How can you open a restaurant if you do not have a deeper knowledge of the present market scenario?
Market analysis helps you to discover the feasibility of opening, expanding or continuing a restaurant in a preferred region. It depends on certain factors:
Industry Trends: Your first step should be to study the industry trends. This will help you identify opportunities and threats in the industry that may affect your profitability. You can get information for these from various sources:
· National Restaurant Association of India
· Local restaurant associations
· Other industry publications
Brands like McDonalds, KFC, Pizza Hut and Dominos create a high trend for their type of food in the market and people rush towards them.
Demography: The next step is to understand the local market area demographic and economic statistics. This will help you determine the restaurant sales potential of the market area that your restaurant plans to serve.
Concept: It is important to decide the target audience for your restaurant. So understanding the customer preferences is essential in developing an appropriate concept. If you are going to open a Quick Service Restaurant (QSR), you have to focus on the younger generations and their food habits. On the other hand if you want to open a full-fledged dining restaurant, you have to create an ambience so as to attract not only the youth but also families. So it is concept that distinguishes your restaurant from others in the market area and attracts particular customer groups.
Study your competitors: The existing market area restaurants can help you analyze demand and market opportunities. You must assess their competitive strengths and weaknesses and learn from their successes and failures. So first identify the number of restaurants in your market area. Second identify restaurants that appeal to the types of customers which you plan to serve. Third, you should identify all the other restaurants located in your immediate area because they will influence your business. Answers to questions, like how they are categorising their service; what type of food are they offering, etc. – will also give you a clear picture on how sustain your restaurant in this economically struggling society.
Location: This is very critical for your restaurant because it affects your ability to draw customers. You must ensure that your restaurant is visible, accessible, convenient and attractive to your market. Your location and concept must complement each other and the site is chosen depending on market factors and not low price. A good location itself draws a greater customer.
Restaurant size: Size is another important factor to be considered before starting your restaurant. You need to know the exact number of people residing near your restaurant so as to make the seating arrangements.
Compare: Start comparing your restaurant with other successful restaurants in the market on certain points – what products are they using; how much money they are charging for a simple lunch order; is their quality better than yours; Is their service faster than yours and; what reputation have they created in the restaurant market.
It is very important to analyse the market very carefully in addition to the customers demand. Once properly executed, your restaurant surely stand strong to compete in the industry.