Gauging your Restaurants Competition

Updated September 21st 2013

A restaurant owner must always analyze any competition close by in order to develop effective marketing strategies. This will enable them to survive this competitive industry.

One of the most effective strategies of gauging your restaurant’s competition is benchmarking. This is where you compare your product and services with that of your competition and developing strategies that will keep you ahead of them. No restaurant can survive competition without learning about their competition.  The first step in this process involves identifying your competitors and categorizing them as either direct or indirect competition. Your competition includes all restaurant within a 15 mile radius from your establishment. Direct competition on the other hand is those restaurants that offer similar products and services to your own. It is always important to concentrate on direct competition as they have the potential to run you out of business. However don’t forget secondary competition as they can also affect your sales and profits significantly by driving traffic away from you.

After identifying your competitors you need to research all about their services, ratings, and food. The easiest method is by looking for their customer feedback or reviews online. Compare all the feedback and reviews with those of your restaurant. The best place to get their customer reviews is on their websites, travel websites, or other online directories. Such reviews are usually more accurate as they are written by their customers. They also offer more insight and personal opinion compared to information obtained from customer satisfaction surveys. Read and carefully analyze all your reviews and theirs and don’t get discouraged by any negative reviews as you can use them to improve your marketing strategies or service delivery. It is also advisable to get back to dissatisfied customers and solve any problems amicably. Check out and get familiar with tripadvisor.com which offers an insight on what more than 200 million travellers think about venues, restaurants, hotels or locations.

Apart from the internet other wonderful sources of information about your competition includes newspapers and restaurant guides. Local newspapers always feature a food section where they sometimes mention the best restaurants around. They may also contain customer reviews of local establishments. Restaurant guides on the other hand offer more detailed information about all local establishments as they are used by tourists as well as locals. The best way of getting your restaurants in such guides is by ensuring you get good press and customer reviews. You can also contact the publishers to list your restaurant.

Another suitable avenue of obtaining information is by visiting other restaurants. This will offer you first-hand experience on the food and services that they offer. Check closely the way their staff treat employees and the quality of their food. Take notes of anything you find different and interesting from your competition. However try to avoid exposing your intention to their employees or managers as they may sabotage your efforts.

Industry reports can also come in handy as a source of information about your competition. These reports are available online and they contain financial and operational statistics of this competitive industry. You can always use it to compare your restaurants performance to the industry standard. This way you will be able to identify any problem areas and make adjustments to enhance your performance.

After successfully obtaining all the information about your competition, the next step is to prepare a comparison. You first have to evaluate their concepts and operations by comparing several factors including;

•    Pricing of their items
•    Their visibility and ease of access
•    Their location
•    Their Unique selling point
•    Their target customers
•    The menu items offered
•    Other extra services offered – for example: parking

For easier comparison you can make a chart with all the details you collect from all the information sources discussed above. To avoid biases you can always ask a friend or third party to help you fill in the chart especially the section containing details of your own establishment. After completing the chart you can then identify your pros and cons and work on improving your services and avoiding all the cons.

After comparing yourself to your competition the final step involves developing strategies that will keep you ahead of other restaurants. Avoid imitating the services and food offered by your direct competition, instead focus on offering unique services. However at times it can be beneficial imitating secondary competition as this will most likely give you an edge over direct competition.  Here is a three step guideline of how to beat your competition;

1. First compare what you offer with what your competition offers. You can use a chart or any of the benchmarking techniques mentioned above.
2. The second step follows from the first and basically involves fixing any issues or cons identified after the comparison.  Handle each problem identified to the best of your ability as this will help improve customer experience in your establishment.
3. Finally, develop a strategic edge by focusing on your strengths and taking advantage of your competition’s weaknesses. You can always try to beat your competition at what they are best at but this is not advisable as you don’t have the necessary experience and it may look like direct imitation. Exploit their weaknesses by offering what they don’t.

 

Written by Daniel Grossmann