It may seem like just an excuse to eat out, but finding out about your competitors’ food and vibe is key to writing a compelling restaurant business plan.
Think about it: you can’t know what your restaurant is up against unless you do some research. Research, in this case, involves visiting, eating, and making lots of notes about other restaurants in your area.
And research is the cornerstone of a restaurant pitch to investors. They want to see you have studied your market, and your competitors are part of this market landscape. When you include data about your restaurant’s competitors, investors see that you understand the barriers to success and how to mitigate them.
So let’s look at some of the aspects of your competition that your investors will want to see in your business plan.
Menu and prices
First you need to identify a niche in your local restaurant market: something missing in the local food scene that you could supply. Your menu can’t be too similar to other restaurants, but it shouldn’t be fancy either. Theme restaurants are a tough sell to investors because most diners don’t return for a repeat experience.
Visit any other restaurants in the area where you plan to start your own. This includes places that may be priced higher or lower than yours. They will always compete for your guests.
Take home a copy of their menu or take a photo if you can’t get a copy. Find out what they offer on their menu and what they don’t. Write down how much they charge for each item. Pay attention to the quality of service in the restaurant and the general atmosphere. Even if your planned menu is similar, you might be able to offer something unique in the dining experience.
The quality of food your competitors serve is closely tied to menu and price. If they charge high prices for mediocre dishes, your restaurant might charge higher prices for better. If your restaurant’s neighborhood doesn’t have high-quality dining options, your restaurant can fill that niche perfectly.
When visiting your competitors, pay close attention to the quality of whatever they serve you. They can cut corners on items like desserts or side dishes. And while appetizers are notorious for making money in a restaurant, no one will come back for frozen fries or chewy mozzarella sticks. Simply serving better food can be enough to beat the competition.
Location and parking
Your restaurant may be able to offer better access than others if you can find the right location. You will need to take a moment to think about your guests: who are they and what are their transportation needs?
If you are speaking to a Gen Z crowd (younger, with less money), you will want to be near public transport. If you’re trying to attract millennials, you’ll need plenty of parking space for their family cars. If your competitors aren’t meeting the transportation needs of their diners, you may have a head start in attracting them to your restaurant. Including this information in your business plan will show investors that your location choice is informed.
Part of your competitor analysis should include how your competitors market their business. Look at their social media profiles and see what kind of interactions they get. Also note whether they market through traditional media such as newspapers or subway ads, or if they only advertise online. Look at their Yelp profile and also see how they rank in a Google search for restaurants in the neighborhood.
All of this information will serve as a checklist when planning your own marketing strategy. You’ll see what works for your competitors and what doesn’t. And investors will love to see that you’ve compiled a smart marketing campaign informed by real data. It’s a win-win strategy for you and your investors.
Competitor analysis is an essential part of a great business plan for a restaurant, but it is only one part. A well-rounded business plan and pitch deck inspire confidence in investors, and confident investors are more willing to open their wallets. When your business plan is full of real, specific data, you’ll have a better chance of winning over investors.