5 Things Lenders Want to See in a Restaurant Business Plan

5 Things Lenders Want to See in a Restaurant Business Plan
Rumzz Bajwa

By Rumzz Bajwa

Table of Contents

    Fulfilling as running a restaurant business can be, it can also be overwhelming. Not only must you invest time and effort, but you’ll also need to secure a significant amount of capital.. financing institutions are tightening restrictions for small business loans, and restaurant owners have a hard time qualifying for traditional and other types of restaurant financing.  

    This is where restaurant business plans are essential. Their primary purpose is to guide businesses in running a smooth operation. It’s also a vital document that helps businesses qualify for better loans.

    If you’re writing a restaurant business plan one for the first time or updating an existing one, we’re here to help. We’ll go over the five important things you should include:

    Restaurant Concept

    Thousands of restaurants operate each day. What make’s yours stand out? Outlining your restaurant’s concept gives you chance to show off your restaurant’s unique value to investors or financiers and get them excited to fund your business.

    Your concept should include the details of your restaurant. Think, like the type of service it would offer. Will you provide a casual or fine-dining experience? While you’re at that, think about your restaurant’s floor plan and design and incorporate that as it will impact the customer experience.

    Don’t forget to include your business’ mission and vision statements in this section. It will give the lenders a glimpse of what you want to achieve and what steps you’ll take to accomplish it.

    Market Analysis

    A market analysis is a thorough examination of the market in which you want to operate. This section on your business plan will serve as the supporting statements that will prove why your planned concept will work. Here are the important components that your marketing analysis should include:

    • Industry information. Start your market analysis with a bit of background about the restaurant industry. Mention statistics, demographics, trends, and growth potential. It will give the lenders and investors an idea of whether the restaurant industry is currently experiencing growth or decline.
    • Target market. Your market analysis should depict who your customers are and why they would prefer your restaurant over the others. Look into their needs and state how you’ll fill in the void. Maybe you’re offering a unique service to your clients, like accepting cryptocurrencies as payments. Or you’re targeting students on a budget.  Details like this would help the lenders determine if your restaurant has potential or not.
    • Market share potential. Business owners use the market share potential to show investors that the client customer base is enough to support the business and make it profitable. You can include the barriers that you might face here, as well.
    • Pricing. Determine how you’ll price your products. After that, try comparing it to your competitors. If you’re offering it at lower prices, be sure that you’re not sacrificing the quality of your food.


    Lenders will look at your business’ financials to determine how viable your business idea is and whether or not you’ll be able to afford repayment. In general, lenders will want to see at least five years' worth of cash flow projections. It should be supported by your sales history, current trends in the industry, and, if possible, your competition’s sales history.

    Your financials should also explain the money you’ve already spent, the expenses you will incur in the future, how you plan on financing these expenses, and the profit you hope to see as a result of your business initiatives.

    When putting all your finances together, it’s better to work with an experienced accountant. As you start working together, provide a rough estimation of how many tables you’re expecting to serve each day and the total amount you’ll earn in a day. From there, they will help you work through the numbers and provide an estimation of your future cash flow.

    Be sure to stick to realistic estimations. Remember, these numbers should show the lenders that your business is financially feasible so you can convince them to approve your restaurant financing application.

    Business History and Management Team

    Some lenders will want to know how you established your business from the ground up and what encouraged you to open a restaurant in the first place. They want to know the threats and hurdles you’ve faced and what steps you took to overcome them. Your determination to turn a loss into a win will show lenders how committed you are to your business's success.

    Just as important as showing the company’s resiliency is the team behind the success. Dedicate a section to show off your management team. It’s worth noting that lenders would want to see the qualifications of the business owner(s) and manager(s) running the business together. With that in mind, be sure to highlight the experience and skills of each of the members of your management team in this section. Explain what they do and how they would contribute to the overall success of the business.  

    Loan Purpose

    After the introductions come the crucial part: telling the lenders why you need their help. Whether you’re planning to purchase a couple of ovens expand your business operation to accommodate more customers, your loan purpose should clearly state where the money goes. Most importantly, provide a detailed explanation of how the project would contribute to your company's bottom line. Leave no stones unturned for the lenders.

    Again, when it comes to numbers, it’s vital to ask for a realistic amount. Give them a breakdown of the expenses you’re expecting with the project. If you’re purchasing equipment like an oven or delivery truck, obtain a quote from the dealer and base your estimations from there.

    Additional Tips to Make Your Restaurant Business Plan Better

    Writing a business plan for your restaurant is challenging and time-consuming. At most, you’ll spend months and a lot of late nights at the office conceptualizing everything with your team. To make the process a little bit bearable, here are three things to keep in mind:

    Know who your audience will be

    As a business owner, you’ll want to create different versions of your business plan – one for attracting investors, another to serve as your guide, and the last for a restaurant financing application.

    In this case, you’ll be addressing the lenders. The primary goal of the financing institution in looking at your business plan is to determine if your business will be profitable and you’ll be able to afford the required loan repayments. Focus on explaining how and why your business will be profitable.

    One easy way to go about this is to put yourself in the lender’s shoes. If you were them, what would you want to know about the business? You’ll probably look at the restaurant's marketing strategy to see how they would promote their brand and attract customers. Secondly, you’ll want to know how they’ll run their business and who owns most of the shares. Finally, you’ll want to look at the financials and see how they handle the expenses. From there, you’ll know how you can structure your business plan better to appeal to the lenders' eyes.

    Back it up with facts

    The primary goal of your business plan in this situation is to win the approval of the lenders. As such, you’ll want to provide as much information as you want. Don’t leave them guessing. If you claim that the product you’re selling will become a big hit in the industry within the next six months, tell them why and back it up with hard evidence. This could be growing trends or changing customer buying behaviors.

    Do as much research as you can about your industry and use the information to support your claims and convince the lenders.

    Ace your executive summary

    The executive summary is a one to two-page summary or snapshot of all the things discussed in your business plan. This section is the very first one that the readers will see. In other words, it’s your chance to catch the attention of the lenders and entice them to read the rest of the business plan.

    That said, when writing your executive summary, keep your tone strong and positive as this will display confidence to your lenders. Since it’s a summary, focus on keeping it that way. It shouldn’t be more than two pages long. Finally, end the section with a short answer to the question, “Why is this a winning business?”.

    Go over the executive summary again and put yourself in the reader’s shoes. Do you feel excitement while reading it? If not, find out why and make some revisions.

    The Bottom Line: Is a Restaurant Business Plan Worth It?

    The short answer is yes. While having a business plan will not solve every problem you’re facing in your company, it will increase your chances of getting approval for your restaurant financing application. With it, the lenders will get a glimpse of how you plan on operating and managing your business to make a profit out of it. It’s a vital document that financing institutions will evaluate to determine your business’ potential for success.

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    Rumzz Bajwa
    Rumzz Bajwa

    Rumzz is a digital strategist and content marketer at SMB Compass. She enjoys spending time with her family. She loves to go out and experience new moments whenever they come to light.