Analyzing Your Restaurant Market Potential and Mapping it to Industry Trends


This is the 2nd step in 5 steps to getting success in a changing restaurant industry.

How can you tell if a market is completely saturated or if there’s still room for you to grow there?

You, as a restaurant owner, should have a deeper knowledge of the present restaurant market scenario to discover the feasibility of expanding or continuing a restaurant in a preferred region. This depends on various factors:

Restaurant Industry Trends: Studying and analyzing restaurant industry trends will help you to identify opportunities and threats involved in the present market scenario that may affect your restaurant success. Perform an in-depth analysis of your local restaurant market, analyze business trends, restaurant sales, and tourism & economic statistics to get more accurate sense of your market potential for your restaurant. Be realistic while conducting customer analytics.

Some of the best research and other industry data sources where you can find the information on restaurant industry trends are:

Restaurant Industry Publications

Local and State Restaurant Associations

Global Restaurant Associations

National Restaurant Association

Bureau of Census

Department of Commerce

Your Local Chamber of Commerce

People will rush towards your restaurant if you create a high trend food that appeals your customers by identifying trends in consumer eating habits and making menu changes based on menu analytics.

Restaurant Concept: As discussed in Step 1, it’s important to decide the target customers for your restaurant. Developing a concept is based on your understanding of the customer likes and preferences identified in our earlier research.

If your focus is on millennials and their food habits, then you should open a fast food service, also known as a QSR – Quick Service Restaurant within the industry. QSR is a specific type of restaurant that serves fast food cuisine and has minimal table service. Here the guests pay for their food in advance and do not have servers.

If you want to attract families, you should plan for a full-service dining restaurant. Full-service restaurant offers fine dining – considered as expensive and casual dining considered as affordable. The full-service restaurant has broad range menu items and can make a wide selection of foods & beverages. Guests have table service, where they are cared by a server throughout the duration of the experience in the restaurant.

Study and compare your restaurant competitors: Demand and market opportunities in your market area can be analyzed by studying the existing restaurants. Learn from successes and failures by conducting SWOT (Strengths, Weakness, Opportunities, and Threats) analysis of your competitors. This section explains:

How to identify and analyze your competitors?

How to research what your restaurant competitors are doing?

How to act on the information you gain to create marketing strategies that take advantage of your competitors’ weaknesses and improve your restaurant business performance?

Who are your restaurant competitors?

Like all other businesses, restaurant businesses too face competition.

Identify your direct restaurant competitors – selling a very similar product to the same customer base. For example, restaurants located in the same location are in direct competition with each other.

Identify your indirect restaurant competitors – do not sell an exactly similar product or even sell to exactly to your client base, however they can take away business from you. For example, QSR (Quick Service Restaurant or fast food outlets) could be indirect competitors to your restaurant.

Identify the number of restaurants in your market area.

Identify restaurants that appeal to the types of customers which you plan to serve.

Identify all the other restaurants located in your immediate area as they will influence your business

What do you need to know about your restaurant competitors?

Answers to the below questions will give you a clear picture of how to sustain your restaurant in changing restaurant industry by monitoring the way your competitors do business:

How are they categorizing their service?

What type of food are they offering?

What are the products and services offered by your competitor restaurant?

Is their packaging more attractive?

Are your competitors offering a similar menu at a lower price?

Is your competitors’ service better?

Do they accept a wider range of credit cards?

Is their ambiance good?

How is the outlook for their restaurant?

What are their financial strengths and weaknesses?

What are the prices they charge?

How do they distribute and deliver?

What are the devices they employ to enhance customer loyalty?

Hearing about your restaurant competitors

Speak to your suppliers to ask what the other restaurant owners are doing.

Speak to your competitors by phone and ask for a price list. Try to understand the discount strategy by asking for a discount on bulk volume.

Listen to your customers to understand how well you’re performing and ask which of your competitor’s restaurant they buy.

Acting on your competitors’ information

There is no point in collecting your competitors’ information if you are not going to evaluate it. Collate the information in three categories:

What they’re doing same as you?

What they’re doing better than you?

What they’re doing worse than you?

By answering the above three categories you can learn from your competitors and perform better. Learnings might be to improve customer service, changing or updating your products, assessing your prices, making changes to your website, and/or redesigning your marketing literature. Add more value to your product by doing better than your competitors.

Size of your restaurant: Restaurant design is one of the most important aspects of making a restaurant successful.

Features of an efficient restaurant design are the human comfort, temperature, humidity control, lighting, acoustic comfort, indoor air quality, and safety concerns.

The layout of the restaurant design varies according to the type and size of the restaurant. However, most of them have similar components. Two primary functional areas are found while designing a restaurant, they are:

  1. Front of the house – This area includes entrance, lobby area, seating area, waiting area, POS terminals or billing system area, dining area, Bar/Lounge area.

The entrance to your restaurant is the first impression of your restaurant on the customer and it should be inviting and welcoming with good maintenance.

Restaurant Dining Area: Allocation of dining area space depends on the type of restaurant, number of guests and seat turnover. Customers should be comfortable in the seating area while enjoying their food.

Bar/Lounge Area: Restaurant bar and cocktail lounge space can be estimated based on the size of the dining room.

     2. Back of the house – This area includes kitchen, pantry, storage, service entry and administration areas.

Restaurant Kitchen Area: Restaurant kitchen area has several work areas.

Kitchen cooking area – This is the area where actual food preparation will take place.

Pre-prep area – This is the area where cooks clean, chop, and process food.

Cold Storage area– This area constitutes deep freezers and cold rooms.

Hot food prep area – You will find grills, fryers, and ranges in this area.

Baking area – This area is designed to prepare rolls, cakes, and pastries.

Storage area: This area is used to store all the dry goods and it should be moist free & pest free.

Other Work Areas: Service areas, employee lockers, restrooms and manager’s office require additional space.

Combine the customer insights from your customer profile with technology that pinpoints areas with significant clusters of your best customers. From there, you can assess how many more locations you can support market- by-market.

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