next big-name franchise? Let’s explore how to franchise a restaurant in ten steps.

1. Figuring out if your restaurant franchise is feasible

Why doesn’t every popular neighborhood restaurant try to become a national (or even just regional) franchise? Because it isn’t a feasible growth model for every restaurant. 

Before you take any other steps, consider how you’ll address some of the most common setbacks restaurateurs face when trying to franchise: 

• Scale Issue : Imagine that you start another restaurant that’s identical to yours in every way: same menu, suppliers, building, and prices. You’ll essentially double your workload once you start the second. Even if you bring in a franchisee (who will have some capital and a few big ideas), you’re still at the helm of not one, but two restaurants. 
• Liquidity : While you might have an emergency fund tucked away for potential catastrophes at your restaurant (like major equipment breakdowns or ingredient price fluctuations), is that fund big enough to cover the costs of opening a new restaurant and maintain financial peace of mind (for you and your franchisee)? You simply might not have enough cash in the bank yet.
• Demand : Is there enough demand to sustain your restaurant in your new market (or your existing market if you want to start franchising locally)? If market research doesn’t indicate potential success, keep marketing your current restaurant before you start franchising. 

2. Develop your restaurant franchise business plan 

While writing a restaurant business plan deserves its own guide, your business plan should (at minimum) include:

• Your business goals
• A current financial analysis
• Short- and long-term financial forecasting
• Your brand’s mission, vision, and values

A fully-formed business plan can help you navigate the early years of franchising in two major ways:

• It’ll show franchisees (whom you’ll be courting in your franchise infancy; more on this below) that you have a sound plan for making your joint venture work.
• It can serve as a foundational document as you reach critical turning points in your franchise business. When you’re considering changing a beloved menu item or revisiting a relationship with a long-term supplier, for instance, you can return to your original plan to help make an informed, intentional decision. 

3. Securing financing for your restaurant franchise

While we discussed investor-supported growth as a distinct growth method above, it’s also one of a few ways you can secure funding for your franchise operation, along with:

• Leveraging your own capital
• Applying for a traditional business loan through a bank or credit union
• Collecting a “franchise fee” from your first franchisee

The last method is one of the most common, and it can be a hard sell for potential franchisees in the early days. But you can leverage the worth of your existing assets (and access to them) to convince franchisees to pay the entry fee.

Learn more about the cost associated with operating a franchise .

4. Establishing a legal structure

Legal experts recommend that restaurateurs establish a franchising company as a separate legal entity from their primary restaurant company. Eventually, when the paperwork is done and you’ve officially started a joint venture with a franchisee, you should have three distinct companies with their own sets of books:

• Acme Franchising, LLC (the parent company for every future franchise location)
• Acme Eats, Inc. (your original restaurant)
• Acme Eats Springfield, Inc. (your first franchise location)

Ensuring that all three of these companies are separate legal and financial entities should protect each individual business (including your original restaurant) if one of them experiences legal or financial trouble. 

5. Creating a franchise operations manual

Consistency is key for franchise businesses. A franchise operations manual will help each franchise location consistently embody the parent brand by:

• Preparing menu items the same way at all locations
• Adhering to a brand-wide dress code or uniform
• Decorating facilities or designing facilities to match company colors and standards
• Streamlining processes like HR, payroll, recruitment, and vendor negotiation

Your franchise operations manual should be as detailed as possible, but be open to modifications—as your franchise restaurant grows, so will your manual. Whenever you make changes, ensure that every franchisee has the latest version of the document. 

6. Creating a franchise operations manual

7. Finding franchisees

If your franchise becomes successful enough, you’ll likely be approached by aspiring franchisees. But as we mentioned above, this is unlikely to be the case in the early days of your franchise restaurant. You’ll probably have to recruit your first few partners yourself. 

Be as selective as possible when choosing your first franchisees. These first partners will set the tone for your growing brand and collaborate to solve early brand-wide problems.

Look for candidates with

• Significant restaurant experience —preferably in all food service roles, but specifically in management
• Enough capital to pay the franchise fee and startup costs
• A verifiable history of ethical and successful business practices

Early franchisees will be some of the first faces of your growing brand—choose them wisely. 

8. Marketing and launching your restaurant franchise

As you’re tackling all of the other steps in this list, don’t forget about the most important part of opening a franchise restaurant: telling customers about it. 

You might be too busy to tackle marketing on your own, so don’t be afraid to hire an internal employee or an outside marketing firm to take the reins. Delegating tasks you’re not an expert in (like managing social media) will free up your time for tasks that require your expertise like menu planning and vendor negotiations.

Once your marketing is up to snuff, prepare to launch your first franchise location: an event that should include all of the fanfare it so deserves. 

9. Managing and supporting your restaurant franchise network

As you continue recruiting franchisees (and as ambitious candidates start approaching you), one of your most important roles as the franchise business owner is to support your network of franchisees. 

This role deserves a guide of its own, too. But some of your responsibilities in this capacity include:

• Maintaining brand integrity at every location (I.e., making sure menus and methods are consistent across locations)
• Helping franchisees overcome operational challenges
• Administering (and maintaining) a franchisee training program
• Overseeing the finances at every location

This is just the tip of the iceberg. As your business grows, consider hiring more franchise management staff to help shoulder the burden of leadership. 

10. Measuring the success of your restaurant franchise

How do you know if your restaurant franchise is successful? You should measure your performance by evaluating:

The success of individual franchises – How is each restaurant location doing? Are they turning a profit, satisfying customers, and embodying your mission? Use a combination of quantitative and qualitative metrics to assess a branch’s success.

The success of the brand as a whole – Is the parent company making (and saving) money? Is your brand image generally positive in the market? Do people want to work at your franchise locations? These are just a few elements you can assess to determine how well your parent company is doing. 

11. Planning for the future

Business owners in all sectors must be future-minded. One way to make plans for the future, maintain a goal-oriented approach, and make decisions that secure your franchise restaurant’s future is to return to your business model. 

Remember those short- and long-term financial forecasts you made in your original business plan? As your business grows, make a habit of refreshing those forecasts regularly to maintain a constant eye on the horizon. 

Note that you can plan for more than your financial future. You can also set goals (and make plans to meet them) related to:

• Your brand’s image and reputation
• Your menu offerings
• Your ingredient sourcing
• Your human resources efforts

Staying focused on the future of your brand will help you make savvy business decisions in the present. 

CloudKitchens: Reimagining restaurants of the future

Learning how to open a franchise restaurant can be overwhelming—the learning curve is high, you need substantial start-up capital, and there are many challenges to overcome as you rise to the top. 

Future-minded franchise restaurateurs always keep their eyes open for innovative opportunities to expand their brands. As the demand increases for quality food delivery, for instance, how will you answer the call?

When you’re ready to embrace the future of delivery, partner with CloudKitchens. We help restaurant owners by providing seamless delivery, cost savings, and ghost kitchen spaces. 

Instead of navigating the muddy waters of the startup phase for months on end, CloudKitchens partners can have their delivery businesses up and running in just weeks. Now offering ghost kitchens in Austin , NYC, Orlando, Chicago, Los Angeles, and many more cities across the U.S.! Expand your restaurant business and take advantage of the bustling food delivery scene.

Learn more about how CloudKitchens is changing the game for restaurants—from small businesses to national franchises.

Explore ghost kitchen locations across the US:

• Ghost kitchens in San Francisco
• Ghost kitchens in LA
• Ghost kitchens in NYC
• Ghost Kitchens in Toronto
• Ghost Kitchens in Atlanta
• Ghost Kitchens in Dallas
• Ghost Kitchens in Chicago
• Ghost Kitchens in Denver
• Ghost Kitchens in Miami

Investopedia. What Is a Franchise, and How Does It Work? https://www.investopedia.com/terms/f/franchise.asp  

Investopedia. 10 Biggest Restaurant Companies. https://www.investopedia.com/articles/markets/012516/worlds-top-10-restaurant-companies-mcdsbux.asp   

NerdWallet. How to Write a Business Plan, Step by Step. https://www.nerdwallet.com/article/small-business/business-plan   

US Small Business Administration. Franchise Fees: Why Do You Pay Them and How Much Are They? https://www.sba.gov/blog/franchise-fees-why-do-you-pay-them-how-much-are-they   

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Franchise Restaurant Business Plan: 10 Facets of Your Plan

Starting a franchise restaurant business comes with a great deal of work and planning. You’ll need skills in restaurant management , restaurant data analytics , and forecasting for restaurants . You’ll need financial support and projected success. To bring it all together, you should have a franchise restaurant business plan.

You don’t need a business plan to start a restaurant, but oh boy will your job be easier with a plan in place. It gives you a sense of security in your future, with sets of guidelines for any situation at the ready. Read on through this BinWise blog to learn how to write and work with a franchise restaurant business plan.

What Is a Franchise Restaurant Business Plan?

So, what is a franchise restaurant business plan? It’s a detailed guide to the things you’ll need to do for your business, and the facts and figures to know. It’s similar to many other types of business plans, including:

• Cafe franchise business plans
• Cafe business plans
• Standard restaurant business plans
• Brewery business plans

All in all, most business plans follow the same structure. It’s a structured plan to give you the tools to run a successful business. There are going to be lots of parts of your franchise restaurant business plan that are unique to your business. There will also, however, be many parts that are standard across business plans. 

10 Facets of the Franchise Restaurant Business Plan

Setting up your restaurant franchise business plan starts with the basic steps. As you work through the sections of a business plan, you’ll find yourself going in-depth in all the important places. A business plan structure gives you the tools to find the strengths, weaknesses, and opportunities of your new business plan. 

These 10 facets of the franchise restaurant business plan will get you started. Some of these steps are unique to franchises. Others are basic parts of every business plan. They all come together to show you how to plan for your franchise restaurant business. As you follow through this sections you’ll learn about the process of running a successful franchise restaurant.

10. Executive Summary

Your executive summary is the place to define your business and give a brief, succinct overview of your business needs and plans. This is your introduction to frame your business plan.

9. Franchise Disclosure Document

The franchise disclosure document, or FDD, is the legal work of declaring your franchise business. It’s helpful to complete this as part of your business plan work. 

8. Menu Components

The restaurant menus part of your franchise restaurant business plan are vital for the legal startup process. You need to share exactly what ingredients you’ll be needing in your supplies. If you're doing something unique, like table d’hote menus , you'll need to plan that out entirely.

7. Franchise Operations Manual

The franchise operations manual is the guidebook of how your franchise restaurant locations will operate. This is a comprehensive guide, with daily, weekly, monthly, and yearly plans written out in full.

6. Industry Analysis

Your industry analysis should be focused on all franchise restaurants. This is a broad scope for your first analysis among the several analysis projects on this list.

5. Market Analysis

Your market analysis is all about your customer base. This is the place to dive into what customers will be looking for from your franchise, and how you can provide for them.

4. Marketing Plans 

Your marketing plans come up right after the market analysis because the two go hand in hand. Your marketing plans should be curated to reach your target market of customers.

3. Competitive Analysis

A competitive analysis is the third of the analysis projects, and the last one in your business plan. It serves to show you the franchises in your immediate area, and how you can be better than them.

2. Management and Staffing Organization

Management and staffing organization showcases the functions within your business. This is especially important for organizing each franchise location.

1. Financial Planning

The financial planning section is the place to write up your budget, financial situation, and any possible needed assistance. This part is particular for being shown to potential investors. 

"Key Takeaway: You don’t need a business plan to start a restaurant, but oh boy will your job be easier with a plan in place. It gives you a sense of security in your future, with sets of guidelines for any situation at the ready."

Frequently Asked Questions About Business Plans for Franchising a Restaurant

Creating a franchise restaurant business plan comes with a lot of heavy mental work. You’ll face the tough questions of your franchise business, and need answers to continue. You’ll have to plan for each possibility, and prepare your plans for your franchise partners. It’s a lot to manage. Our answers to these frequently asked questions will help you get started and remain steadfast.

How Do I Write a Business Plan for a Franchise?

Some key tips to use when it comes to writing a business plan for a franchise include:

• Defining your target audience, so you have a clear idea of who you’re creating this business for
• Setting business marketing goals, to set up a marketing plan that will lead to direct, tangible results through content marketing , email marketing , and more
• Develop your marketing strategy, so that marketing can become an instinctual, regular part of your franchise business
• Build up your sales strategy, to learn how to sell from a franchise perspective, as opposed to a singular restaurant perspective
• Identify your KPIs, or key performance indicators, to be able to measure your success and areas for growth
• Continue to monitor your business, to adjust your business plan and strategies as needed

These tips will guide you as you write your franchise restaurant business plan. They work in conjunction with many of the steps outlined in this blog, to support and grow your franchise restaurant business plan.

Do I Need a Business Plan To Open a Franchise?

You don’t technically need a business plan to open a franchise, but your business will do much better with a business plan. When you dive into a business without a structured plan with defined sections and clear guidance, you put your business at risk. You’ll reach points where you’re not sure what to do, and you’ll have to struggle to find out. A business plan is the answer.

How Do I Build a Successful Franchise Business?

To build a successful franchise business, you need a steady plan, a great team, and patience. Your business plan will pave the way for success with defined steps to take. Your team is vital for managing your franchise locations and supporting you in specified ways. Patience is a must for any restaurant, bar business , or hospitality industry job. It will bring you through hard work.

How Do I Write a Food Business Plan?

To write a food business plan, for a restaurant, bar, or even a country club, follow the basic steps and map your business in your mind. The basic steps of a business plan can come from this blog. You can also dive into restaurant business plans or a catering business plan . Mentally plan on top of these phsyical plans to develop your restaurant concept .

Your Franchise Restaurant Business Plan: Details to Run Your Business 

Writing up your franchise restaurant business plan is one of the most tangible steps toward starting up your franchise. It shows you what you’ll need to focus on with particular attention. It gives you a place to organize finances, marketing, market analysis, and so much more. 

When you’re ready to create your franchise business with a quality plan, reach out to BinWise and BlueCart . The BinWise Pro beverage inventory program , paired with the BinScan app , gives you peace of mind when you do inventory . BlueCart’s order management software simplifies your order management system . 

Franchise Business Plan Template

If you want to start a franchise business or expand your current one, you need a business plan.

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their franchise businesses.

Below are links to each section of your franchise business plan template:

Next Section: Executive Summary >

Franchise Business Plan FAQs

What is the easiest way to complete my franchise business plan.

Growthink's Ultimate Franchise Business Plan Template allows you to quickly and easily complete your Franchise Business Plan.

Where Can I Download a Franchise Business Plan PDF?

You can download our franchise business plan PDF template here . This is a business plan template that will help you with how to create a franchise business plan in PDF format.

What Is a Franchise Business Plan?

A business plan provides a snapshot of your franchise as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why Do You Need a Business Plan for a Franchise?

If you’re looking to start a franchise or grow your existing franchise you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your franchise in order to improve your chances of success.    Your franchise business plan is a living document that should be updated annually as your business grows and changes.

What Are the Sources of Funding for a Franchise?

Franchises are usually funded through small business loans, personal savings, credit card financing and/or angel investors.

FRANCHISE BUSINESS PLAN OUTLINE

• Franchise Business Plan Home
• 1. Executive Summary
• 2. Company Overview
• 3. Industry Analysis
• 4. Customer Analysis
• 5. Competitive Analysis
• 6. Marketing Plan
• 7. Operations Plan
• 8. Management Team
• 9. Financial Plan
• 10. Appendix
• Franchise Business Plan Summary

Start Your Franchise Plan Here

Other Helpful Business Plan Articles & Templates

Restaurants | How To

How to Franchise a Restaurant in 11 Steps

Published January 9, 2024

Published Jan 9, 2024

REVIEWED BY: Mary King

WRITTEN BY: Ray Delucci

This article is part of a larger series on Restaurant .

• 1. Assess If Franchising is a Fit
• 2. Craft A Franchise Business Plan
• 3. Create a Franchise Disclosure Document
• 4. Build Out an Operation Manual
• 5. Establish Your Legal Structure
• 6. Determine Fee Structure
• 7. Build Out Financial Targets
• 8. Market Your Franchise Availability
• 9. Select Your Franchisees
• 10. Support & Train
• 11. Monitor Your Locations
• Why You Should Franchise
• Examples of Franchise Costs
• Pros & Cons of Franchising

Bottom Line

Some of the most successful food businesses in the restaurant industry come in the form of franchised restaurants. The franchise model allows the owner of a food business (the franchisor) to grow their brand and revenue while a third party (the franchisee) undertakes the operational management of the franchised business. If your restaurant concept is streamlined, easily replicated, appeals to a wide customer base, and is profitable, you might be wondering how to franchise your restaurant.

In this article, I break down the steps it takes to franchise a restaurant and go into detail on the process you can expect, plus how to tell if your restaurant is one that would do well with the franchise model. I also give the pros and cons of restaurant franchising and give insight into the best practices you should adopt. Let’s dive in.

Step 1: Assess If Franchising Is a Fit

Knowing if your restaurant can be a franchise is the first very important step in this process. Franchising is not a model for every restaurant, and this is for good reason. Answering a few questions can help you determine if franchising your restaurant is a good idea.

Is your restaurant profitable?

The first step in knowing if you should franchise your restaurant is if it is profitable and successful financially. Profit margins between 5%–8% are usually a good indicator your restaurant is performing well, especially closer to 8%. That being said, when you are successful as a restaurant, and there is demand for more of your product, then that is when you should feel comfortable branching out.

Can your concept scale?

The next part in assessing if a franchise model is right for you is your ability to scale your food. The most successful franchise models serve the same great quality food consistently across various locations. This could be one of the biggest struggles in making a franchise restaurant business, as it takes time, organization, and an operator who is very in tune with why the restaurant does well. So having standardized recipes, replicable systems of managing the business and serving guests, and access to comparably sourced ingredients are just a few of the many aspects you need to replicate your restaurant.

Do you have the funds to franchise?

Lastly, being liquid enough to cover your bills and support expanding into another location is absolutely vital to whether you can franchise or not. The costs to build out a restaurant are still there, albeit supplemented by the franchisee you bring with you. But there will still be financial obligations, and you will need to help fund the new business as your franchisee works on getting it up and running.

Step 2: Craft a Franchise Business Plan

Your franchise business will be a separate entity from your original restaurant. So you’ll still have your original business (i.e., “Awesome Restaurant, LLC”), and you’ll add a separate business to handle the franchising aspect (i.e., “Awesome Restaurant Franchising, LLC”).

The next step to creating your franchise business is writing a franchise business plan . This business plan articulates the overall vision of your franchise model and gives your franchisees a blueprint for financial success. A franchise business plan is also how you will ensure that you, as an operator, have thought of everything and are not making this decision on a whim.

Your franchise business plan should include:

• The structure of your franchise, including leadership as the business grows
• Target market
• Key demographics
• Regions expected to branch out into
• Supporting data for key expansions
• Growth projections
• Final expectations

The final step in the business plan should be articulating how you can support your franchise owners when they come under your network. Often, franchisees are people with capital and a willingness to start in the food industry but many lack the basic knowledge to open a restaurant on their own. With a solid business plan in place, you offer not only confidence but the guiding documentation they will use to understand and execute your concept’s goals and the brand vision you may have.

Step 3: Create a Franchise Disclosure Document

The Franchise Disclosure Document (FDD) is a legal document that provides information to potential franchisees. The FDD describes the terms of the relationship between the franchisor (you) and future franchisees.

Your FDD should include:

• Details about the franchisor (you)
• Details about the management team that prospective franchisees can expect to interact with
• Required start-up costs needed to start a franchised restaurant, along with
• A list of royalty percentages and other licensing fees

This FDD will also contain the relevant trademarks, patents, and other company information that is specific to your business that franchisees would be privy to. Sourcing restrictions, territory expansion, public figures related to the restaurant, and any other item that could have financial implications in owning a business are also typically included.

As you can imagine, this legal document is extensive and is key for doing business within the law and with good standing. If you didn’t consult with a franchise attorney when writing your business plan, you absolutely need one to help create your FDD. You can find franchise attorneys from a simple internet search, or find attorneys that specialize in business formation and franchise disclosure on legal services sites like LegalZoom.

Step 4: Build Out an Operation Manual

When you first started your restaurant , you likely wrote an employee handbook and recipe book to ensure consistently great quality in your food and service. Take this same mindset and apply it to your franchise business. You’ll need to create a guide for franchisees to ensure consistency and lay out the expectations for anyone running a business with your brand name attached.

An operations manual that is intensive, easy to follow, and offers guidance on the major tasks a franchisee will perform is something that will help elevate your business and determine how well you grow and succeed at gaining multiple franchise locations.

Your operations manual should be able to share how exactly to perform certain tasks and the philosophies behind why you approach problems and other tasks within the business, including:

Staff Management

• Hiring, onboarding, and training staff
• Performance expectations
• Promotion expectations
• Management hierarchy for each location
• Termination process
• Any other relevant employee-specific information

Food & Beverage Handling

• Food preparation
• Vendors and vendor sources
• Standardized recipes
• Philosophies on the overall guest dining experience

Operational Proficiency

• Specific contracts with repair services
• Equipment maintenance
• Safety system checks (such as fire suppression)
• Opening and closing the restaurant
• Inventory and ingredient tracking
• Performing restaurant forecasting
• Performing restaurant audits

You basically want to give your franchisees the playbook of success that you had with your guests in your first restaurant. This manual is the key to how your restaurants will function, so being as detailed as possible in how the people leading these businesses should perform is vital.

Step 5: Establish Your Legal Structure & Other Items

Establishing how your franchise business is legally set up is key. Standard practice in the industry dictates that you often will have your own parent company that establishes the franchise network. You then want to have each business be its own legal entity—for example, having your own original restaurant and the newly expanded restaurant separate. This helps protect each individual business and keeps them all in standing order financially in case one business is confronted with a difficult situation.

The legal structure is important as it allows your businesses to operate with peace of mind while also protecting each of them in their own right as operating businesses.

Other documents you may want to file for are trademarks and restaurant-specific patents you may come up with. These specific legal filings keep the successful parts of your business that drive business yours and help avoid any bad faith actions in regards to copying or taking away from your business. All of this should be done with the oversight of a lawyer or someone familiar with restaurant and individual property law.

Related: LLC vs S corporation vs C corporation: Which Is Best for Your Business?

Step 6: Determine Fee Structure

The next step is to determine the fees and other charges the franchisee will incur and pay you while operating. You need to be able to decide whether you will charge your franchisees only a royalty on top-line sales, for marketing support, or just an upfront fee. This is very important, as it gives you the game plan on how you will make money in the franchise process.

In this process, you will also look at some other important criteria. Many franchise programs require an individual franchisee to have a net worth of a certain amount to qualify. This would mean their cash and assets minus any debt they may have. For example, Subway requires a franchisee to have a net worth of $80,000 to participate in their franchise program. They also require applicants to have $30,000 in liquid assets alone to be given a shot at owning and operating their own location.

It is important to note that the percentage of top-line sales requested may change by concept. For example, Taco Bell has a 5% rate for monthly fees to operate, and this is built into the contract your franchisee will sign when starting out. It is up to you to determine the rate you would like to charge, but do note higher rates may make some franchisees wary. So, a rate that financially makes you a profit but also gives the franchisee a chance to make money is what you should aim for.

Step 7: Build Out Your Financial Targets

Knowing the financial goals you will have for your franchisee leaders is key to their success and your ability to track them. The good news is that the basis of franchising restaurants is the success of your own business, so copying this over should not be too difficult of a task. But you do need to be aware of the costs of goods, the market pricing that you will have on items, and how much it will cost to operate based on that individual location and the geographical location it sits in.

With franchised restaurants, it is very common to perform restaurant audits and have monthly financial goals that involve profit and loss (P&L) . So having targets on food cost , liquor cost, labor cost , total sales, and any other important financial markers you value is essential to ensure your restaurants perform to where they need to.

You also need to have a plan on how to support your franchisee partners to hit these goals. You need to remember that some franchisee partners are joining your brand because they want support and guidance on how to build a successful restaurant. Having clear financial goals and a roadmap on how to support their ability to achieve them is key in order to find success for all parties involved.

Step 8: Market Your Franchise Availability

Letting people know that you are offering a franchise opportunity is key to attracting potential franchisees. You will also want to highlight and champion why it is such a good prospect to franchise out a piece of your business. Some of the items below I have seen in the market are examples of what you should do to make potential franchisees more interested in your brand:

• Add a franchisee information page to your website. This page will sell the reason why choosing your business model to franchise is a good decision. Take, for example, Tim Horton’s page , where the coffee giant sells the perks of franchising out a location.
• Advertise in franchise industry publications (franchise listing websites, Franchise Times , Franchising Magazine USA , etc.).
• Consider social media marketing. Targeted ads on Facebook , Instagram, and other social media sites will allow you to reach your desired demographic while spreading the word more organically. Another site to share your opportunity is LinkedIn. Consider a post on the franchise opportunity and share it within your network to get possible leads.
• Publishing a press release on your franchise opportunities is another great way to get the word out. Local newspapers and online journals can share this as well, so having a formal announcement for traditional media centers to publish is key.
• Share the word at industry nights, local culinary American Culinary Federation meetings, and other events where industry and business professionals will gather. Work on your franchise pitch and be comfortable sharing it with others in the food space.
• Learn How to Write a Press Release in 6 Steps
• Demystifying the Press Release Format (+ Free Template)

Step 9: Select Your Franchisees

Maybe one of the most important steps, if not the most important step, in franchising restaurants is finding leaders who will take the reins and help grow your brand. The people you choose to franchise your restaurant to are literal extensions of your brand. They represent your food, your image, and how your product is sold to customers and are in control when you are not around. Your vetting process for choosing who gets to franchise your restaurant needs to be one that is intentional and finds the best candidates.

First, being enthusiastic about your business and wanting to grow it is the first aspect you should look for in someone. You will want your first franchisees to also have a proven track record in restaurants and food business management, as it is these first few that will lay the groundwork for the rest of your franchise network. They should meet all capital and asset requirements that we discussed earlier, and finally, should be able to prove a track record of good business practices.

Step 10: Support & Train

Training your franchisees will allow you to get their businesses running in the quickest time possible. It will also allow you to instill the methods, practices, and philosophy you have when running your restaurant. The training for franchisees should be in-depth and offer them the ability to truly learn how to run your restaurant concept. It would be wise to have a training program laid out by the time you’ve selected your partners. This program should be able to detail their daily tasks, expectations for customer experience and end product, and how to manage higher-level tasks for the businesses they run.

You can start with support by helping with hiring and training staff and teaching your franchise partners how to vet and hire employees. You should also teach them and support them in marketing and how they can get their business out there. Helping set up systems— point-of-sale (POS) systems , audio systems, security systems, staff and customer safety systems—and ensuring their facility is in working condition is vital in this process as well. While some franchise programs do not offer this level of in-depth training, you should definitely consider it for your first few franchises.

Your goal is to replicate the dining experience that has made you so successful that you can actually begin to franchise out. Do not waste the opportunity with a lack of support, especially when franchising your first few locations.

Step 11: Monitor Your Locations

The last step in franchising your restaurant is monitoring each location for success. This can be done by requiring restaurant monthly audit reports by each franchisee, reviewing sales, and also by reviewing customer reviews. Additionally, performing in-person visits and sitting down to dine as a customer lets you see how your locations are doing.

The more effort you put in, the more you can catch, and the better you can help build out the number of franchise restaurants you have to offer. While franchising your restaurants takes the pressure of managing multiple locations, your involvement in guiding all of your franchisees is what will determine the amount of success you have overall.

Why You Should Franchise Your Restaurant

Many popular restaurant and food businesses are actually franchises; McDonalds, Subway, Coffee Bean & Tea Leaf, to name just a few. Plenty of new businesses—like Crisp & Green and Big Chicken —start franchising every year. In a franchise restaurant system, the franchisor offers up their brand and proven business model for a franchisee to use to set up their own business. The franchisor benefits from franchising fees and increasing market expansion while the franchisee benefits from starting a a business that has already proven to be successful.

A financial benefit of franchising your restaurant is that, as the franchisor, your royalty payments and franchise fees typically come from top-line sales. This means you receive your fees from the overall sales of your franchises, not the bottom-line profit; you will be paid your fees no matter how well (or poorly) the franchise is managed. Finally, if you plan on exiting your business, you’ll be able to sell a business that has the added revenue stream of franchise royalties, not just the profit margin of a traditional restaurant. The upside for franchising your restaurant is very high, and when done right, it can be financially lucrative.

Examples of Restaurant Franchise Costs

There are many examples out there of popular restaurants that have gone on to franchise and expand their brands rapidly. The common denominator is that these restaurant brands have been able to offer crave-able dining experiences that are consistent in each location, no matter how large the growth has been. Check out the real-world cost examples for these popular restaurant brands.

These are the big, recognizable brands. But every day smaller brands choose to expand via franchising. If you are considering converting your successful restaurant into a franchise business, you can look at franchise brands like Toastique or Crisp & Green for inspiration.

Pros & Cons of Franchising Restaurants

While franchising a restaurant can be lucrative, there can be some drawbacks to the process if you are not careful. It can also be a challenge if the right systems are not in place to manage the growth you will experience when franchising your restaurant. Below we share some of the pros and cons of making the decision to franchise your business.

Pro: Exponential Growth Options

The ability to grow your brand and increase your sales with the help of other food business professionals is why franchising your brand is such a popular option in the first place. One only has to look at any major national brand that employs the franchise method to see how lucrative it can be. By expanding your business at a much faster rate than you would on your own, you get to introduce your brand to more customers and create a larger customer base to sell to. This will lead to more sales and more opportunities to grow as your brand is recognized more and more.

Con: Lack Of Consistency

While this con can be avoided with the right process in place, if your consistency in great products is not there, then your brand’s image can be put in a negative light. Your business is ultimately in the hands of another. With this decision comes a risk that you need to decide to take.

If you are not able to effectively lead your franchisees into a space where they can effectively replicate the product you sold originally, then the risk of failure and alienating customers is high. It only takes one bad experience to drive a customer away, and if word gets out that the food and drink being served is not good, then customers will be wary to show up and support your brand.

Pro: Lower Cost for Brand Growth

Another great reason to franchise your restaurant is the fact that it will cost less with the funds from the franchisee that joins your program. You are relying on using some capital from the franchisee when building out the space, and they will often be responsible for a sizable amount of the cost it will take to get the business off the ground. This allows you to open up new units or locations with less of a cost barrier and can prove to be very useful if demand for your restaurant is high and you need to open more locations in a shorter time window.

Con: Large Time Investment Upfront

While the goal of franchising your restaurant concept is to relieve the workload of growing your brand, it will require a lot of time upfront. This can be a challenge for restaurant operators who are already running their own business. The process of franchising a restaurant is its own full-time job, as you can see from the steps we laid out above. To make your new locations succeed, you need to ensure they are running efficiently and delivering quality products. This takes away time from other tasks and can be a large lift for single operators who are already very busy with their original concept.

Pro: Major Profit Opportunity

The last big pro to franchising your restaurant is the fact that over time, with the right growth plan and success, you can make a large amount of profit off your restaurant brand. Not only will this come from increased exposure, but the more units you open, the more royalty fees you collect. Earning off of a set royalty fee is a much more efficient way to bring in a profit, and it also makes exiting your restaurant brand much easier if you ever decide to sell the company you have built. The long-term gains of franchising a restaurant brand can be very lucrative when done right.

Franchising a restaurant that has high demand from a local customer base is a great idea if the concept can be replicated and deliver consistently great customer experiences. That being said, there is a lot of effort that goes into franchising a restaurant and ensuring that the partners you bring in to run your concepts have the tools they need to succeed. Use the 11 steps above to understand the franchise process and what you can expect to do if you decide your business is ready to take this exciting next step in its evolution.

About the Author

Ray Delucci

Ray Delucci is a graduate of The Culinary Institute of America with a Bachelor’s in Food Business Management. He has experience managing restaurants in New York City, Houston, and Chicago. He is also the host of the Line Cook Thoughts Podcast, where he interviews and shares the stories of foodservice workers. Ray currently works in food manufacturing and food product development.

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How to Write a Restaurant Business Plan in 2024 (Step by Step Guide with Templates)

A restaurant business plan is a framework that guides you to plan and forecast every element of restaurant management and operations.

This includes anything from your restaurant's menu design , location, financials, employee training , and a lot more.

Creating a solid business plan is important, as it helps:

• Transform your restaurant ideas into reality.
• Boosts entrepreneurial success by 16% (Harvard Business Study) .
• It equips you to navigate challenges before they arise.
• Attracts potential investors.

Planning is key to restaurant success. Without a plan, you're more likely to join the 26% of restaurants that fail within a year.

Create a business plan to set yourself up for success.

Here's how to get started. 

What is a restaurant business plan? 

Before writing a business plan, it is important to understand its fundamentals.

It serves as a roadmap for starting and running your restaurant , making it easy for outside parties, such as investors, to understand your objectives, vision, and plan of action for your restaurant.

The length and level of detail of business plans vary, ranging from brief synopses to large papers. Investors can benefit from clear insights and additional information provided by beginning with a concise plan and working their way up to a detailed one.

In short, a thorough description of the resources allocated to the success of your restaurant should be included in your business plan.

Steps to include in your business plan 

Your restaurant and mission statement needs to reflect your brand and goals, but you don't have to start from scratch.

The Eat App Restaurant Business Plan template , created by industry professionals and packed with insider information, is your go-to manual for creating a profitable business plan.

Your finalized business plan should have 11 essential elements, no matter how you write it. Continue reading below. 

1. Executive summary

A restaurant business plan should always begin with an executive summary. Why?

• 80% of venture capitalists say they read the executive summary first.
• 62% of investors say they would not continue reading a business plan if the executive summary did not capture their interest.
• A strong executive summary can increase the likelihood of securing funding by up to 40%.

An executive summary not only acts as the introduction to your restaurant business plan samples but also as a summary of the entire idea.

The main aim of an executive summary is to draw the reader (oftentimes an investor) into the rest of your business plan.

The executive summary also helps you envision the identity of your restaurant which essentially shapes the customer experience and sets you apart from competitors.

To establish a distinct identity, you need to focus on c ommon elements of an executive summary, including:

• A mission statement  
• Proposed concept development
• Cuisine selection
• The overall execution
• The potential costs
• Expected return on investments (ROI)

Let's take a more in-depth look at the concept development, cuisine selection, and mission statement.

Further reading

• How to write a restaurant executive summary

Concept Development

Selecting the type of restaurant, service style, and atmosphere is the first step towards creating a unique dining experience. Whether you envision a sample menu for a:

• cozy, intimate bistro
• bustling quick-service deli
• fast-casual restaurant
• fine dining establishment

Your concept should reflect your passion and expertise in the industry.

Cuisine Selection

The cuisine you select for your restaurant can significantly influence its success.

Choosing the appropriate cuisine is vital for distinguishing your establishment from competitors and attracting your target market.

To make an informed decision, consider factors such as:

• Market demand
• Expertise and passion
• Ingredient availability
• Competition
• Profitability
• Cultural fit
• Seasonality
• Dietary restrictions and trends

In the highly competitive restaurant industry, keeping track of current and emerging cuisine trends can be a significant advantage.

Creating a mission statement

A well-constructed mission statement communicates the purpose, values, and goals of your restaurant to potential investors and customers alike.

A mission statement serves as a guiding light for decision-makers and employees, fueling their efforts to achieve your restaurant’s objectives.

To create an impactful mission statement, consider the following steps:

• Identify the purpose of the restaurant.
• Contemplate the brand’s image.
• Account for the target audience.
• Incorporate company values.
• Ensure brevity and comprehensiveness.

Related content:  How to Write a Restaurant Mission Statement  

Remember, your mission statement should not only differentiate your restaurant from competitors but also resonate with your target market .

2. Company description

This is where you carefully introduce the company in the restaurant business plan. Include the name of the restaurant you are launching in this field along with its address, phone number, and other important information. Then, also include the owner's information as well as a synopsis or explanation of their background. The restaurant's legal position and its short- and long-term objectives should be outlined in the second section of the company description. To demonstrate your understanding of the changes in the local food business and the reasons why the most independent restaurant investors will be successful in this market, please submit a brief market research.

Here's an example of the page layout:  

Company Description

Restaurant Name: [Restaurant Name]

Location: [Restaurant Address]

Contact: [Restaurant Phone Number] | [Restaurant Email Address]

Owner: [Owner Name]

Experience: [Owner Name] has over [Number] years of experience in the restaurant industry. They have worked in various roles, including [List of Roles]. They are passionate about food and creating a memorable dining experience for their guests.

Legal Standing: [Restaurant Name] is a [Type of Legal Entity] registered in [State/Province].

3. Market analysis

The market analysis portion of the restaurant business plan is typically divided into three parts.

3.1 Industry analysis

What is your target market? What demographics will your restaurant cater to?

This section aims to explain your target market to investors and why you believe guests will choose your restaurant over others.

Comprehending your target market is key to customizing your restaurant offerings to their preferences and needs.

By diving into demographics, preferences, dining habits, and trends, you can fine-tune your concept and marketing strategy to reach and appeal to your target audience effectively.

An example of analyzing your target market

  Comprehending your target market is key to customizing your restaurant offerings to their preferences and needs.

Demographics and preferences

Identifying your primary target market involves considering factors such as:

For example, a neighborhood with a high concentration of families might prefer a family-friendly restaurant with a diverse menu catering to various age groups and dietary preferences.

Conversely, a trendy urban area with a predominantly young and affluent population may gravitate towards upscale dining experiences and innovative cuisine.

Cultural and ethnic backgrounds also have a significant impact on restaurant preferences, with people from different backgrounds having distinctive tastes and customs that influence their dining choices.

By thoroughly understanding the demographics and preferences of your target market, you’ll be better equipped to create a restaurant concept that resonates with them and ultimately drives success.

Dining habits and trends

As the restaurant industry continues to evolve, staying informed about dining habits and trends is crucial for adapting your offerings and attracting customers.

For example, the rise of online ordering and delivery services has significantly influenced dining habits, with many consumers seeking the convenience of having their meals delivered to their doorstep.

Health trends have also had an impact on dining habits, with an increasing number of individuals seeking healthier options when dining out.

• How to find your restaurant's target market

3.2 Competition analysis

It's easy to assume that everyone will visit your new restaurant first, so it is important to research your competition to make this a reality.

What restaurants have already established a customer base in the area?

Take note of everything from their prices, hours, and service style to menu design to the restaurant interior.

Then explain to your investors how your restaurant will be different.

3.3 Marketing analysis

Your investors are going to want to know how you plan to market your restaurant. How will your marketing campaigns differ from what is already being done by others in the restaurant industry?

How do you plan on securing your target market? What kind of offers will you provide your guests? Make sure to list everything.

The menu is the most important part of a restaurant's debut. Your restaurant wouldn't be able to operate without it.

You most likely don't have a final draft at this time, but you should aim to create a mock-up for your restaurant business plan. You can choose a design that you can envision yourself using and add your logo to the mock-up.

• Top Free Restaurant Menu Makers

There are several resources available online if you need assistance with menu design or don't want to hire a designer.

But the price should be the most important component of your sample menu. The cost research you've completed for investors ought to be reflected in your prices. They will have a clearer idea of your restaurant's intended price range as a result.  You'll quickly see how important menu engineering can be, even early on.

5. Employees

The company description section of the restaurant business plan briefly introduces the owners of the restaurant with some information about each. This section should fully flesh out the restaurant's business plan and management team.

The investors don’t expect you to have your entire team selected at this point, but you should at least have a couple of people on board. Use the talent you have chosen thus far to highlight the combined work experience everyone is bringing to the table.

6. Restaurant design

The design portion of your restaurant business plan is where you can really show off your thoughts and ideas to the investors. If you don’t have professional mock-ups of your restaurant rendered, that’s fine.

Instead, put together a mood board to get your vision across. Find pictures of a similar aesthetic to what you are looking for in your restaurant.

The restaurant design extends beyond aesthetics alone and should include everything from restaurant software to kitchen equipment. 

7. Location

The location you settle on for your restaurant should be well aligned with your target market (making it easier to cater to your ideal customer) and with your business plans.

At this stage in the process, it's not uncommon to not have a specific location in mind - but you should at the very least have a few options to narrow down.

Pro Tip: When you approach your investors about potential locations, make sure to include as much information as possible about each venue and why it would be ideal for your brand. 

Example for choosing an ideal location

Choosing the ideal location for your restaurant is a pivotal decision that can greatly influence your success. 

To make the best choice, consider factors such as foot traffic, accessibility, and neighborhood demographics.

By carefully evaluating these factors, you’ll be better equipped to maximize visibility and attract your target market.

Foot traffic and accessibility

Foot traffic and accessibility are important factors in selecting a location that will attract customers and ensure convenience.

A high-traffic area with ample parking and public transportation options can greatly increase the likelihood of drawing in potential customers.

Additionally, making your restaurant accessible to individuals with disabilities can further broaden your customer base and promote inclusivity.

Neighborhood demographics

Analyzing neighborhood demographics can help you determine if your restaurant’s concept and cuisine will appeal to the local population.

Factors such as income levels, family structures, and cultural diversity can all influence dining preferences and habits.

By understanding the unique characteristics of the neighborhood, you can tailor your offerings and marketing efforts to resonate with the local community.

Conducting a market analysis can be a valuable step in this process.

To gather demographic data for a particular neighborhood, you can utilize resources such as the U.S. Census Bureau’s American Community Survey and reference maps.

Armed with this information, you can make informed decisions about your restaurant’s concept, menu, and pricing, ensuring that your establishment is well-positioned for success within the community.

Conducting market research will further strengthen your understanding of the local demographic.

8. Market overview

The market overview section is heavily related to the market research and analysis portion of the restaurant business plan. In this section, go into detail about both the micro and macro conditions in the area you want to set up your restaurant.

Discuss the current economic conditions that could make opening a restaurant difficult, and how you aim to counteract that. Mention all the other restaurants that could prove to be competition and what your strategy is to set yourself apart.

9. Marketing

With restaurants opening left and ride nowadays, investors are going to want to know how you will get word of your restaurant to the world.

The next marketing strategy and publicity section should go into detail on how you plan to market your restaurant before and after opening. As well as any plans you may have to bring a PR company on board to help spread the word.

Read more: How to write a restaurant marketing plan from scratch

10. External help

To make your restaurant a reality, you are going to need a lot of help. List any external companies or software you plan on hiring to get your restaurant up and running.

This includes everything from accountants and designers to suppliers that help your restaurant perform better, like POS systems and restaurant reservation systems .

Explain to your other potential investors about the importance of each and what they will be doing for your restaurant.

11. Financial analysis

The most important part of your restaurant business plan is the financial section . We would recommend hiring professional help for this given its importance.

Hiring a trained accountant will not only help you get your own financial projections and estimates in order but also give you a realistic insight into owning a restaurant.

You should have some information prepared to make this step easier for the accountant.

He/she will want to know how many seats your restaurant has, what the check average per table will be, and how many guests you plan on seating per day.

In addition to this, doing rough food cost calculations for various menu items can help estimate your profit margin per dish. This can be achieved easily with a free food cost calculator. 

• Important restaurant metrics to track

A well-crafted restaurant business plan serves as a roadmap to success, guiding every aspect of the venture from menu design to employee training.

By carefully considering each component of the plan, aspiring restaurateurs can increase their chances of securing funding, attracting customers, and achieving their long-term goals.

Remember, a restaurant business plan is not just a document to satisfy investors; it is a living tool that should be revisited and updated regularly as the business grows and evolves.

By staying committed to the plan and adapting it as needed, restaurateurs can ensure that their culinary dreams have a solid foundation for success.

Growth Marketing Manager at Eat App

Saif Alnasur used to work in his family restaurant, but now he is a food influencer and writes about the restaurant industry for Eat App.

Reviewed by

Nezar Kadhem

Co-founder and CEO of Eat App

He is a regular speaker and panelist at industry events, contributing on topics such as digital transformation in the hospitality industry, revenue channel optimization and dine-in experience.

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Franchise Business Plan Template

Written by Dave Lavinsky

Franchise Business Plan Outline

• Franchise Business Plan Home
• 1. Executive Summary
• 2. Company Overview
• 3. Industry Analysis
• 4. Customer Analysis
• 5. Competitive Analysis
• 6. Marketing Plan
• 7. Operations Plan
• 8. Management Team
• 9. Financial Plan

Start Your Franchise Plan Here

Franchise Business Plan

You’ve come to the right place to create your business plan.

We have helped over 10,000 entrepreneurs and business owners with how to create a franchise business plan to start or grow their franchises.

How To Write a Franchise Business Plan & Sample

Below is are links to each section of a franchise business plan example to help you start your own franchise business:

• Executive Summary – This section provides a high-level overview of your business plan. It should include your company’s mission statement, as well as information on the products or services you offer, your target market, and your business goals and objectives.
• Company Overview – This section provides an in-depth look at your company, including information on your franchise’s history, franchise business model, ownership structure, and management team. You will also include a copy of your franchise agreement.
• Industry Analysis – In this section, you will provide an overview of the industry in which your franchise will operate.
• Customer Analysis – In this section, you will describe your target market and explain how you intend to reach them. You will also provide information on your customers’ needs and buying habits.
• Competitive Analysis – This section will provide an overview of your competition, including their strengths and weaknesses. It will also discuss your competitive advantage and how you intend to differentiate your franchise from the competition.
• Marketing Plan – In this section, you will detail your marketing strategy, including your marketing initiatives and promotion plans. You will also discuss your pricing strategy and how you intend to position your own business in the market.
• Operations Plan – This section will provide an overview of your store’s operations, including your store layout, staff, and inventory management.
• Management Team – In this section, you will provide information on your management team, their experience, and their roles in the company.
• Financial Plan – This section includes your company’s financial statements (income statement, balance sheet, and cash flow statement). It also includes information on how much funding you require and the use of these funds.

Next Section: Executive Summary >

Franchise Business Plan FAQs

What is a franchise business plan.

A business plan is a plan to start and/or grow your franchise. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can  easily complete your business plan using our Franchise Business Plan Template here .

What Are the Main Types of a Franchise?

About any type of business can be franchised. Franchises are categorized according to different factors like investment level, franchisor’s strategy, business operations, and marketing and relationship models. The most common types of franchises are job franchise, product or distribution franchise, business format franchise, investment franchise, and conversion franchise.

What Are the Main Sources of Revenues and Expenses for a Franchise?

The main source of revenue for a business franchise are franchise fees and royalty fees. Some also earn from other fees like distribution fees, site assistance fees, training fees, technologies, and rebates.

The key expenses for franchises are inventory, payroll, marketing and advertising, rent and loans.

How Do You Get Funding for Your Franchise?

Among the most common sources of funding for a franchising business are commercial bank loans, Small Business Administration (SBA) loans, personal savings and friends and family loans/gifts. There are also lenders that can supplement other loans with equipment financing and business lines of credit for franchise businesses.

This is true for a business plan for a franchise restaurant, a business plan for franchise store, or any other franchise business plans.

Where Can I Get a Franchise Business Plan PDF?

You can download our free franchise business plan template PDF here . This is a sample franchise business plan template you can use in PDF format.

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• Restaurant Business Plan Example

Posted : September 6, 2022

Category : How To

• Blog Articles

Making a business plan is important no matter what industry you’re in. If you’re opening a restaurant, your business plan needs to reflect the unique needs and services that your restaurant provides. This guide will walk you through the process of writing a business plan if you’re starting a business as a restaurant owner.

Executive Summary

Every business plan should begin with an executive summary, and a restaurant is no different. This section should provide a high-level description of your restaurant, its services, and your overall goals. Aim for around 500 words or less since you’ll want this section to be an easy read for lenders, investors, and potential business partners.

Restaurant Description

This section is really where your restaurant business plan truly stands out from other businesses. For starters, you’ll include your business name and geographic location, but you’ll also want to cover items such as:

• Restaurant size and seating capacity
• Service style (casual dining, fine dining, counter, drive-thru, etc.)
• Operating hours
• Style of cuisine (American, Italian, Asian fusion, etc.)
• Ambiance and atmosphere (décor, music, etc.)

You might also include any unique selling points that can add to your business. For example, if you’re located near a business complex or college, this may give you a greater chance of doing business during lunch hours.

Sample Menu

When making a business plan for other industries, it’s usually common to include product descriptions. The same is true for a restaurant, though this means creating a sample menu to help others understand what you’re selling.

Your sample menu should abide by several considerations, such as:

• Tailoring your design and descriptions to your customer base
• Including descriptions that capture what the item is
• Using the same branding as the rest of your restaurant

You might also use call-out boxes or other design features to highlight unique menu items or direct attention to high-revenue items that can help expand your business.

Target Market Analysis

If you’re starting a business for the first time, you’ll need to understand who you’re trying to reach. This section should include some information about your target market. Think through questions like:

• What type of diner would your restaurant attract?
• Are there any trends related to your type of restaurant or cuisine?
• How is your restaurant different from others in your area?

If your restaurant occupies a specific niche, it might be helpful to talk about how you intend to capitalize on these trends.

Marketing Strategy

Next, you’ll discuss your marketing strategy. For restaurants, this might include digital marketing as well as distributing your menu through a direct mail campaign.

Make sure your marketing strategy matches your restaurant brand and that you lead your customers to actions that fit your dining options. For example, you might use digital marketing tools that prompt viewers to place a to-go order online or direct them to the reservations page of a fine-dining restaurant.

Chefs and Managers

A restaurant business plan should communicate who’s in charge. This approach means explaining the credentials of the business owner (or owners in the event of a partnership).

If your restaurant is tailored around the culinary contributions of a unique chef, then you’ll want to include their credentials when making a business plan. What is their background, and what is their specialty? These features can add value to your restaurant and can give you a greater sense of legitimacy.

Financial Projections

When you’re first starting a business, your financial projections won’t be much more than an educated guess. And that’s okay. At the very least, make sure that you tabulate your anticipated costs, such as supplies, payroll, equipment, and commercial real estate.

Your financial projections should aim to cover these costs and develop a plan for generating profits within the course of business.

Financial Requests

The chances are that you’ll need additional funding to get your restaurant off the ground. This section is particularly important if you’re presenting your business plan to a lender or investor. Make sure to include a specific number, which will help others understand how much money you’ll need to open your doors.

Why Not Choose a Franchise?

Franchise owners also have to create business plans for their restaurants, but it’s a lot simpler when the franchisor guides the startup process.

Why not consider applying to become a franchise owner? Franchise Gator offers a locator tool that you can use to find opportunities near you . Use this tool today and get started as the owner of your own restaurant.

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How to Write a Restaurant Business Plan: Complete Guide

• January 31, 2023
• Food & Beverage

👇 Check all our resources on restaurants 👇

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) to open a restaurant , you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in the business plan of your restaurant . Use this template to create a complete, clear and solid business plan that get you funded. Let’s dive in!

1. Restaurant Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.

Why do you need a business plan for a restaurant?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write your restaurant’s executive summary?

Provide a precise and high-level summary of every section that you have included in your business plan. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.

Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.

The executive summary usually consists of 5 major sub-sections:

• Business overview : start by introducing your restaurant and the products and services that you intend offer. Mention the type of restaurant you intend to open (such as fine dining, casual dining, fast casual, ghost restaurant, café, pub, etc.), the menu and prices. Also add here the total number of customers your restaurant can host at once, its location, and some details on the surface and the design layout
• Market analysis : summarise the market where you will operate and provide a brief about the target audience , market size , competitors , etc. No need to provide granular data here, save it for the Market Overview section later on (or the appendix)
• People : introduce your restaurant’s management and employee structure. Provide a brief (no more than a couple of sentences each) of the knowledge and experience of the team. Also, speak about your hiring plans.
• Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can include here a chart depicting your key financials statements
• Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last?

Restaurant Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Restaurant Business Overview

This is the section where you will provide details about your restaurant and the chosen business model. You must address some important questions that lenders and/or investors generally ask .

Here is a quick list of some of those questions you must address:

• What is the rationale behind you opening this type of restaurant today?
• What’s the restaurant’s location and why did you select that location?
• Why did you select the type of restaurant you want to open?
• What will be the products and services you will offer?
• What will be your pricing strategy and why?
• What will be your opening days / hours?
• How many customers can you serve at once (capacity)?
• What is the surface of your restaurant? How is the restaurant designed (incl. dining rooms and kitchen area)?
• What will be the legal structure of your company?

a) History of the Project

Any business must have two components:

• Passion & experience of the business owner
• Rationale behind starting this type of business today

Passion & experience

You may or may not have prior experience. If you have experience, speak about it and how it will help you to run your business. For instance, you may have been a restaurant manager in a popular restaurant for 6 years, and now you want to start your own restaurant and use your knowledge to run it more efficiently.

However, if you don’t already have experience, that’s fine. You must demonstrate your passion and some industry knowledge (you may have conducted thorough research).

What is your restaurant’s mission?

For example, there may not be any fine dining restaurant in your area where wealthy residents or tourists can enjoy an upscale meal experience in a sophisticated and elegant environment.

But that’s not all: your market must be suitable for your business to thrive.

For instance, if you are planning to open a fine dining restaurant in a low-income area, it is probably not going to attract many customers. Similarly, if the population of the target market has a high percentage of people preferring takeaway/delivery food options because of their busy lifestyle, a fine dining restaurant may not be a good idea.

b) Business Model

This sub-section of the Business Overview will explain your business model. Describe the following points briefly:

• Will you buy an existing restaurant and do some remodeling, or will you start a new restaurant and design it from scratch?
• Will you buy a franchise or do you plan to open an independent restaurant instead?
• The type of restaurant you want to open and why

What are the different types of restaurants?

There are multiple types of restaurants. Some of them that you may consider include, but are not limited to:

• Fine Dining : They provide upscale meal experience with several courses. The atmosphere is sophisticated and classy. They can be franchises or individually owned. Of course, they are quite expensive.
• Casual Dining : This type of restaurants serve customers at their tables and the food prices are moderate. The atmosphere is not very sophisticated. Though the décor is often unique, it can be based on the type of food a restaurant serves.
• Fast Casual : These restaurants will make your food available quickly, but the food is healthier than fast food. Also, food is cheaper than casual dining. They have a counter service (you must collect food from the counter) and the décor is more contemporary.
• Ghost Kitchens : ghost kitchens (or “dark kitchen”) restaurants do not have a storefront, a dining room, signage, or décor. They operate using food delivery partners and take orders through online ordering or phone ordering.
• Fast Food : Think of Taco Bell , KFC, Burger King, etc. The food is relatively cheap and is served quickly. Food ingredients are usually preheated or precooked, and food delivery happens over the counter or via a drive-through window.
• Buffet Style : These restaurants are similar to the Family Style restaurants but with a fundamental difference. People get to select from a selection of food that are made available against a fixed price. However, customers need to serve themselves and they are allowed to return to the buffet for as many times as they want.

c) Products & Services

Of course, the products you will offer in your restaurant will depend on the type of restaurant you are opening. A Buffet Style restaurant, for example, usually prefer specialty cuisines like Indian, pizza, home cooking, Chinese, etc. Similarly, if you are opting for a Diner, you will most likely offer fried foods (fish & chicken), breakfast items, burgers, etc. at a low cost.

It is a good idea to give a list of food and drinks that you want to sell. Depending on the scale of your operations, you may have too many menu items. It is not possible to list every item on your menu, but make sure that you are listing the most important ones. If you specialize in one or a few specific dishes, mention that, too.

d) Pricing Strategy

In this sub-section, you must explain the pricing strategy of your restaurant. If you have multiple competitors (in the same niche) in the vicinity, you cannot have huge pricing variation, especially for the similar food items. Pricing will, of course, depend on the type of restaurant you are opening, and the food items you are offering.

For example, if you are sourcing the raw materials only from organic farms that do not use fertilizers and pesticides, your menu items will have a higher price tag.

Similarly, you cannot expect to charge expensive Fine Dining-like prices if you are opening a Casual Dining restaurant instead.

Create a pricing table and ensure to provide an average price range for your products. You don’t need to provide exact pricing for each product. Use price ranges instead.

Offering a pricing table is important because your pricing strategy will allow investors to tie your pricing strategy with your financial projections .

e) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Restaurant Market Overview

A complete understanding of the market where you want to operate is important for the success of your business.

For example, if your intentions are to open a classy Fine Dining restaurant in a low-income area, you will not attract enough customers. Similarly, if you want to open a fast-food restaurant in a place where family dining is more popular, it will be a disaster.

Therefore, you must cover here 3 important areas:

• Market size & growth : how big is the restaurant industry in your area? What is its growth rate (or decline rate) and what are the factors contributing to its growth or decline?
• Competition overview : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
• Customer analysis : who is your target audience? What type of restaurants do they prefer? How regularly do they visit restaurants for dining? What type of food do they prefer? How much do they spend at restaurants on average?

a) Restaurant Industry Status Quo

How big is the restaurant industry in the us.

According to Finance Online , there were over 1 million restaurants (all types combined) in the US in 2021. The industry recovered post a 60% drop in sales in April 2020 due to the pandemic, and recorded an annualised market size of over $1 trillion dollars in July 2022 ($1,033 billion)..!

How big is the restaurant industry in your area?

Once you provide the overall picture of the US, divert your attention to the area where you want to operate. It might not be possible to find region or area-specific studies, and hence, you must estimate the market size .

For example, if there are 1,000,000 restaurants in the country with total annual revenue of $1 trillion, the average annual revenue for each establishment is around $1 million.

Therefore, if the area where you want to open your restaurant has 30 restaurants, you can safely assume that the restaurant industry in your area is worth approximately $30 million.

How fast is the restaurant industry growing in the area?

You must show the expected growth rate of the restaurant industry in your area. This information may not be available via online research papers. However, assessing the growth rate will not be difficult as you can use metrics such as the number of competitors in your area.

For instance, if there were 25 restaurants in 2018 and 30 restaurants in 2022, the average annual growth rate would be 5%.

What are the current restaurant market trends in your area?

It is vital to understand the trends of the restaurant industry in your area. Understanding trends will allow you to devise marketing strategies.

Understanding trends won’t be easy. You must conduct research and talk with your target audience. Additionally, you must also study your competitors to understand their target audience, the products they sell, etc.

Some common questions you may ask the target audience include:

• What type of restaurants do they prefer?
• At what time of the day do they prefer to visit a restaurant (breakfast, lunch, dinner)?
• How frequently do they visit restaurants?
• What type of foods do they usually order?

You can ask as many questions as you need to understand the evolving trends.

b) Competition Overview

Studying your competitors’ business models is vital. You need to understand what makes them successful or why they fail. A clear understanding of their food offerings, marketing strategies, etc., will allow you to provide a better service.

If your competitors are offering nearly the same products & services, then what is their market share and how do they market their products & services to attract new customers?

It is always a good idea to do some research (if necessary, physically visit your competitors without revealing your business intentions) and create a comparative table summarizing their product & service offerings, marketing strategies, target audience, etc.

Here is a sample table that you can use:

The table you will create will depend on what information you need and want to include based on your proposed business model.

Restaurant SWOT Analysis

Try to provide a SWOT analysis . It must be crisp and highly focused. SWOT stands for Strength, Weakness, Opportunities, and Threats.

Here is a sample that you can use as a reference:

• Strength: 8 years of senior manager experience in a reputed Michelin Star Fine Dining restaurant operated & owned by a renowned chef and a master’s degree in Hospitality management, experienced senior chef with 22 years of experience
• Weakness: Startup cost, zero reputation
• Opportunities: An affluent neighborhood with a rising demand for fine dining establishments, only one fine dining restaurant in the 3-mile radius
• Threats: Increasing cost of raw materials because of geo-political turmoil restricting international trade routes

A clear understanding of your strengths and weakness along with opportunities and threats in the real market can help you to design your marketing strategy. It also helps potential investors to assess the risk and reward profile of your business.

c) Customer Analysis

This is the sub-section where you will provide a detailed analysis of your target audience.

Some important points that you must include in your customer analysis include:

• Age and gender distribution (you can get local demographic data from census.gov )
• Per capita expenditure on dining
• Frequency of restaurant visits
• Average monthly income and disposable income
• Average bill size per visit
• Average yearly or monthly spending on food at restaurants
• Type of restaurants preferred
• The expected price range for food
• Inclination towards loyalty programs & free perks
• Things they dislike about existing restaurants and what they expect to be improved

You can add as many data points as required to validate your business decision. The idea here is to display your deep understanding of the target audience and their needs, preferences, and expectations. This knowledge can help you to tailor your products & services to attract new customers and increase sales .

4. Sales & Marketing Strategy

This is the segment where you outline your customer acquisition strategy. Try to answer the following questions:

• What is your USP ?
• What are the different marketing strategies you will use?
• How do you intend to track the success of your marketing strategy?
• What is your CAC or customer acquisition cost ?
• What is your marketing budget?
• What introductory promos and offers do you intend to provide for attracting new customers?

Let’s expand a bit on a few questions below:

What marketing channels do restaurants use?

A few marketing channels that restaurants typically use are:

• Word-of-mouth, recommendations,
• Local listing & reviews (e.g. Google reviews)
• Online booking platforms (e.g. TheFork , Opentable , etc.)
• Influencer marketing
• Print media, etc.

It is not necessary to use all channels. You can start by focusing on a few of them and include other marketing strategies later instead.

What is your unique selling proposition?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.

A few examples of USPs can be:

• Organic raw materials : we source organic farm fresh raw materials from local farmers
• Authentic Indian food : prepared by a Michelin Star chef from India
• Family run restaurant : run by a family, helping families connect over delicious food
• Price : affordable food & menu for the quality vs. competitors
• Location : the restaurant is located in a busy street, thereby attracting many customers who can easily glance over the menu
• Uniqueness : you may be the only tapas-style restaurant around, in an area where people are fond of this type of restaurant

5. Management & People

You must address 2 things here:

• The management team and their experience / track record
• The organizational structure : different team members and who reports to whom?

a) Management

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your restaurant business.

Describe their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.

It is also important that you explain how their experiences and qualifications help you in implementing the restaurant you are proposing. If they have specialized training, achievement, and experience (such as a degree in hospitality management, 3 Michelin stars, experience in developing menus for 5-star hotels, etc.), add that information.

b) Organization Structure

Even if you haven’t already hired a restaurant manager, server, chef, head cook, busser, cashier, bartenders, and other relevant staff members, you must provide here a chart of the organizational structure defining the hierarchy of reporting.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan for a restaurant.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your restaurant is an attractive investment.

There should be 2 sections to your financial plan section:

• The startup costs of your project (if you plan to start a new restaurant, renovate your restaurant, etc.)
• The 5-year financial projections

a) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your restaurant . For a restaurant, startup costs are all the expenses you incur before you open your restaurant and start making sales . These expenses typically are:

• The leasing deposit for the space (if you rent) or to buy the real estate (if you buy)
• Renovations and improvements
• Equipment & appliances
• Furniture & tableware

Of course, the startup costs depend on a number of factors, like the size of your restaurant, its location, the facilities, the menu, etc.

On average, it costs $484,000 to $685,000 to open a casual restaurant with 150 seats (2,500 sq. ft.) in the US.

Note that these costs are for illustrative purposes and may not be fully relevant for your business. For more information on how much it costs to open and run a restaurant, read our article here .

b) Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model for your restaurant.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in the business plan of your restaurant.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even ?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 15%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of covers (customers or orders) over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing, cost of raw materials (food supplies) and your sales volume. Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.

7. Use of Funds

This is the last section of the business plan of your restaurant. Now that we have explained what your restaurant’s business model and concept are, what is your menu, your marketing strategy, etc., this section must now answer the following questions:

• How much funding do you need ?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio ?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any restaurant business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit and the renovation?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our restaurant financial model template , you won’t have any issues answering these questions.

For the use of funds, we also recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

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When starting a business—no matter what type of business that may be—a business plan is essential to map out your intentions and direction. That’s the same for a restaurant business plan, which will help you figure out where you fit in the landscape, how you’re going to differ from other establishments around you, how you’ll market your business, and even what you’re going to serve. A business plan for your restaurant can also help you later if you choose to apply for a business loan .

While opening a restaurant isn’t as risky as you’ve likely heard, you still want to ensure that you’re putting thought and research into your business venture to set it up for success. And that’s where a restaurant business plan comes in.

We’ll go through how to create a business plan for a restaurant and a few reasons why it’s so important. After you review the categories and the restaurant business plan examples, you can use the categories to make a restaurant business plan template and start your journey.

Why you shouldn’t skip a restaurant business plan

First-time restaurateurs and industry veterans alike all need to create a business plan when opening a new restaurant . That’s because, even if you deeply understand your business and its nuances (say, seasonal menu planning or how to order correct quantities), a restaurant is more than its operations. There’s marketing, financing, the competitive landscape, and more—and each of these things is unique to each door you open.

That’s why it’s so crucial to understand how to create a business plan for a restaurant. All of these things and more will be addressed in the document—which should run about 20 or 30 pages—so you’ll not only have a go-to-market strategy, but you’ll also likely figure out some things about your business that you haven’t even thought of yet.

Additionally, if you’re planning to apply for business funding down the line, some loans—including the highly desirable SBA loan —actually require you to submit your business plan to gain approval. In other words: Don’t skip this step!

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How to write a restaurant business plan: Step by step

There’s no absolute format for a restaurant business plan that you can’t stray from—some of these sections might be more important than others, for example, or you might find that there’s a logical order that makes more sense than the one in the restaurant business plan example below. However, this business plan outline will serve as a good foundation, and you can use it as a restaurant business plan template for when you write your own.

Executive summary

Your executive summary is one to two pages that kick off your business plan and explain your vision. Even though this might seem like an introduction that no one will read, that isn’t the case. In fact, some investors only ask for the executive summary. So, you’ll want to spend a lot of time perfecting it.

Your restaurant business plan executive summary should include information on:

Mission statement: Your goals and objectives

General company information: Include your founding date, team roles (i.e. executive chef, sous chefs, sommeliers), and locations

Category and offerings: What category your restaurant fits into, what you’re planning to serve (i.e. farm-to-table or Korean), and why

Context for success: Any past success you’ve had, or any current financial data that’ll support that you are on the path to success

Financial requests: If you’re searching for investment or financing, include your plans and goals here and any financing you’ve raised or borrowed thus far

Future plans: Your vision for where you’re going in the next year, three years, and five years

When you’re done with your executive summary, you should feel like you’ve provided a bird’s eye view of your entire business plan. In fact, even though this section is first, you will likely write it last so you can take the highlights from each of the subsequent sections.

And once you’re done, read it on its own: Does it give a comprehensive, high-level overview of your restaurant, its current state, and your vision for the future? Remember, this may be the only part of your business plan potential investors or partners will read, so it should be able to stand on its own and be interesting enough to make them want to read the rest of your plan.

Company overview

This is where you’ll dive into the specifics of your company, detailing the kind of restaurant you’re looking to create, who’s helping you do it, and how you’re prepared to accomplish it.

Your restaurant business plan company overview should include:

Purpose: The type of restaurant you’re opening (fine dining, fast-casual, pop-up, etc.), type of food you’re serving, goals you have, and the niche you hope to fill in the market

Area: Information on the area in which you’re opening

Customers: Whom you’re hoping to target, their demographic information

Legal structure: Your business entity (i.e. LLC, LLP, etc.) and how many owners you have

Similar to your executive summary, you won’t be going into major detail here as the sections below will get into the nitty-gritty. You’ll want to look at this as an extended tear sheet that gives someone a good grip on your restaurant or concept, where it fits into the market, and why you’re starting it.

Team and management

Barely anything is as important for a restaurant as the team that runs it. You’ll want to create a section dedicated to the members of your staff—even the ones that aren’t yet hired. This will provide a sense of who is taking care of what, and how you need to structure and build out the team to get your restaurant operating at full steam.

Your restaurant business plan team and management section should have:

Management overview: Who is running the restaurant, what their experience and qualifications are, and what duties they’ll be responsible for

Staff: Other employees you’ve brought on and their bios, as well as other spots you anticipate needing to hire for

Ownership percentage: Which individuals own what percentage of the restaurant, or if you are an employee-owned establishment

Be sure to update this section with more information as your business changes and you continue to share this business plan—especially because who is on your team will change both your business and the way people look at it.

Sample menu

You’ll also want to include a sample menu in your restaurant business plan so readers have a sense of what they can expect from your operations, as well as what your diners can expect from you when they sit down. This will also force you to consider exactly what you want to serve your diners and how your menu will stand out from similar restaurants in the area. Although a sample menu is in some ways self-explanatory, consider the following:

Service : If your brunch is as important as your dinner, provide both menus; you also might want to consider including both a-la-carte and prix fixe menus if you plan to offer them.

Beverage/wine service: If you’ll have an emphasis on specialty beverages or wine, a separate drinks list could be important.

Seasonality: If you’re a highly seasonal restaurant, you might want to consider providing menus for multiple seasons to demonstrate how your dishes (and subsequent purchasing) will change.

Market analysis

This is where you’ll begin to dive deeper. Although you’ve likely mentioned your market and the whitespace you hope to address, the market analysis section will enable you to prove your hypotheses.

Your restaurant business plan market analysis should include:

Industry information: Include a description of the restaurant industry, its size, growth trends, and other trends regarding things such as tastes, trends, demographics, structures, etc.

Target market: Zoom in on the area and neighborhood in which you’re opening your restaurant as well as the type of cuisine you’re serving.

Target market characteristics: Describe your customers and their needs, how/if their needs are currently being served, other important pieces about your specific location and customers.

Target market size and growth: Include a data-driven section on the size of your market, trends in its growth, how your target market fits into the industry as a whole, projected growth of your market, etc.

Market share potential: Share how much potential there is in the market, how much your presence will change the market, and how much your specific restaurant or restaurant locations can own of the open market; also touch on any barriers to growth or entry you might see.

Market pricing: Explain how you’ll be pricing your menu and where you’ll fall relative to your competitors or other restaurants in the market.

Competitive research: Include research on your closest competitors, how they are both succeeding and failing, how customers view them, etc.

If this section seems like it might be long, it should—it’s going to outline one of the most important parts of your strategy, and should feel comprehensive. Lack of demand is the number one reason why new businesses fail, so the goal of this section should be to prove that there is demand for your restaurant and show how you’ll capitalize on it.

Additionally, if market research isn’t your forte, don’t be shy to reach out to market research experts to help you compile the data, or at least read deeply on how to conduct effective research.

Marketing and sales

Your marketing and sales section should feel like a logical extension of your market analysis section, since all of the decisions you’ll make in this section should follow the data of the prior section.

The marketing and sales sections of your restaurant business plan should include:

Positioning: How you’ll describe your restaurant to potential customers, the brand identity and visuals you’ll use to do it, and how you’ll stand out in the market based on the brand you’re building

Promotion: The tools, tactics, and platforms you’ll use to market your business

Sales: How you’ll convert on certain items, and who/how you will facilitate any additional revenue streams (i.e. catering)

It’s likely that you’ll only have concepts for some of these elements, especially if you’re not yet open. Still, get to paper all of the ideas you have, and you can (and should) always update them later as your restaurant business becomes more fully formed.

Business operations

The business operations section should get to the heart of how you plan to run your business. It will highlight both internal factors as well as external forces that will dictate how you run the ship.

The business operations section should include:

Management team: Your management structure and hierarchy, and who is responsible for what

Hours: Your hours and days of operation

Location: What’s special about your location that will get people through the door

Relationships: Any advantageous relationships you have with fellow restaurateurs, places for sourcing and buying, business organizations, or consultants on your team

Add here anything you think could be helpful for illustrating how you’re going to do business and what will affect it.

Here, you’ll detail the current state of your business finances and project where you hope to be in a year, three years, and five years. You’ll want to detail what you’ve spent, what you will spend, where you’ll get the money, costs you might incur, and returns you’ll hope to see—including when you can expect to break even and turn a profit.

Financial statements: If you’ve been in business for any amount of time, include existing financial statements (i.e. profit and loss, balance sheet, cash flow, etc.)

Budget: Your current budget or a general startup budget

Projections: Include revenue, cash flow, projected profit and loss, and other costs

Debt: Include liabilities if the business has any outstanding debt or loans

Funding request: If you’re requesting a loan or an investment, lay out how much capital you’re looking for, your company’s valuation (if applicable), and the purpose of the funding

Above all, as you’re putting your financials together, be realistic—even conservative. You want to give any potential investors a realistic picture of your business.

Feel like there are other important components but they don't quite fit in any of the other categories (or make them run too long)? That’s what the restaurant business plan appendix section is for. And although in, say, a book, an appendix can feel like an afterthought, don’t ignore it—this is another opportunity for you to include crucial information that can give anyone reading your plan some context. You may include additional data, graphs, marketing collateral (like logo mockups), and more.

Start Your Dream Business

The bottom line

Whether you’re writing a restaurant business plan for investors, lenders, or simply for yourself and your team, the most important thing to do is make sure your document is comprehensive. A good business plan for a restaurant will take time—and maybe a little sweat—to complete fully and correctly.

One other crucial thing to remember: a business plan is not a document set in stone. You should often look to it to make sure you’re keeping your vision and mission on track, but you should also feel prepared to update its components as you learn more about your business and individual restaurant.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

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How to: Open a Franchise Restaurant

Understanding Franchise Restaurants

A franchise restaurant operates under the banner of a parent company, allowing the franchisee to utilize the franchisor's trademark, systems, and processes. Popular examples include international fast food franchises like  McDonald's and  Taco Bell , as well as full-service brands such as  Denny's and  Pizza Hut .

Roles and Responsibilities:

• Franchisors provide the brand, operational systems, and ongoing support.
• Franchise owners pay royalties and are expected to adhere to the franchisor’s guidelines while managing day-to-day operations.

Benefits over Starting from Scratch:

• Access to a proven business model and brand recognition.
• Support in terms of training, marketing, and operational guidance.
• Typically higher success rates compared to independent restaurants due to established customer loyalty.

A Simple Guide to Opening a Franchise Restaurant

• Assess the brand’s market recognition
• Review the support offered
• Understand the financial commitments, like start-up costs, required
• Evaluating profitability and sustainability includes analyzing market trends and financial performance of existing franchises.  
• Franchise fees : One-time payments to the franchisor.
• Startup costs : Expenses for equipment, decor, and initial inventory.
• Real estate : Costs associated with leasing or purchasing property.
• Bank loans, specifically  SBA loans .
• Seeking investors.
• Personal assets, though some franchisors require proof of liquid assets.  
• All the critical details about the franchisor
• The obligations of the restaurant owner
• The legalities of the agreement. Setting up the franchise contract properly is crucial to ensure compliance and protect both parties' interests.  
• Site Selection and Development : The visibility and accessibility of the location can greatly influence the restaurant's success.  Franchisors often provide significant support in selecting the ideal location that adheres to brand-specific demographics and market research, like your target audience.   
• Training and Support: Comprehensive training programs cover everything from operations to customer service, ensuring franchisees meet the brand’s standards. Continuous support from the franchisor helps you adapt to evolving business needs and market conditions. While initial training is typically covered by the franchise fee, ongoing or additional training sessions might cost extra. Franchisors may charge for specialized support services or consultations that go beyond the standard support package.  
• Marketing and Grand Opening: Effective marketing strategies are crucial for a successful launch. Franchisors typically assist with grand opening promotions and provide marketing assistance, like campaign setup, to attract and retain customers.  
• Operational Management:  Daily management in franchise ownership involves: Modern POS (point of sale) systems and technology solutions provided by franchisors help streamline these operations, ensuring efficiency and consistency across locations.

Common Challenges and Considerations

Franchisees may face challenges such as high initial costs, adherence to strict franchisor guidelines, and managing customer expectations. Navigating these challenges successfully involves:

• Careful financial planning and management of your business plan.
• Maintaining open lines of communication with the franchisor.
• Continuously engaging with other franchisees to share insights and strategies.

Ongoing Fees and Costs Associated with Franchising a Restaurant

Once you open your franchise restaurant, understanding and managing the  ongoing costs is crucial to maintaining profitability and operational efficiency. There are some ongoing expenses associated with running a franchise restaurant to be aware of:

• Royalty Fees : These are fees paid to the franchisor based on a percentage of the weekly or monthly gross income. The percentage can vary widely between different franchises, typically ranging from 4% to 8% of gross sales.
• Marketing Fees: Franchisees are often required to contribute to a national marketing fund. This fee, usually calculated as a percentage of sales (ranging from 2% to 5%), goes towards national advertising and promotional campaigns designed to benefit all franchise locations
• Operational Expenses : Costs include labor, which is often the largest expense, inventory, utilities, maintenance, and other supplies necessary for daily operations. Efficient management of these costs is vital to maintaining the profitability of the franchise.
• Renewal Fees : Some franchises charge a renewal fee if the franchisee decides to renew the franchise agreement after it expires. This fee covers the cost of continuing the franchise relationship and may include updates to systems or processes required by the franchisor.

Understanding these ongoing costs and planning for them in the business budget is essential for the financial health and success of a franchise restaurant. Proper management of these expenses helps ensure that the franchise can continue operating profitably while maintaining the standards expected by the franchisor and appreciated by customers.

Combine Your Skill with Passion to Set Yourself Up for Success

Opening a franchise restaurant is a significant but rewarding investment. It requires careful planning, adherence to established procedures, and active engagement with the franchisor. Prospective franchisees should conduct in-depth research and seek professional advice when necessary.

As you contemplate getting into the franchise business, let  the IFA stand as your guide with support and resources. We combine our  industry expertise with our  resources to assist and empower potential franchisees, providing tailored advice and support at every stage. The franchising world is ready to welcome you—so  take the first step towards your own franchising story!

• Business Plans Handbook
• Business Plans - Volume 02
• Restaurant Franchise Business Plan

Restaurant Franchise

BUSINESS PLAN

STEPHENSON'S, INC., dba REUBEN'S DELI

413 S. Kraut Ln. Akron, OH 43905

Stephenson's, Inc. operates Reuben's Deli, a franchise delicatessen. This business plan features a discussion of factors unique to a franchise, such as the history of its performance in other areas, the applicability of the concept in the new area, special trademark and image issues, and the advantages of a franchise as opposed to an independently-owned restaurant.

RISK FACTORS

Company status, proprietary features, community benefits, the product, competition, planned development, sales and advertising programs, management duties and responsibilities, financial estimates, the company.

Stephenson's, Inc. was formed as a Delaware Corporation in July of 1995. The Company was formed to establish operating Reuben's Deli restaurants in Akron, OH. The Company will develop this concept, which currently has a time-tested, proven market acceptance of its food and beverage group(s). In addition to other considerations, the Company in its evaluations elected to execute this concept based upon the simplicity of the concept overall, the training by the Franchisor, the support offered by the local area developer group, and the ease and costs of entry and the likelihood of success at the store level under the various market conditions and environments. Initial efforts in this development shall be primarily focused upon the commitment and execution of an initial Reuben's Restaurant located in the Akron, OH area. It is the intention of the company to establish its headquarters in Akron, OH during its first year of operation.

Company History

Stephenson's, Inc. was co-founded by Caren and Eddie Stephenson. Mrs. Stephenson acts as President and Mr. Stephenson acts as Executive Vice President. Both are Directors of the Company. The Company is a start-up situation, however, and it should be recognized that it also represents an extension of a successful 23 year-old chain of more than 400 operating restaurants. Further, the company will have very effective guidance provided by the local Area Developers who will be working day to day with the Company to help insure its success. The Area Developers are Mr. Wilson and Mr. Jones. Mr. Wilson has extensive experience in the food and beverage industry. Mr. Wilson was formerly with Wendy's International Inc. of Columbus, OH and worked for its chairman Mr. Dave Thomas for over five (5) years. He was also Co-Founder and President of Calibre Inc., a publicly held company in the business of building and operating various restaurant concepts. These concepts include Chuck E. Cheese Pizza Time Theaters, RAX Restaurants, and G.D. Ritzy's. In addition, Mr. Wilson began his restaurant career with his family as they owned and operated one of the first Kentucky Fried Chicken restaurants and a full-service family restaurant known as Wilson's Drive-In located in Lima, OH. Mr. Jones has over 15 years' experience in developing startup and ongoing businesses. Mr. Jones has worked closely with successful entrepreneurs, including the nationally recognized billionaire and insurance magnate Clement Stone; America's leading real estate educator and author, Dr. Albert J. Lowry; and others, including Charles J. Givens, ZigZiglar, and Mr. Bob Harrington (Chaplin of Bourbon Street). Mr. Jones spent six years doing national platform speaking engagements on investment strategies, business management, and motivational topics. He has extensive experience in formulating and executing start-up businesses for others as well as himself. He has spent the past eight years involved with law firms specializing in tax planning strategies to high net worth individuals and clients of these law firms. Additionally, Mr. Jones taught attorneys and CPAs methods of tax and estate planning with the use of both domestic and off-shore trusts.

Company Objectives

The Company's first priority is to establish its first operating Reuben's Deli restaurant. Prior to opening the first restaurant, the principals shall obtain complete training from both the parent company, Reuben's Inc. of Boise, Idaho, and the local Area Developer, Yukon, Inc. Second, it will continue to pursue sites for the future development of subsequent restaurants. The Company has entered into an Agreement with Reuben's Inc. to build and develop additional franchise units.

It is the long-term objective of the Company to obtain adequate financing for the project, identify sites, and develop successful Reuben's Deli restaurants. The selection of this specific concept was made as a result of the likelihood of success in a new business venture of this type. Significant risks that are usually inherent in start-up businesses are reasonably mitigated as a result of Reuben's history and track record. Reuben's Inc. has developed a 24-year track record of success and profitability with over 400 operating franchises. The Company believes that the timing of this sector of the food market is most desirable. Food industry experts agree that a specialty sandwich with unique flavors offered at competitive prices will be the fastest growing segment for the next ten (10) years. However, in all events, there are certain risks that need to be addressed appropriately since the Company is directly competing for transactions with other existing restaurant chains as well as independent operations.

Operating History

Stephenson's, Inc. is in its first year of operation. It has located and established its headquarters in Akron, OH. The Company has submitted a lease proposal on a site located at_____________________. Further consideration is under evaluation for a site in___________, OH. It is anticipated that construction and completion of the initial company store shall be not later than_______________. Stephenson's, Inc. will expedite additional efforts during 1995 and into 1996 to build and operate additional company-owned stores and increase the depth and strength of management of the company.

Dependence on Management

The success of the Company will depend on the ability of management to operate daily. The Company plans upon growing its base of management as needed and when it becomes financially feasible. There is no assurance that management can do this in a timely or profitable manner.

Competition

All aspects of the retail food industry are highly competitive, but the competition in the quick serve food segment is particularly intense. The Company will be competing with a large number of other quick serve food stores. Some of the competitors have greater financial resources and more established reputations that this company. However, the Reuben's chain does have a 24-year successful operating history.

Dependence on Company Support Personnel

The Company's ability to develop and manage franchises will require significant time commitments from management. The Company intends upon staffing two persons by the end of the second year to manage the franchise with its owners. The placement of these persons will be difficult in light of the competition. Therefore, no assurance can be given that the Company will attract or be able to retain qualified individuals to satisfy the Company's requirements for such personnel. In such an event, the management may need to continue to maintain and operate the stores and their growth.

Dependence on Manufacturers and Suppliers

The Company has no production facilities for food and equipment and is dependent upon obtaining the services of outside manufacturers. Although the Company anticipates that it will be able to purchase sufficient products, equipment, and agreements with approved manufacturers, no assurance can be given that the Company will be able to always obtain such products, equipment, or agreements.

The Company has entered its first full year of operations and has started to develop relationships with area professionals to advise the Company in the areas of Real Estate, Banking, Accounting, and Legal needs. Its activities include the establishment of initial store financing. The Company has also recently submitted a proposal to acquire a lease in Akron, OH. Upon obtaining a commitment for financing for its first store, the Company will then execute a Franchise Unit Development Agreement with Reuben's, Inc. Currently, the Company has executed a Unit Development Agreement with Reuben's and has paid $_____.00 in franchise fees to the franchisor. The Company anticipates building a minimum of_____units.

Capitalization

The Company is currently seeking to obtain a loan of $ 170,000 to develop the first store. The terms of that loan shall be determined when management has negotiated what is going to be realistic to offer based upon projected earnings. Further, the Company anticipates providing an additional amount of cash between $75,000 and $90,000 towards its first store development.

Use of Proceeds

The amounts set forth in this business plan represent the Company's present intentions with respect to promised expenditures. Actual expenditures may vary substantially, depending upon future developments such as marketing, sales activity, corporate opportunities, and certain other recognized or unforeseen factors. Any change either in the allocation of funds or in the order of priority will be at the discretion of the Company's Board of Directors.

The Company may utilize trade and other commercial credit, if available. Working capital, lines of credit, secured by orders and accounts receivable, will likely be used during the routine course of its business.

The Company and Reuben's Inc. intend to mutually protect all patents, trademarks and other proprietary rights to the extent such action is feasible. The packaged goods, advertising, logos, recipes, local promotions, and any other product, service or idea deemed proprietary will also be protected appropriately. The intent is to preserve the integrity of the concept and to hold the protected property to certain standards and monitor use of these trademarks as they are supposed to apply to certain promotions and products as directed by the parent company. The Company and Reuben's Inc. rely upon certain recipes and proprietary products to present a unique atmosphere, ambiance, aroma, food taste, and overall consistent presentation to the customer. Any representation of these items or trademarks should only be as directed by Reuben's Inc. and the Company as an area developer. The Company primarily relies upon the laws of unfair competition and confidentiality agreements to protect its designs and other proprietary information.

The Company believes it will be an asset within its development area as it will generate new job opportunities for the residents of the respective communities in which it builds stores. The Company plans to hire as many employees as possible from the local community residents for each store. It will also give the cities increased revenues through payroll and sales taxes and increased consumer spending by employing the local residents. The Company believes that as a franchise owner for Reuben's Inc., that Reuben's Deli will become a well-known brand name nationwide and create a company that the local communities will be proud to have. Further, Reuben's has established a tradition that the Company plans on supporting along with other area franchise owners and the Area Developers for the benefit of local charities. For the past several years Reuben's Inc. has sponsored a 5K race to benefit various charities by raising significant dollars through the participation of the public. It is noted to be one of the most successful 5K races in the U.S. Stephenson's Inc., in cooperation with other franchise owners plans on co-sponsoring this race in the greater Akron market.

The Company together with Reuben's Inc. is providing an opportunity designed to fulfill the needs of an active population who find themselves in a busy working environment with schedules that are pressing because of circumstances which cause them to have their time restrained for various reasons. Therefore, this population who appreciates a quality product at a fair price will use their disposable income to eat at a quick service restaurant offering outstanding customer service in an effort to obtain both convenience and entertainment. Reuben's Deli enjoys a base of customers that have traditionally developed during the past 24 years, into a heavy user profile (more than 4 visits per month). This allows for a solid customer base. Therefore a Reuben's franchise fulfills a need for a small business owner of a single unit or a larger business organization which would include multi-unit operations. The franchise provides a time-tested business opportunity with a successful track record and products proven to be widely accepted.

Customer Response

The Company has observed and spoken with customers of other Reuben's Deli franchise units who have indicated their overwhelming acceptance of the products in this market. Indications are strong that as the Reuben's system grows nationally and internationally, the recognition will continue to cause further interest in the concept. Many studies point out that if you' re interested in operating a restaurant your odds of success are greatly enhanced with a concept that has been in business for at least 10 years and offers a unique product. In fact, it has been statistically shown that the odds are that if you start your own restaurant without any history, it will fail 85% of the time, while if you develop afranchise with a proven track record, like Reuben's Deli, you will be successful 85% or more of the time. Reuben's Deli certainly is a proven entity. The customer responds for the following reasons:

The wide appeal and the quality of Reuben's Deli products. Reuben's enjoys one of the highest customer responses in the food industry today. The average customer visits a Reuben's Deli 4-6 times per month.

• The universal acceptance of the old and especially new restaurant designs.
• The affordable price of the products as compared to other competitive food operations.
• The cleanliness of the overall operation.

Any restaurant is certainly considered competition in this industry. However, the food segment that we are in, the specialty deli type sandwich is rapidly becoming the fastest growing segment in the food industry. Reuben's Deli and similar food operators in this category are showing impressive results as featured in various industry publications like "Restaurant News."

Competitive Advantage

The Reuben's restaurant concept has a 24-year operating history which gives it a vast amount of past operating history and proven stability. The products in a Reuben's Deli have stood the test of time. The quality is unequaled and truly unique and that is why so many franchise owners already operating in this system have experienced success. The new updated building layouts and designs, together with the quality of the product and expanded menu is encouraging a very high level of repeat business. The addition of many new store, approximately 15-20 per month, is creating an awareness of Reuben's Deli nationwide and will fuelits popularity through this growth. In 1993, system-widesalesexceeded$71,000,000.00, an increase of over 20% from the previous year. In 1994, sales reached in excess of $100,000,000.00 system-wide. Itis anticipated that by 1999, there will be in excess of 3800 stores producing almost two (2) billion in annual sales. The Area Developer program has further enhanced this growth and success of the nationwide development of the Reuben's Deli system due to the increase in support to the local franchise owners by their area developers.

Industry and Market Overview

The Reuben's Deli restaurant concept is involved in one of the largest dollar volume industries in the world. However, those who excel in this category are generously rewarded both personally and financially. The largest cross section of population in the world spends money daily in this industry and those trends are continuing to increase rapidly. Reuben's Deli has a 24-year operating history and has now entered the mature growth stage of their development. This is the time in the development history when restaurant chains historically experience explosive growth and effective market penetration. The markets are growing nationally and internationally, and the specialty sandwich segment is viewed by experts in the industry as the segment clearly offering the most dynamic opportunities. The blended flavors of the sandwich menu and the popular gourmet pizza products, together with the new flavored coffee program, have combined to attract industry attention. "Entrepreneur Magazine" again recently named the Reuben's Deli concept as the Number 1 franchise in the sandwiches, soups, and salads category, representing the second consecutive year that award has been won by Reuben's. This is an impressive list to be on at any level and to be named Number lisa tribute to the concept. Reuben's Inc. and Yukon, Inc. (Area Developers) have been the focus of several national and local periodicals.

Yukon, Inc., Area Developer, anticipates and estimates that the territories under their control for development will support over 667 Reuben's Deli restaurants. The minimum development contract demands that at least 317 stores be developed over the next five years. This growth is affected by seasonality, market share achieved, market trends, pricing strategies, and product line strategies. Management has determined that after evaluating all of these criteria and spending valuable due diligence time, that the growth in our respective areas will significantly enhance the credibility and visibility of Stephenson's, Inc. in its efforts to develop.

Stephenson's, Inc. plans on using several methods of local store marketing as suggested by the Reuben's, Inc. marketing department and the area developer. The primary method for obtaining sales is initially contacting surrounding businesses and residents and inviting them to visit the store through special local store promotions. Coupons, radio, and frequency cards will be utilized early as pre-opening sales tools. Reuben's has also contracted a number of national magazines and/or newspapers to continuously prepare and run advertising for exposure of the concept. Stephenson's, Inc. will contribute 1% of total gross store sales to the national marketing fund for the overall corporate wide system marketing program. Additionally, the Company will spend at least 3% annually of its gross revenues of Companyowned stores on local advertising and promotions and will participate with these funds in the area co-op programs. The Company will develop working relationships with various advertising agency's and will receive quality guidance from the co-op members and its area development company, Yukon, Inc., in choosing the most effective advertising.

The Company consists of a Board of Directors and two (2) full-time management employees including Mr. Eddie Stephenson and Mrs. Caren Stephenson who are also officers of the Company. The principals will be managers in these stores. The functions of managements are structured according to the operating requirements for the successful execution of the business. These functions include but are not limited to corporate strategic planning, sales and marketing, implementation and updates of operations, advertising and promotions. Additionally, management currently is responsible for the daily operations of Companyowned stores. Outside professional services will support the needs for legal and accounting functions. Also, the Company will utilize the services of a life insurance professional and an advertising and public relations firm based in the greater Akron, OH area.

Major Management Objectives

The Company has outlined as its 1995 major management objectives the following points in order to continue to successfully execute its business plan:

• Complete the Company's need for financing
• Locate, negotiate, obtain, develop, and open store #1
• Complete training in operations at Boise, Idaho, per Reuben's, Inc. requirement
• Increase the depth of knowledge in management of the Company organization
• Participate closely with Reuben's Inc. to further enhance the overall improvement of the Reuben's Deli concept
• Promote awareness of the Reuben's Deli in the local trade area through in-store promotions
• Select and hire quality employees who appropriately represent the image of the success of Reuben's Deli
• Operate a clean profitable store

Projected Statement of Earnings

For years ending December 31, 1996-1998

Projected Balance Sheet

Adjusted Projections: Cash Flow Only

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Which Franchise Model Is Right for You? Here's How to Choose There are thousands of brands and concepts, but franchises generally fall under two business models: "brick-and-mortar" and "service-based." Which is the best choice for you?

By David Busker Edited by Kara McIntyre May 14, 2024

Key Takeaways

• If you're ready to buy a franchise, there are two business models to consider: brick-and-mortar and service-based.
• Deciding between the two may be hard, but it doesn't have to be.
• The investment cost, potential for scalability, location and other factors below will help you decide which one you should choose.

Opinions expressed by Entrepreneur contributors are their own.

A major decision potential business owners must make when considering a franchise is determining what type of business they should run. There are thousands of brands and concepts, but franchises generally fall under two business models: " brick-and-mortar " and " service-based ."

Think about a franchise you know. One that offers services that you use consistently. Is it a hair salon ? A fitness studio ? A lawn care company? A moving and junk removal service?

All of these are franchises, but in terms of a business model, the hair salon and fitness studio fall under one umbrella — location-based businesses with retail storefronts where the customer receives the service at a fixed-base location. Meanwhile, the lawn care company and moving service fall under another umbrella — service-based brands — which do not have a storefront or customer-facing real estate and the service is provided at the customer's location.

Here are some of the key differences between brick-and-mortar and service-based businesses, so you are more informed when choosing a franchise model .

Related: Considering franchise ownership? Get started now to find your personalized list of franchises that match your lifestyle, interests and budget.

1. Investment cost

Real estate is what usually drives franchising investment costs . The more real estate intensive, the greater the investment level. Location-based, brick-and-mortar franchises generally have higher initial investments. Building the retail space can be pricey. Picture a fitness studio — you need bikes and machines, but also a high-tech sound system, televisions, changing rooms, showers, etc. Not to mention the flooring and interior architecture.

On the other hand, a service-based brand doesn't necessarily require real estate (some may even operate from a home office ). Some service-based brands require storage space to house vehicles or equipment that are deployed at the customer's location. Less visible and lower-cost industrial spaces are ideal for these franchises. Typically, these spaces require few leasehold improvements compared to a customer-facing retail space.

So what can you expect the investment costs to be for each of these options for a single unit or territory? Although it isn't definitive (there are always exceptions), common ranges are:

• Brick-and-mortar: $250,000+
• Service-based brands: under $300,000

2. Ramp-up time

Ramp-up time goes hand-in-hand with investment costs. The time it takes to ramp up to a monthly positive cash flow and establish repeat business both indicate important benchmarks for any sustainable business. In terms of speed, service-based brands are more likely to ramp up quickly because of a lower investment cost upfront and lower fixed overhead costs. Let's consider a moving service brand . Once you have the equipment and employees in place, the month-over-month operation costs are more closely linked to revenue growth; thus, these models can often grow to cash flow more quickly.

Alternatively, a brick-and-mortar brand (like a salon ) will have high upfront investment costs (retail space, individual stations, chairs, mirrors, hair wash/dry stations, etc.) and will likely take time to establish a strong customer base in a particular community. However, they tend to have more repeat business and durable income streams over time.

Related: Find Out Which Brands Have Ranked on the Franchise 500 for Longest, Earning a Spot In our New 'Hall of Fame'

3. Scalability

Brick-and-mortar businesses are typically more scalable . Once you have a single successful franchise, it's easier to manage and build an empire by spreading costs over multiple locations. But remember, due to the costly initial investments, building costs will be similar each time you open a new location.

With a service-based brand, rather than building more physical locations , you can expand your territory and drive more penetration within your territories. While this isn't without additional costs (consider gas money, employees to keep up with demand, more frequent equipment maintenance, etc.), it requires incremental investments since your revenue justifies it and creates economies of scale. By purchasing additional territories in a service-based brand, you scale your revenue and income multiplier without the same proportional increase in capital investment.

4. Technology

One area that is relatively equal in terms of usefulness and accessibility is technology. In recent years, technology has transformed franchising. Specifically, repeatable but necessary tasks have been streamlined and simplified through technology. For brick-and-mortar brands, it's common to see customers scheduling services directly (hair appointments, fitness class bookings, etc.). For service-based brands, customers can book service calls, and employees can perform tasks in real-time to keep business moving, such as ordering parts, creating estimates, etc.

Related: This Pizza Chain Will Pay You to Become a Small Business Owner — No Money or Experience Required

5. Location risk

Location is key for brick-and-mortar franchise brands . It's often a balancing act of finding real estate that is within an acceptable price range and in a popular location that creates consistent repeat business. You will be offering services in a fixed location, so the further away you are from the customer, the less likely the customer will travel to your location. For example, a fitness studio needs to be convenient for customers to come to your location three to four times per week. The more frequently a customer would ideally like to visit your franchise, the higher density is needed for the same market radius.

For a service-based brand, location is not as important for overall success. Since you or your employees will be traveling to the customer's location, there is no site selection risk, and you are free to penetrate deeper into a market. However, it is worth noting that if you do expand to multiple territories, you may want to consider renting additional warehouse or storage space to optimize efficiency.

6. Recession resistance

Lastly, one factor to consider lies in the recession resistance of your franchise. Brick-and-mortar brands often offer more discretionary services. These are everyday services, to be sure — hair care, nail salon, etc. — but they are not always considered everyday essential services. On the other hand, service-based brands often are essential everyday services that must be performed despite fluctuating market trends — think HVAC , plumbing , yard care , or restoration.

At the end of the day, there is no one-size-fits-all franchise for every potential franchisee. But by understanding the basics of these umbrella categories, you can start to consider which business model type matches most closely with your business goals.

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McDonald's franchise group slams California fast-food law as 'draconian'

Ab 1228 recently received approval from the senate and is likely headed for gavin newsom's signature.

McDonald's is a resilient brand that thrives in any environment: Jim Skinner

Former McDonald's CEO Jim Skinner analyzes the state of the fast-food industry as the U.S. economy slows on 'The Claman Countdown.'

The National Owners Association called California’s recently-passed AB 1228 "draconian" and costly to franchisees in a memo distributed to its members.

"The new ‘AB 1228’ legislation has been voted into law and will result in a devastating financial blow to California McDonald’s franchisees at a projected annual cost of $250,000 per McDonald’s restaurant," the advocacy group representing some 1,000 McDonald’s franchisees said in the memo obtained by FOX Business. 

"These costs simply cannot be absorbed by the current business model."

CNBC earlier reported on the NOA memo. 

CALIFORNIA GOV. NEWSOM SIGNS LANDMARK FAST-FOOD WORKERS BILL, DESPITE CONCERNS IT WILL DRIVE UP COSTS

Among the bill's key components: 

• It would raise the minimum wage for fast-food workers to $20 per hour.
• It would apply to restaurants with at least 60 locations nationwide, except for restaurants that make and sell their own bread.
• It would also create a 10-person council to govern fast-food chains, set guidelines for wages and make recommendations pertaining to working conditions.

When signing the original version of the legislation, California Gov. Gavin Newsom said, "California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity. Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry."

Gavin Newsom, governor of California, speaks during the United Nations Climate Action: Race to Zero and Resilience Forum in New York Sept. 21, 2022. (Michael Nagle/Bloomberg via Getty Images / Getty Images)

The state Senate passed AB 1228 Thursday. 

The NOA said franchisees, suppliers and McDonald’s "must engage to support our California McFamily " and identified steps it said they each should take with ideas ranging from the franchisees establishing 501(c)4 entities and state political action committees (PACs) to create an official arm to lobby the government. 

Suppliers urged the reduction of costs in operations that could lead to cost savings for fast-food restaurants they work with. 

The NOA called on McDonald’s to direct "rent and service fees collected from sales" from potential price increases in response to the bill to efforts like "overhauling" the operational platform and doing more labor-related research and development to help franchisees. 

In its memo, the NOA also made allegations about a "small coalition of franchisors" having "negotiated a deal with" the Service Employees International Union without franchisee involvement "causing the legislative outcome to now become certain." It mentioned McDonald’s, the National Restaurant Association and the International Franchise Association. 

The McDonald's logo at a restaurant in Streator Oct. 15, 2022.  (Jakub Porzycki/NurPhoto via Getty Images / Getty Images)

IFA CEO Matthew Haller told FOX Business he participated in the negotiations with a goal of making sure franchises had involvement and representation. Some franchisees spoke directly to the governor’s office, he added. 

FOX Business also reached out to the National Restaurant Association for comment.

"Over the past year, I've worked closely with company leaders, a task force of fellow franchisees and our own independent advisers as part of a coalition of brands working to protect our business model against an all-out attack on restaurant owner/operators," California McDonald's franchisee Roger Delph said in a statement to FOX Business. 

"Anyone who is suggesting this was not a collaborative and successful effort to protect the franchised business model in California, or that franchisee involvement was absent, was either not involved or is contorting the facts."

The NOA suggested AB 1228’s passage could lead to similar efforts by legislative bodies elsewhere in the country, adding, "We need to remain unified so that this can not gain a foothold anywhere else."

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In a recent internal message obtained by FOX Business, McDonald's told its restaurant system AB 1228’s terms "are entirely different" compared to the prior version of the bill that it described as "harmful to our system."

McDonald's Corp

It said AB 1228 created a "significantly limited Fast Food Council," did away with AB 257, prevented joint liability from getting applied to franchisors and franchisees, and made a "clearer, predictable wage schedule through 2029," among other things.

McDonald’s "worked tirelessly" with the "California Owner/Operator Task Force" and others in the state to "protect owner/operators’ ability to make decisions for their businesses locally and protect their restaurants and their crew," the company said in the message.

CALIFORNIANS PUT FAST-FOOD LAW ON 2024 BALLOT

Those included the creation of a "coalition of brands to refer AB 257 to California voters in November 2024" and "significantly" increasing its "political engagement in the state," according to the message. 

A sign is posted in front of a McDonald's restaurant April 28, 2022, in San Leandro, Calif.  (Justin Sullivan/Getty Images / Getty Images)

The company said it has established a "cross-function, fast-action team of McDonald’s staff as well as Owner/Operators from California, New York and Illinois, to co-invest and work collaboratively on an action plan." 

It will "pilot innovative short and long-term solutions" for California using best practices adapted from other places that have experienced similar legislation, according to the internal message. 

Jay Caruso contributed to this report.

Correction: An earlier version of this story misstated the council's authority regarding working conditions. It can only make recommendations for those. 

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Franchise Sandwich Shop Business Plan

Start your own franchise sandwich shop business plan

Franchise Sub Shop

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

The purpose of this business plan is to secure additional, long-term funding to open a QSR (Quick Service Retail) franchise in Ashland, Oregon. The owners of the company are willing to invest $30,000, and assume over $110,000 in short-term liability to secure the funding for inventory, and early operations. The SBA 504 loan we seek is in the amount of $200,000, and if approved, will be amortized to 10 years.

The franchiser, “The Sub Shop Corp.,” is one of the fastest growing franchises in North America. Sales last year topped $800,000,000. The chain is positioned somewhere between traditional fast food restaurants, and sit-down restaurants. This segment of the market is attuned to the health benefits of their eating habits, are more conscious of their buying habits than the general population, and more importantly, they have higher incomes and are willing to pay more for a better fast food choice. Our goal is to be that choice in the Ashland Metro area.

To succeed with our goal, and to encourage a healthy lifestyle, we will sponsor local sporting events, and give 3% of profits to local charities. We will build roots into the community. We will also market our products with local businesses, the famous Shakespearean Festival, to local hotels, and offer catering services through local party supply stores and through close ties to local hotel managers and executives. 

Our primary goal for this plan is that it help us secure this $200,000 SBA loan. Once we have done that, our goal will be to build value for our constituents, ourselves, our employees, our customers, and the community. We see these goals as being consistent with the goals the SBA expects of itself and its guarantors.

1.1 Objectives

Our first objective is to open the Franchise restaurant four months from the day that our site is confirmed by the realtor.  Our site was confirmed in April, therefore our goal is to be up and running by August.  Our P&L and Balance Sheet all begin in August.  Start-up costs between April and August may be found in the Start-up Summary Section.

The Sub Shop will turn a profit by the beginning of our second fiscal year of operations.

We will pay down our $200,000 SBA loan to $180,000 by the end of year one.

Repeat customers will constitute 70% of our overall business by the end of year one. We will track customer habits and loyalty through a local marketing research firm, and publish the results of these findings to our employees once a quarter.

Net Profit for year one will be 21%.

1.2 Mission

Our mission is to bring to market the tastiest and healthiest fast food in Ashland, at a slight cost premium over other fast food restaurants.   Our high standards of quality and cleanliness will establish our reputation as the cleanest fast food restaurant in Ashland. 

Our community is as important to us as making a profit. We will devote 2% of profits to a local women’s shelter, and 1% to a local environmental conservation fund. This company is founded on the concept that good works and good deeds not only serve the needs of the community, but will also keep our company healthy and committed to the success of its customers.

1.3 Keys to Success

The most important key to success is our location. It is very important that our location live up to our expectations, and is convenient to as many potential customers as possible. As stipulated by the franchise agreement, our “Type A – Profile 1” location must contain a minimum of 6,000 customers within a four block radius (or five minute walk time). The pedestrian traffic must be adequate and the lunch habits of the customers must be conducive to eating out.  

Another key to success lies with our ability to execute our plan. If we neglect one or more aspects of our plan, whether that is our numbers, our employees, our cleaning and food standards, or our commitment to customers, we will not succeed and thrive.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

“The Sub Shop” Corporation franchises, and sometimes owns and operates quick-service Italian-style sub sandwich shops called, appropriately, “The Sub Shop” subs.

The Sub Shop’s upscale concept fits a niche between fast food and fine dining–offering the customer the best benefits of both segments.  The company provides the convenience of fast food with rapid response times, affordability, as well as carry-out and home meal replacement options.  The Sub Shop also offers a fresher and tastier alternative to typical fried fast food products such as hamburgers and french fries.

The Sub Shop’s concept was born in the kitchen of a popular Italian sit-down restaurant called Gianni’s.  The goal of the original owner was to provide great Italian food in a clean, urban environment, and at a reasonable price.  After two years as Gianni’s, the owner changed the name to The Sub Shop and began selling subs and soup to go.  In 1993, the company expanded to two stores and sales tripled.  Financing was secured in December of 1993, and the company became a local Franchise, then a national Franchise.  Now with 53 stores in 23 states and four countries, The Sub Shop has taken the Fast Food segment by storm by producing a better product than its competitors, and at a moderately low price.

2.1 Company Ownership

Ninety-seven percent of the restaurant belongs to Walsh and Walsh LLC. The company was formed in Oregon in 1995, and is owned by Jack William Walsh and his father Luke Walsh. Luke owns 77% and Jack owns 30% of Walsh and Walsh LLC.  The remaining 3% is held by Lisa McKewan, Store Manager.

2.2 Start-up Summary

The start-up table shows a summary of our overall start-up costs. The highest initial outlay is for the franchise fee. This is required to launch the franchise. After paying our Franchise fee, our only liability to the franchise will be the 7% cost of sales, and 2.2% advertising charge. Normally the franchise fee would be paid in interest accruing installments, but we decided to forego this to keep the books as clean as possible and to reduce the possibility of a “parent/child” conflict between our company and the constituents.

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The SBA loan that we are seeking will be secured via the pre-appraised market value of the land and property, as well as the improvements to be made on the property through 2001. The estimated net market value of the property following all improvements is approximately $320,000.

2.3 Company Locations and Facilities

The company will be located between Oak St. and Water St. on Highway 99 in Ashland, Oregon.   It is the busiest shopping district in Ashland, and is very close to world famous Lithia Park, also a bustling tourist destination.  The building will be decorated like many of the merchants along this thoroughfare; as would befit a former 19th century gold-mining town.

We will offer a large variety of Submarine sandwiches, salads, soups, chili, chips, cookies, and sodas. The sandwiches are made with The Sub Shop’s unique sweet mustard sauce and each loaf of bread is made fresh daily. The bread is toasted for every order and the soups are made daily.

3.1 Product Description

All of our sandwiches are available for customization. In addition, customers will love the fresh, toasted bread, and the freshly sliced meats and cheeses. 

Below is a short list of some of the subs we will market, the rest of the products are broken down by unit sales in the sales forecast table:

German Snack: Italian Salami, Bologna, Roast Beef, Tomato, Onion, Bell Pepper, Cheese, Vinegar & Oil and Salt & Pepper upon request.

Swiss Delight: Cheeses (3), Tomato, Onion, Bell Pepper, Cheese, Vinegar & Oil and Salt & Pepper upon request.

Spanish Conqueror: Cheeses (2), White Meat Chicken, Jalapeno Sauce, Tomato, Onion, Bell Pepper, Conqueror & Oil and Salt & Pepper upon request.

American Suburban: PB&J.

American Urban: Tofu, Onions, Tomatoes, Cucumber, Carrot, and two Cheeses.

American Traditional: Angus Beef, American Cheese, Lettuce, Tomato, with a 1/4 slice Kosher Pickle.

3.2 Competitive Comparison

Our competition consists of on-campus sandwich shops, fast food restaurants, and downtown eateries. There are three SubSub Sandwich shops in the Ashland metro area, and 10 fast food restaurants. Our competition will be fierce, but our specialized sub sandwiches will set us apart from the competition, as will our focus on healthy, yet tasty fast food. SubSub has emphasized the benefits of their healthy sandwiches, yet their sandwich bread is often tasteless and stale, they don’t toast their bread, they don’t use a special sauce, and their production facilities are rarely clean enough to make dining in their restaurant an appetizing venture.

The other fast food restaurants in Ashland will offer a more serious challenge: How do we position ourselves so that people know food is both healthy AND tasty. Many people who eat fast food burgers and fries are not concerned with the health benefits of such activities, but rather, the way the food tastes. To be competitive, our sales literature and promotions will make it clear that our products are tastier than any greasy hamburger, yet will provide a fun, guilt-free eating experience.

3.3 Sales Literature

Our sales literature consists of menus supplied by The Sub Shop and custom flyers designed in-house. The custom flyers will offer catering prices, explain the difference between our lunch specials and those of our competitors, and show our hours of operation. We will place the catering and lunch service flyers strategically near Oregon Shakespearean theatre events, park events, with local businesses, and in Jackson County community centers.

3.4 Sourcing

The Sub Shop Corp. will provide the supplies necessary for operation. Due to bulk buying by The Sub Shop Corp., and our standardized franchise-based supply line, our purchasing costs will be 10% below similar costs incurred by a non-Franchise restaurant and our payment days average 45 instead of the industry median of 30 days. 

To maintain a conservative financial perspective, we have not built this 10% discount into our cost of goods in the Profit and Loss Statement. We have calculated cost of goods as a flat 35% of sales, an average for our industry. We will update these amounts with real figures once we have three months of purchase history. We expect to revise our sourcing costs down by at least 10% in November.

3.5 Technology

We will take advantage of the latest technology in order to speed our business processes and develop more efficient operations. In planning for the launch, we have purchased three copies of Business Plan Pro software. Each principle has been given a segment of the plan to work on. Jack is in charge of writing all franchise-specific topics, Luke is in charge of generating and explaining the numbers, and Susan is responsible for all operations-specific topics. Each person synchronizes their machine with the secureplan.com secure server, making the most recent version of the business plan available at all times on the Web.

In addition to using technology to establish the business model and methodology, we also use technology for day-to-day operations. The Sub Shop Corp. supplies us with the latest in ordering equipment, including a merchant credit and debit card account, number verification, inventory management software and timeclock (HR) software. Each employee is given a cell phone for personal use, and in exchange for this relatively inexpensive benefit, they are expected to work flexible hours, and respond when called in to replace an employee that is sick, or otherwise not available for their shift.  

Technology is also used for routine maintenance and sustainable operations. The company uses only biodegradable soaps and cleaning supplies, and encourages all employees and customers to recycle plastic, glass, and cardboard items. We view these options in sustainability as being tied directly to advances in technology. For instance, as wind and solar power become available through the local utility, we will opt to source through those options.

3.6 Future Products

The product mix is determined by corporate (biodegradable).  Future product suggestions are welcome by corporate, and if approved, may become part of the product mix.

Market Analysis Summary how to do a market analysis for your business plan.">

In addition, demographics have shifted in recent years from traditional households (two parents with children) to more non-traditional households; as a result, many adults feel they have less free time.  Consumers report that they are eating out more often in order to free up time normally spent cooking, and use that time to enjoy their families and to take advantage of other leisure activities. 

From the Ashland Chamber of Commerce: Ashland (pop. 18,560) has built its economy on a resource base of timber, favorable climate, attractive landscape, cultural attractions, a well-educated labor force and education. In addition, Ashland’s location off Interstate 5 and the Southern Pacific Railroad, and its proximity to the Rogue Valley International-Medford Airport, give it market access that is more favorable than usual for a rural town. To offset the risk that comes with dependence on one economic sector, the City of Ashland and the Chamber of Commerce encourage the diversification of markets. Establishment of light manufacturing firms with value-added components, sophisticated services catering to a geographically dispersed clientele, and retailing targeted to local residents are especially encouraged. The Oregon Shakespeare Festival attracts more than 100,000 visitors annually. And because Ashland is considered a “destination” city, an additional 258,427 people visit here for its other attractions such as recreation, shopping and sightseeing. Ashland, while widely known for the nine-month Shakespeare Festival, is also the location of the only federally funded wildlife forensics lab and research facility in the country. Southern Oregon University plays a large part in Ashland’s economic health, with approximately 5,130 students, 576 faculty, 207 staff, 26 temps and 691 student employees.

The City of Ashland’s population over the last four years has averaged 1.4% growth and is not expected to deviate from that rate The City of Ashland’s “official population projections” show a 19,995 population projection for the year 2,005. Over the 10-year period 1995-2005, a total of 2,010 new residents to Ashland are expected. The City of Ashland’s average household size is 2.22 (1990) persons per unit (12) compared to the average household size of 2.34 in 1980.

4.1 Market Segmentation

The largest market  is tourists.  Our next largest target market consists of downtown workers.   Weekend shoppers and students who work or visit downtown make up the remaining two percent of the total market.

4.2 Target Market Segment Strategy

Downtown Workers: We will target downtown workers through local businesses, advertising, event sponsorship, and word of mouth advertising.

Students: Ashland has a seasonal student population of around 4,700. We expect to reach students through campus activities and marketing, as well as by sponsoring special student events.

Tourists: Over 100,000 tourists will visit the Oregon Shakespearean Festival in 2001. Approximately 262,000 people will visit Ashland for it’s premier recreational activities. We will reach tourists at the time they visit Ashland. Most tourists aren’t thinking, “Where am I going to find good, inexpensive lunches?” when they plan their trips because they know fast food venues are abundant everywhere in America. The strategy will be to stand out from the other venues available on the street, and letting people know our food is relatively inexpensive, but without degrading the premium ambience of shopping in Downtown Ashland.

Weekend Shoppers: Weekend shoppers come from Medford to shop for clothes, gifts, and crafts in downtown Ashland. Over 40,000 people live and work in Medford, and we predict that at least 8% of those people will at some point shop in Downtown Ashland.

4.2.1 Market Needs

There are two market needs we are attempting to fill.  First, there’s a need for a fast food restaurant that produces tasty fast food, at a low cost, in a clean environment.   There are many people, considered in the traditional sense to be “Middle Class” and above who will not set foot inside a fast food restaurant due to a) the restaurant’s lack of cleanliness and b) the relative poverty and despair displayed by the people working in these fast food  restaurants. 

To fill the needs of these customers, we will market products that appeal to their healthy lifestyles, their taste buds, and their sense of “place.”  In addition, our food line, tables, floors, and counters will be cleaned constantly throughout the day, and we will maintain a very high standard of cleanliness.

4.2.2 Market Trends

The market for fast food is becoming more demanding. While fast food chains such as D-Lite and others in the mid-1980s failed in their attempt to market low calorie fast food, since the 90’s, some companies have found that healthy fast food pays off. Garden burgers have become prevalent at many fast food restaurants, and even some fast food burger franchises are beginning to offer gardenburgers, and other soy alternatives.  

While marketing fast food only as “healthy” would be corporate suicide, there is a trend towards quality in both food and ambiance. As mentioned in the Market Needs topic, many people are heading for restaurants that offer fast food at a slightly higher price, but at a much higher quality, and delivered by employees who do not feel degraded or otherwise fatalistic about their role at work. While the latter issue may be debated by intellectuals in Management 410 B-school courses or  readers of the current bestselling book, “Fast Food Nation,” the fact remains that American society will continue to want more for less. If we pursue the niche of customers that reside between the bargain-hunters and the spendthrifts, and of those, the ones that are repulsed by standard fast food practices, lack of cleanliness, and the total lack ambiance inherent to most fast food restaurants, we will do a brisk business. 

Consumers spend about 46% of their food budget on eating out.

4.2.3 Market Growth

The National Restaurant Association predicts that the QSR market will grow slightly slower than the overall market for food services. This is due to reduced discretionary income, and recessionary economic pressures in 2000 and 2001. The overall growth rate in the fast food business is expected to be 4.4% in 2001. Growth in catering services is expected to be at around 6.5%. Based on the fact that only about 20% of our sales will be generated from catering services, and that our franchise resides in the QSR sub-market of the fast food market, a slower growing market during a recession, we have pegged our overall market growth rate at a weighted 4.82%.  However, because of the faster than average growth of the Ashland area, and the increase in tourism in Jackson County over the last few years, we have estimated that our potential customer base will grow at a healthy 8.57% clip.

4.3 Industry Analysis

4.3.1 industry participants.

The industry is composed of several large brand-name restaurants, and a large number of local fast food chains. Depending on where you look in any given year, 4-5 new fast food outlets may open and close their doors. The industry is always changing and is a highly competitive arena where staying power and customer loyalty is difficult to acquire. The participants in the Ashland market include Burger King, McDonald’s, Taco Bell, Taco Time. In the QSR market, Blimpie, Subway, and several local sub-shops are industry participants most likely to compete directly with The Sub Shop.

4.3.2 Distribution Patterns

We distribute our products direct to customers, both through retail and through our catering service. We don’t rely on a channel of resellers or distributors to get our products into the hands of consumers.

4.3.3 Competition and Buying Patterns

The fast-food business is based largely on the impulsive choice of consumers. Many people buy their business lunch, lunch, or family dinners at a fast food restaurant, and those fast food restaurants offer not necessarily the best selection, but the most reliable menu and the fastest order completion time. Customers will try other fast food restaurants, and shop around, but the majority of their fast food purchases are from one of their favorite fast food or QSR restaurants. Our goal is to capture those customers, and to build loyalty to the product through purchase punch cards, consistent daily specials, and a direct mail list.

4.3.4 Main Competitors

Our main competitors are the major national fast food franchises.  SubSub is our largest competitor, with 12,868 franchises in the U.S. alone.  

SubSub licenses franchises throughout the nation, and offers two locations in the Ashland Metro area. McDonald’s only has one store in the Ashland area. 

SubSub contributes to the growth in our market by advocating for healthy eating habits via online, TV, and radio advertising. They are our largest competitor, yet they also contribute to the nationwide growth of the healthy food segment of this market. We can count on them to bring people into our stores, and will target their local operations through direct mail flyers that offer specials to customer that bring in their SubSub 10-sandwich punch cards.

Strategy and Implementation Summary

Our #1 strategy is to focus on our customer experience. Our success hinges on whether customers receive what we promise them, and are pleased enough to come back for more. Our KISS (Keep it Simple Stupid) approach will be successful only if we don’t distract ourselves from the core business of making good sandwiches fast, and of treating the customers as if they are special. 

As with any business model in the new millennium, we must adapt our strategy to the customer and market trends, while maintaining consistency of brand and message. This is a challenge for any business in any industry because the nature of business will always, and has always determined that the best strategy with the most resources behind it will survive. This millennium has proved to be very successful in growing this market, and of supporting it’s franchises.

5.1 Strategy Pyramid

5.2 value proposition.

Our value proposition is that we offer high-quality, healthy fast food at a reasonable price. Our facilities are clean and our food is tastier than that of our competitors. The ambiance of our facilities contribute to customers’ desire to eat their meals in a comfortable, healthy environment.

5.3 Competitive Edge

We have a competitive edge in regards to the overall quality and differentiation of our products, and in the cleanliness and ambiance of our seating area. Our sandwiches, soups, etc. are all of the finest quality, and have been refined through taste-tests sponsored by The Sub Shop Corporate. Our seating area will be clean, the murals and prints on the wall will feature airy Italian landscape and European lifestyle motifs. The walls will be painted a rich yellow color, the tables and chairs are a rich walnut color, and the floor will consist of high-quality tile. 

We will differentiate our food from SubSub’s in regards to taste, quality of bread and contents, attentiveness to customers, and overall experience. We will build off of SubSub’s national marketing strategy so that we gain from their conversion of burger eaters to sandwich eaters, but alternately prove that we are more responsive to customers and offer better fare than SubSub franchises.

5.4 Marketing Strategy

Our Marketing Strategy is to reach the largest amount of tourists, residents, and students for the least amount of money.  

Our strategy will focus on three solid points:

• Building customer loyalty.
• Extending the franchise brand locally.
• Develop local word-of-mouth advertising (buzz).

5.4.1 Positioning Statement

For people looking for a fast, friendly, and tasty lunch, we produce a quick meal.  Our seating area will be clean and the overall ambiance of the place will be pleasing to the senses.  The food will be good and the service, friendly and fast.

5.4.2 Pricing Strategy

Our pricing strategy is different for different customers. Prices to retail customers will be fixed by the chairs, and based on a relative cost of living indicator. Retail prices will be competitive at about $6 for the average meal. This is about 30% above McDonald’s and Burger King prices, but only about 15% above the average price of a SubSub sandwich. Customers are simply willing to pay more for healthy, flavorful food served in a clean, comfortable environment.

Our highest margins will come from our catering services and large sub products. We will focus on expanding this segment of the market as soon and as aggressively as possible.

5.4.3 Promotion Strategy

The chairs will promote our products on the national level. In order to reach our local customers, and build loyalty, we will offer special mid-day promotions, sponsor local community events, advertise in the local classified paper, and our President will become a leading figure and spokesman in the community.

Our strategy is to focus on promoting the business through local PR efforts, rather than paid advertising.

5.4.4 Distribution Strategy

We plan to distribute our products direct to customers, without the use of a separate channel of distributors.

5.4.5 Marketing Programs

Our marketing programs will include customer-centric appeals to switch from the competition, build loyalty, provide cost value to the customers, and build word of mouth marketing.

Here’s a list of the sales and marketing programs we intend to implement within the next 15 months:

• Five daily in-store regular specials, at least 15% off one particular sandwich item.
• A direct mail coupon offering 50% off your first sandwich when you bring in a stamped SubSub card and sign up for our coupon mailing list.
• High profile sponsorship of two local sporting or charity events.
• 20% off a menu item when you bring in your Oregon Shakespeare festival ticket stub.
• Free delivery to any of the local hotels (market only through hotels), and offer to pay hotels a slotting fee.

We may institute more programs as we see fit. This list of programs is aggressive when compared to the local marketing done by our competitors, so this should give us an early advantage as long as we can keep cash balance and sales numbers up.

5.5 Milestones

The following table shows important milestones for the franchise Sub Shop.

5.6 Sales Strategy

Our sales strategy will be to reach the largest amount of Jackson county residents and tourists with consistent value-added incentives to purchase our products and visit our restaurant. In this industry, and especially as a franchise, our marketing programs are almost indistinguishable from our sales programs. The indistinguishable handles a lot of the national and regional marketing, and we just pay our fee to have it done. Our flexibility will lie in our ability to push the boundaries of freedom the indistinguishable has given us, and to take advantage of opportunities to differentiate ourselves on sales by sale level.

5.6.1 Sales Programs

5.6.2 sales forecast.

The majority of our revenue will be generated through medium subs and cookies/desserts. The breakdown by product is below.

5.7 Strategic Alliances

The fast-food business is based largely on the impulsive choice of consumers. Many people buy their business lunch, lunch, or family dinners at a fast food restaurant, and those fast food restaurants offer not necessarily the best selection, but the most reliable menu and the fastest order completion time. Customers will try other fast food restaurants, and shop around, but the majority of their fast food purchases are made through one retailer. Our goal is to capture those customers, and to build loyalty to the product through purchase punch cards, consistent daily specials, and a direct mail list.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Our managers are also owners. We want our managers to take a personal stake in the success of the company, and for that reason we have given them a share of any profits they generate. 

Specific information about each manager is available in the following plan topics.

6.1 Personnel Plan

Most of our employees will come from the University of Southern Oregon in Ashland. They will be part-time students and will not need healthcare benefits or 401K benefits. This will hold our payroll burden to less than 8% of total payroll.

The store will hold an annual rafting trip and picnic on the Illinois River each summer. This “team building” exercise will come out of the marketing budget. Please see the Profit and Loss table for details.

Our employees will be respected, and will wear a company polo or sweatshirt, not a tight-fitting, artificial fiber, company-mandated jumpsuit. Our employees will be paid more (in salary & benefits) than employees at most other fast food restaurants will be given tuition reimbursements, thereby making them more empowered, and more content workers. In this way, we will meet the needs of our market, and differentiate our company from the myriad of fast food behemoths, who’s primary goal is to churn out worthless, tasteless food in a degraded facility and by degraded employees.

6.2 Organizational Structure

The organizational structure is very flat. While it’s important that our manager on duty is clearly in charge, we will not belittle our employees through rankism that disempowers them from taking initiative. Our manage on duty will have the final say regarding all decisions, yet we have trained her to teach the employees how to react to customer issues on their own and respond based on their knowledge of company policy, and when that fails them, their common sense. Fortunately all of the people we have lined up for our open positions appear to have an abundant supply of common sense.

6.3 Management Team

The management team has a combined 30 years of experience in the food service industry, with 15 years of delicatessen experience. 

Luke Walsh, the owner, owned and managed a deli in downtown Portland, OR for 15 years. During this period, he turned the deli into a full-service convenience mart, added a dining area, and increase the menu from 10 items when launched, to over 100 items prior to his exit from the company. Luke sold the company to a husband/wife entrepreneur team in 1994 for $2 million, and has been living off personal investments and other ventures for the last seven years. Luke received his MBA from Portland State University in 1998, and earned his BA in finance from the University of Oregon in 1989. 

Lisa McKewan, Store Manager, has a BA in Psychology, and worked for over 15 years as manager of the The Greentree Restaurant in Ashland. This restaurant is known for its friendly waitstaff, diverse and award-winning menu, outdoor seating, and excellent service. Lisa turned The Greentree Restaurant from a small, 600 sq. ft deli, to a full-service restaurant. She helped the owners find investors, and helped write the marketing and business expansion plan. She managed the day-to-day operations of the business, trained and hired all waitstaff, set the menu, and managed all advertising spending.  Lisa will assume the Store Manager position in title, a step down for her, but in exchange for being flexible in this regard, she will receive 4% ownership in the company. Once the owner has moved out of day-to-day operations, presumably around year three of operations, Lisa will receive another 2% of the company as stipulated by her employment contract.

6.4 Management Team Gaps

The only gap we face is the fact that none of us have run a franchise business. Since both Lisa and Luke have experience running a sole proprietorship, and non-franchised restaurant, our experience will more than compensate for the increased “hand-holding” that comes with owning a franchise.

Due to the limited number of people managing the restaurant, our goals may not be met if we were to lose a manager or owner. We have drawn up a legal contingency plan with a $1 million policy on the owner to prevent this from disrupting the business. We have also allowed for a cash balance that would allow for a recruitment bonus to another Store Manager if Lisa were to leave for any reason.

Financial Plan investor-ready personnel plan .">

Our financial plan is available in the following chapters. Our numbers are based on past experience, knowledge of the industry, growth expectations for the fast food sector nationwide, and common sense.

7.1 Long-term Plan

Our long-term plan includes expansion into the Medford market in year two, followed by healthy dividend payouts in years three through five. Our goal is to build a business out of two franchises, and run each franchise as a profit center for the purpose of building wealth for employees, the community, and the Walsh family.

7.2 Important Assumptions

The SBA 504 loan program stipulates that loans for the purpose of purchasing and improving small business real estate will not exceed 7.5%. The loan is pegged to the 10 year treasury note +1.7%. The current rate for the US Treasury Note is 5.13%, so our estimated long-term loan rate will be about 7%.

The tax rate includes the Oregon State Revenue Tax, currently at 6.6% of NET revenue. We have prorated the assumptive state tax rate to 4.6% due to the fact that this tax is levied on NET revenue, not GROSS. The Federal tax rate average for our net revenue is expected to average 31%. Thus, or assumed total tax rate for this table is 37.6%.

7.3 Key Financial Indicators

The following chart shows the projected benchmarks.

7.4 Break-even Analysis

Our break-even analysis is based on a rough estimate of fixed costs. We predict average fixed costs to include the cost to lease the building, equipment leases, and various other equipment costs and fees. Our variable costs include the cost of labor, food inventory, and other product-related costs. Our variable cost estimate is $1.14 per unit, although that number may be revised as we review our actuals in the coming months.  

Our monthly break-even unit sales are 12,754. This includes units other than sandwiches, such as cookies, soda, chips and other add-ons. The basis for this break-even point is an average of entrees (sandwiches) and add-ons. The average per unit revenue is $3.26.

7.5 Projected Profit and Loss

The following table is the projected profit and loss for franchise Sub Shop.

7.6 Projected Cash Flow

The following chart and table shows the projected cash flow.

7.7 Projected Balance Sheet

The following table is the projected balance sheet for the franchise Sub Shop.

7.8 Business Ratios

Our ratios table shows industry numbers for SIC 5812, Eating Places. The SIC industry averages are generic and do not reflect our precise numbers.

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