You have an idea that you think will resonate with your target audience and you seek to bring it to market. Our first step is to create a financial model that explains how much your restaurant concept will cost to bring to life and then how it will perform once it is open. A big chunk of restaurant concept development occurs during the financial modeling phase, but there are plenty of things to consider.
Creating a restaurant concept by linking together steps in sequential order is short-sighted. It doesn’t balance the brand offering or allow for adjustments. Adjusting one element will affect the other elements…like a mobile that goes off balance when one of it’s charms is altered. Opening a full-service burger restaurant in Texas, for instance, might make sense…until you decide you’d rather to go to Montana where there is no tip credit, forcing your labor model higher and torpedoing the presumed profits. Does it mean you need to stay in Texas? No, you just need to adjust the model for, say, fast casual… stripping away table service… which affects your menu, management, hours of operations, size and location assumptions.
Whether trying to borrow money, impress a landlord, or add to your portfolio, you will need to clarify how much it will cost, what business you will be in, how it will make money…and how much it will make. No one (no one) will fund your project without a Profit Model and, if you’ve never done this before, the chances that you’ll be able to whip up accurate financials are pretty slim.
Once your concept is defined by your Profit Model, it’s time to write about it. This includes concept brand narratives, market research, competitive analysis, brand filter and operating practices, so your investors and stakeholders fully understand your idea.