Market research for restaurants helps you see whether your restaurant concept will work in the future. It also guides the necessary changes you need to make to stay relevant. Yet, many restaurant owners neglect this step since it seems challenging and overwhelming.
But, the truth is that market research simply involves gathering and analyzing information about the industry. Simply put, you must look into different aspects affecting restaurant operations, like customers, location, and menu.
By doing so, you’ll know what you need to stand apart from the competition and increase your chances of success. So, let this article guide you through the process. You’ll also learn about the benefits and tools necessary for market research.
Benefits of Market Research for Restaurants
If you’re unfamiliar with the concept, you might think that restaurant market research is only necessary when opening. In reality, nothing could be further from the truth.
Market research is just as important when your restaurant is doing well because trends keep changing. Customers set new expectations from restaurants regularly. Your competitors will outshine you if you’re unaware of these market trends and restaurant customer experiences.
With that said, let’s dive deep into the benefits of market research in both these cases.
Firstly, market research will help you develop a restaurant marketing plan that works in your favor. It tells you what potential customers like and what will make your restaurant successful.
Secondly, since market research includes competitor research, you can create a unique selling point. Knowing the problems that customers face and the gaps in the restaurant industry is the path to standing out.
For example, the research shows that the location you’re aiming for doesn’t have any Mexican restaurants. If you grab this opportunity, you’ll be the only restaurant in the area providing Mexican food. This will serve as an immediate perk to attract your target market.
Moreover, yearly market research will help you develop new marketing strategies. You’ll know what your target customer is responding to.
Replicating those strategies will instantly set you up for success.
You’ll also know what problems your competitors are facing. By analyzing those problems and finding the root cause, you can take steps to avoid those issues.
Additionally, regular research helps you stay in touch with your customers. You can meet their expectations and enhance their experience, which is the best path to loyalty.
What Should the Market Research Plan for a Restaurant Include
An effective market research plan for a restaurant should include five main areas. After all, opening or running a restaurant is no easy task. You need to plan for a lot, and missing the points from the list below might sabotage your success.
- Location: No matter how good your business plan is, it might not work if you choose the wrong location. Choose an area with as few restaurants with a similar concept as possible. Otherwise, you might have a hard time standing out.
- Competitors: Your direct and indirect competitors are already functioning in the industry. Analyzing them and their operations will give you a clear idea of the market.
- Customer base: The ultimate goal for opening any business is making money, and the restaurant industry is no different. Since customers bring that money to your business, you must know your target customer. Their preferences and spending behaviors will help you determine how best to serve them.
- Menu and pricing: Learning what food people like and how much they would pay will guide your approach. You don’t want to offer dishes that aren’t in demand. Look at the menus and prices for existing restaurants before setting up your own.
- Rules and regulations: You must also plan to research the industry’s rules and regulations. Some examples include health regulations, business permits, and restaurant marketing compliances. Following these rules will protect your business and prevent you from falling into a legal mess.
How To Do Market Research for a Restaurant: 5 Steps to Take
There are several ways to conduct market research, but some yield better results. For example, online surveys might give you an idea of the market, but they will never surpass practical visits. Whichever course of action you choose, remember to include the five areas mentioned above.
If you’re still unsure, the following statistic might help you decide. According to a survey, approximately 60% of restaurants don’t survive the first year of operation. One of the main reasons is the wrong location. Since market analysis can help avoid this, here’s how to do market research for restaurants in five simple steps.
1. Set Some Goals for Your Restaurant
Before you start analyzing the market, you should list some goals for your business. These goals will help you conduct research relevant to your restaurant concept.
Remember, your research will only return the results to your specific question. You must know what you want to achieve from your business to know what questions to ask.
For example, if you want to aim for 8% profit, researching a full-service restaurant won’t work in your favor. That’s because a quick-service restaurant makes around 6% to 9% profit, while a full-service restaurant makes 3% to 5%.
Or, if you’re opening a fine-dining restaurant, you won’t find many customers in a middle-class neighborhood, informing your location options. After this step, you should have a restaurant concept in mind.
2. Identify Your Ideal Customers and Location
As mentioned, you’ll serve customers, so you should know your ideal customer. You can do this yourself or hire a company that provides market research services.
If you’re new to the industry, the first option might be more feasible. Therefore, it’s worth knowing what you should look for.
Firstly, research local restaurant data and record things like types of customers, demographics, occupation, salary, etc. Combining this information, you can create customer profiles to use later for marketing purposes. Moreover, look into the locations that would work best for the customer base you want to attract.
For example, if you want to open a fine-dining restaurant, your ideal customer would be from the elite/upper class. Therefore, choose a location with fewer fine-dining restaurants near where this type of customer lives or works.
3. Analyze the Demand for Your Restaurant Concept
The next step is to see if potential customers are demanding your chosen concept. To do this, create online or printed surveys and distribute them in the neighborhood.
However, people might not be willing to fill out long questionnaires. So, you have to be mindful when setting the survey questions. They should be detailed but short.
The best way to achieve this is a multiple-choice questionnaire. For example, let’s say you want to open a fast-food restaurant. In this case, you should include questions like:
- How many times do you visit a fast-food restaurant per month?
- Are you happy with the state of these restaurants in your area?
Apart from surveys, you can run focus groups, which are a more personal way of collecting market information. For this, recruit participants who are willing to answer your questions. But remember to choose people who fit the profile of your ideal customer.
On the other hand, you can conduct these focus groups using your restaurant’s social media posts. Whichever method you choose, remember to reward the participants for their time. It can either be a monetary payment or exclusive benefits for your restaurant.
In practice, this step overlaps with the previous one. So, keep referring between the two as you find new information.
4. Get To Know Your Competition
Since the beginning of this article, we’ve been mentioning the importance of knowing your competitors. So, let’s talk about how to do that.
If you’ve followed the first three steps, you now have restaurant marketing ideas based on your concept. Keeping that and your location in mind, create a list of nearby restaurants similar to what you plan to launch.
Then, visit these restaurants as a customer and see how they operate. Don’t shy away from talking to employees and customers. Try to find their pain points within the restaurant industry.
Moreover, analyze your competitor’s dishes and pricing. During this, focus on finding a unique selling point by pinpointing areas where they lack and learning from their success.
5. Use Online Resources To Dive Deeper Into the Market
Once you have the concept, customer profiles, and competitor research ready, head over to online resources. This step is crucial to conclude your research with market share, statistics, etc.
Start by getting familiar with the numbers. You must know the average costs and profits you can expect from your chosen concept. This will also be useful once your restaurant starts operating to see whether it’s up to the industry’s benchmark.
Moreover, visit websites like census.gov to keep yourself updated with the latest data about restaurants. Lastly, use Google to note down the rules and regulations.
Now that you know the research steps, let’s look at some tools for this. If you try to do everything manually, there’s a high chance of errors. Plus, it will make your work more difficult.
For example, if you create manual surveys, you’ll have a hard time distributing them. But the good news is you can use several paid and free tools to create surveys. Google is among the best in the free category, while Glimpse is at the top in the paid category.
Moreover, you can use Statista to gather information when conducting market research for opening a restaurant and always remain on-trend. Other tools include Make My Persona for creating customer profiles and Tableau for business intelligence.
Lastly, you can use WiFi proximity marketing software to gather customer information.
Increase Your Chances of Success With Proper Market Research
Overall, market research for restaurants guides everything from restaurant concepts to operations and marketing. Restaurant owners who ignore this step often face problems that eventually lead to failure.
To avoid falling into this mess, learn everything about your market using Beambox WiFi marketing. This platform integrates with all internet systems and allows you to collect customer data.
Using this data, you can run effective marketing campaigns to promote your restaurants on social media or review platforms. Get your free trial today to maximize your business potential.
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