How to Conduct a Strategic Competitive Analysis in the Restaurant Industry

It can be challenging to break into the restaurant industry, even if your food is amazing. To succeed, you need to know your target customers, provide good service, and have a USP (unique selling point). But most importantly, you need to stay ahead of the competition.

But the only way to compete with your rivals is to know their restaurants inside out. It would be best to find their strengths, weaknesses, and what keeps their customers returning. What you need is a complete strategic competitive analysis of their business. 

What is a Competitive Analysis?

Competitive analysis is used in all industries to study competitors when a business is still in the planning stages. The best way to do this is to create a SWOT analysis - this means looking at strengths, weaknesses, opportunities, and threats. The information found is used to create a better business plan and uncover problems before they arise.

As part of a competitive analysis, running a SWOT analysis for your business is essential to determine how best to run it. If you’re using Platform-as-a-Service to create your websites and apps, you can quickly gather data on your business ready to monitor and analyze. You might even find some surprising results, like that your Anguillan-based branch would benefit from a .ai domain or that there’s demand for a new location in Sydney. 

In the restaurant industry, most conduct a competitive analysis before opening their restaurants, usually while creating their business plan. But constantly checking what your competitors are doing is always a good idea.

How to Conduct a Strategic Competitive Analysis in the Restaurant Industry?

Identify your competitors

Before you can analyze your competitors, you need to find them. You’re not just looking for direct competition; look at restaurants whose target customers crossover with yours (even slightly).

The first thing to consider is restaurant location —a big city probably has more restaurants in a smaller area. But customers may travel further in less saturated areas. Also, look at restaurants that deliver in the same place.

Don’t disregard potential competitors based on their cuisines. The local Chinese restaurant could still compete with the nearest fine dining experience.

Evaluate your competitors’ SWOT.

A SWOT analysis will uncover your competitors’ strengths and opportunities so you can figure out how to compete. Finding weaknesses will help you avoid similar mistakes, and you might be able to use them to your advantage.

If you can find threats to a competitor’s business, it can help you predict how the market is going. Also, remember that a threat to their business could also be a threat to yours.

Look at trends and the media. Is there anything that could hurt their business? For example, if there has been a lot of talk about healthy eating in the news, this could damage the fast food business.

Run a SWOT analysis for your restaurant.

It is equally important to run a SWOT analysis on your own business to discover any weaknesses and threats you may not have initially considered. This way, you can find a way to turn weaknesses into strengths and keep an eye on threats so they don’t become a problem.

Analyzing strengths will allow you to plan to capitalize on them in advance. It is also essential to think ahead to opportunities that may present themselves in the future.

Identify your unique selling point (USP)

Most successful businesses have a USP. For example, Domino’s Pizza guarantees to deliver your pizza in 30 minutes or free. Being a restaurateur is about creating a unique restaurant brand experience for your customers.

If you’re struggling to find a USP, look at your location - can you capitalize on its history or something it is famous for? Examine your menu - offer a dish that can’t be found elsewhere. It could be as simple as your waiting staff wearing a unique uniform.

Analyze your market position and advantage.

Before entering the restaurant industry, you need to know your market. This includes products, services, and trends. You need to know where your restaurant stands and where you want to be.

What gives you the market advantage over other restaurants? This is where your SWOT analysis will help you out.

Track and predict trends and challenges

The restaurant industry moves so fast that getting left behind is easy. One minute, everyone’s eating superfoods; the next, they’re obsessed with homegrown vegetables. So, tracking current trends and looking for patterns that may predict future ones is essential. Then, consider how they will affect your business and how you can plan to take advantage of new opportunities.

Menu trends are one thing, but don’t neglect trends in other aspects of the business. For example, with the boom of Uber Eats and Deliveroo, restaurants are increasingly looking to build their apps. Although this idea might leave you scratching your head, wondering, “What is env?” or “Android or iOS?” it can be worth looking into, especially considering the benefits of cutting out the middle-man. 

Develop a plan for your restaurant’s growth.

Don’t plan just to be successful today. Look at how you can be successful in the future. A competitive analysis allows you to do this by looking at what your rivals are doing in the second, third, fourth, etc., year of their business and using this to enhance your business plan.

For example, you don’t want to rely on an online food delivery company in the future but are worried about how to manage multiple websites. Look at how other restaurants have merged their websites and apps.

Continuously monitor and adopt.

Analyzing competitors and your own business should be an ongoing process. As we have already said, the restaurant industry moves quickly, so unforeseen changes are always possible.

Look at how covid changed how we all had to work and live. Some restaurants that were prepared switched to delivery easily. Others adapted by changing the layout of their seating. Those who couldn’t adapt no longer exist.

Final thoughts

A strategic competitive analysis will give you the information you need to compete in the restaurant industry. The key to conducting practical competitive research is to run a detailed SWOT analysis of your competitors’ businesses and your own. This gives you the tools to create a successful business plan. It is also important to consider current and future trends when performing your competitive analysis.