Additive-free meals are growing in popularity because many people are trying to avoid consuming chemicals that may be tainting food products, like pesticides and fertilizers. They prefer to eat only fresh rather than processed items for the same reason. The problem is that too many people equate natural with tastelessness, vegetarian dishes, and boring recipes. The misinformation in the marketplace is amazing, so one of the goals of the organic restaurant business plan is educating readers, like investors, on the characteristics of a true additive-free restaurant.
Additive-Free for Good Health
Organic food is grown without the use of any chemicals or special processes that may change the genetic makeup of the consumable items or add chemicals to the human body upon consumption. Banning chemicals means there is no use of synthetic fertilizers, herbicides, and/or pesticides. Special processes not allowed to produce items include GMOs (genetically modified organisms), sewage sludge, and ionization radiation. Animals used to produce meat, eggs, and dairy products are not injected with any kind of antibiotics or growth hormones. The same is true for poultry.
To be called organic, it must be USDA certified. The eating establishment selling menu items made with additive-free ingredients ensures the ingredients meet USDA (United States Department of Agriculture) standards. That means buying ingredients proved to be produced by organic growers and farmers who are certified as appropriate suppliers. It is a complex proposition for an entrepreneur because of the limitations on eligible suppliers and products.
More than Vegetarian
One of the public misconceptions about these types of dining spots is that they are vegetarian eating establishments. As the entrepreneur develops the dining spot’s concept, it is important to understand that many potential customers will need educating. The reality is that an additive-free meal could include just about any item as long as it is USDA certified as organic, including a nice juicy steak, broiled chicken breast, pizza, sandwiches, salads, and others. The industry is growing rapidly and has already reached 5 percent of the total food market per the Organic Trade Association (OTA).
What kind of dining place will be started? It could be fast food, family dining, fine dining or café. Will three meals be served – breakfast, lunch, and dinner? Answering these kinds of questions will drive what is added to the menu. A menu catering to a family with children would be different than a menu designed to appeal to couples enjoying gourmet dining.
Path to Success
There are many sections in a business plan, including the marketing and financial plans, operating plan, and staffing plan. When the document is almost completed, it is time to write the Executive Summary. This is a one or two page summary of what is contained in the rest of the document. Though it is written last, it is the first introduction the reader gets to the entrepreneur’s intentions. It briefly explains many items that are fully developed in the rest of the document.
- Basic Information – The introduction paragraph presents the name of the eatery and its general location. In one or two sentences, the entrepreneur can explain that it will serve certain foods. If true, it is important to mention that other types of selections will be served, like ethnic recipes, vegetarian, or gluten-free recipes. To entice the reader, add a short description as to why the entrepreneur decided on this type of menu theme and where the ingredients will come from.
- Atmosphere – In one or two paragraphs, explain the atmosphere or ambiance of the restaurant. Will it be a cheerful, family-style place, a rustic eatery, or an upscale chic eating establishment catering to working professionals? Is the atmosphere casual or formal? What is the decorating theme? What colors were chosen? Are there booths or tables or both? Paint a picture with words so the reader has a clear idea of what the eatery will look like.
- Staffing – Who is the chef, and what is her or her specialty? Is there a need for wait staff, a cashier, dishwater and busboys or girls? Will the owner primarily manage the restaurant, or will he or she cook, wait tables, or greet guests?
- Customers – Also draw a picture with words of the type of customers that are expected to frequent the dining location. This is the paragraph where the entrepreneur can describe the market segments targeted, like Baby Boomers interested in a healthy aging process or Millennials who are environmentally conscious. Give specific statistics on the various market segments.
- Management – Introduce the key managers who are responsible for the restaurant’s success. They include people like the owner, general manager, accountant, chef and assistant chefs, and others. Write a sentence or two about each person, describing responsibilities and years of experience.
- Additional Information – Add the information that will excite the reader or investor about the dining spot. What will contribute most to financial success of the eatery? For a restaurant, the success factors are likely to include exceptional customer service, delicious and creative recipes, inviting atmosphere, and a wide range of menu options. Many eateries today also offer related and appealing features, such as “green” practices like supporting an environmental cause, installing water and energy saving devices, offering compost material to farmers, and so on.
- Other revenue sources – To grow any kind of eatery, some restaurants sell packaged goods online or operate a gift shop or mini-market. These are just some of the ways to expand the enterprise outside the eatery’s walls.
- Financial Information – In one paragraph, give the reader basic financial information like startup expenditures, the first year’s sales and costs, and when the enterprise is expected to be profitable. Also, if the information provided is written to attract investors, the last paragraph will indicate how much money is needed. In some documents, a chart that visually demonstrates the financial information over the first few years is added. The easier it is for readers to understand the financial plan, the easier it will be to attract investors.
A high quality organic restaurant business plan answers in full the questions potential investors will ask. Plan thoroughness is critical because the document is like a set of signposts pointing to success. Approximately 60 percent of restaurants fail within a year according to an Ohio State University study. They fail for many reasons:
- Inexperienced management
- Difficulty finding and retaining qualified people able to deliver excellent customer service
- Lack of accounting skills so does not produce accurate statistics and information for decision-making
- Poor menu selection or poor ingredient quality
Potential investors are likely to be very aware of the challenges the industry faces, so it is important to address any of them that may impact the startup. For example, the OTA says that there is still a tight supply of appropriate foods. The organic restaurant business plan should include a discussion on how the establishment will ensure it has access to a steady supply of the right ingredients. Patrons do not like choosing items on a menu to hear, “It is not available today.” Word of mouth negative advertising will soon hurt the ability to attract new customers and to steadily grow. It is important to build adaptability into the menu so that a shortage of one or more ingredients does not hurt sales.
Pricing menu items is challenging too because of tight supplies and the frequent need to order fresh fruits and vegetables or other ingredients from a distant supplier. The weather is a factor also. These types of foods also tend to be higher priced than foods with additives or that are processed– sometimes twice as much – because of the specialized farming techniques.
Another challenge is the need to install special equipment that ensures every aspect of the meal is free of chemicals. For example, most public water supply systems produce water filled with chemicals. Therefore, the restaurant needs to install the highest quality commercial water filtration system. That will increase the amount of startup capital needed.
The greatest challenge in writing an Executive Summary is deciding what information to include. For example, will the restaurant pursue appropriate certification, from a certifying organization like Oregon Tilth? While the rest of the information is the roadmap for long-term success, writing the Executive Summary is often a matter of picking and choosing the critical information that will convince investors or lenders to keep reading. This is why it is so important to get professional help with writing the organic food restaurant business plan.
OGS Capital offers expert consulting services to entrepreneurs needing help with the development of an organic food restaurant business plan. Complete the online contact form to start down the path to a startup company.
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