How to Start a Restaurant 08: Research your Local Competition

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How to Start a Restaurant 08: Research your Local Competition

Last weeks post on “How to Start a Restaurant” we discussed how to start Researching Restaurant Insurance. With any business you need to have insurance to cover your butt incase something happens. It is no different when you’re a restaurant owner. You don’t want all your hard work you have put into being a restaurant owner to go down because you weren’t covered properly.

Researching Local Competition

In this weeks lesson in our series of “How to Start a Restaurant” we are going to talk about researching your local competition.

As in any business there is going to be competition. Some restaurant owners say competition is good for you it pushes you to always be better then you were the day before. Other restaurant owners hate competition for obvious reasons. It’s important to make sure there isn’t too much competition in your area before you open your doors. The feasibility study you did in the very first unit of How to Start a Restaurant touches on this as well.

You may find this article interesting as well : How to start a demographical study

It’s important that as a restaurant owner you start looking into all the local competition. You may think you have a product that is so superior that you don’t have to worry about competition, but that just isn’t true. Look at Little Ceasars I have heard several people say how horrible their pizza is but they all turn around and say to me we go there at least twice a week. They have a very low price point which helps them sell a lot of pizza. Even though other pizza places have better pizza they would still rather visit Little Ceasars.

10 Ways to evaluate your competition

1. Yelp

Always start with a yelp search. Search for restaurants in your area. A lot of people turn to yelp when they are new to the area even if they aren’t an active yelp user. See what people are saying about your competition. If there are complaints it is going to give you an idea of what you can do better than your competition.

2. Social Media

Once you have identified your local competitors head to social media to check Facebook, Instagram, and Twitter. Find all your local competitors pages to see what people are saying about them and what specials they are running or events they have coming up. Look at all the reviews people have left on Facebook about your competition. Again this is a good place to find things that you can do better then your competition. You can also see how active they are on their accounts to see if this is going to be an area that you might be able to dominate.

You may find this podcast about doing a feasibility study I did with Laurie from the Small Business Development Center in Lansing Michigan interesting as well

3. Google

As with any research you should do a quick google search for competitors in your area. This will help you figure out how many local competitors there are for you business. There may be to many for you to even consider opening in that location. At least you will know what you are up against. Read as many reviews about your local competition as you can on google. Just by googling restaurants near me you will find many of your local competitors.

4. Google My Business

Google my business is a great tool for restaurant owners. You will want to download the app onto your phone. You will be able to upload pictures for people to see when they google you business and pull you up on google maps. This is also where you will get notified if any customers leave reviews on your place for everyone to see. You can respond to them there as well. You can find your local competitors on there and see what customers are saying about them.

5. Google Alerts

It is good to have a google alert set so you get notified any time someone mentions you the internet. It is also good practice to have an alert set for all your local competitors as well. This will help keep you in the know of new specials they might be running or if they are coming out with a new product. This may only work for big national chains but it may help with smaller shops as well.

6. Do some reporting

By visiting your competitors establishments you will get a sense of what you are going to be up against. Get a taste of their food. If you can talk to some customers and just see why they like going to that restaurant. Is it the restaurant owner they like or is it the staff, food, or just the price point they have their food set at.

7. Job Postings

Another way to research your local competition as a restaurant owner is to look at there job openings. Are they hiring new people frequently? If they are this could mean they have a management problem. You could even try working for a few of them while you are still in the planning stages of your own restaurant.

8. Conducting a Survey

Their are several different websites out there that you can send your future customers to that will give them a survey and give you the data from those surveys. One of these sites is called survey monkey. I have used them when I first opened to see what was most important to my customers taste or price. I also asked them how we were doing and what we could do to improve and how would you rate our customer service. Just for filling it out I offered them something for free.

A good way to do this would be just to head over to your Facebook page and ask your social media friends to take your little survey. See what they say about the local competition and where they can improve. It is free so you are no further behind then you were before you asked them to do this.

9. Check with your Restaurant Food Supplier

If you have already started to interview restaurant food distributors you should ask your salesman how your competition is doing. Not in those words though. For instance if your competitor is another pizza place ask your distributor if they get their food order on the same day yours will be delivered. If they say yes you know they supply them. Ask a simple question like how much cheese do they usually order or how many boxes do they order. If you are a steak house ask them how many steaks they get delivered. You can also pay attention to what distributors go to their restaurants and start using them as well. Or check their prices at least to see how they compare with what you are getting now.

10. Order from them yourself

A great way to check on all your local competition is to order food from them. I used to do this before I opened my restaurant to see what I was up against but after opening I felt weird ordering from competitors. Whenever I go on vacation it is the first thing I do. I love seeing how I stack up compared to other restaurants and restaurant owners. I usually come back with at least one to two good ideas. It is always good to talk to as many other restaurant owners as possible. You can find out what problems if any they have and how they have fixed them. You would be surprised at how helpful your competition can be.

As a restaurant owner you will be able to start to anticipate your competitions next move or know what specials they are going to run. After years of being open if you have been keeping tabs on your competition you may notice they run the same special every spring.

Researching your competition at the beginning is going to be something you are going to want to continue to do as long as you are a restaurant owner.

How to keep it all straight

The best way to keep track of everything is by starting a spreadsheet. Put all your competitors names going down the left side. Across the top put all the information you find important. For example at the across the top you might put outdoor seating, serves beer and wine, live music, Facebook page, Instagram page, website, online ordering, and complaints. If you find other things that you find interesting about them put those in as well. Below you will find an example of what yours might look like.

Have a great day restaurateurs.

  Outdoor seating serves beer and wine T.V.'s Live Music Facebook Page URL Instagram URL Website URL Online Ordering Complaints
Jakes Stake House x   x         x  
The Chop House   x x   URL's here URL's here URL's here   List any and all complaints you find
Joe's Seafood shop     x x       x  
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