How To Conduct a Restaurant Market Analysis

Expanding your restaurant requires planning and market research is part of that planning. A market analysis helps you find the best places to expand and manage your real estate. By looking at demand, feasibility, and potential challenges you can make informed decisions that will drive your restaurant’s success.

Understanding and adapting to consumer trends is key to staying ahead in the ever-changing restaurant industry. A market analysis allows you to compare, rank, and evaluate locations based on your criteria, find opportunities that benefit your bottom line, and align with your strategy.

Here we’ll break down the components of a restaurant market analysis. You’ll see what to look at, how to research, and how to plug it into your restaurant business plan so you can make informed decisions for expansion and profit.

Key steps to restaurant marketing analysis

There are lots of criteria to analyze when evaluating potential markets for your restaurant. It’s easy to miss critical elements when there are so many variables to consider.

To ensure you’re comparing apples to apples, your market analysis should cover the following:

1. Identify your customers (and more like them)

Your own customer data is the most valuable information for market analysis. By studying demographic trends like your customers’ place of residence, age groups, and common characteristics, you can locate more customers like your best ones. By combining your own customer data with other available sources, you can identify trade areas with populations like your best customers. Products like Nielsen’s MyBestSegments and Esri’s Tapestry Segmentation can help you layer this data over maps to pinpoint the best opportunities.

2. Score each site’s accessibility and visibility

A great location is more than just situated in a populated area; the site needs to be accessible and visible to your target market. Ask yourself if the location is visible from through streets or intersections, accessibility, shared parking, and traffic congestion. These characteristics greatly affect your ability to reach your target market and should be part of your research.

3. Analyze traffic patterns

To truly uncover opportunities, traffic flow data is critical. Where are your targeted demographics most concentrated during your busiest hour of the day? Products like Placer.ai and StreetLight Data can help layer traffic flow data over a map of your trade area and demonstrate how patterns shift throughout the day. You can use these indicators to locate sites that are closest to your target market during your busiest hour of the day.

4. Map points of interest

What points of interest attract your customers? Parks, event spaces, theaters, schools, or locations tied to specific demographics like skate parks or yoga studios? By analyzing each of your best locations, you can gather insights into complementary businesses nearby your potential new sites.

5. Assess overlap with competitors

How saturated is the market? Evaluating the competitive landscape by analyzing direct and indirect competitors can justify the opportunity as much as any other factor, it’s also sharing the potential market. Layer each store’s serviceable area (considering traffic patterns and demographic data) to demonstrate overlaps and remaining opportunities.

6. Forecast potential sales

Sales forecasts are one of the most important and most difficult tasks. Predictive analytics software can utilize machine learning and AI to weigh criteria and produce sales forecasts. Products like Intalytics and PredictHQ produce a robust site model and allow you to input variables affecting sales. This consideration produces better comparisons and forecasts.

7. Build a prioritized list

Based on their fit with your business goals and potential sales, your market analysis should produce a prioritized list of opportunities. This list drives your strategic real estate moves and helps you do the right things in the right order.

How to do Market Research for Restaurants

Market research for restaurants can be divided into two: qualitative and quantitative.

Qualitative research:

This type of research is about understanding opinions, not numbers. It’s for gaining insight into your customers' experiences and preferences.

Methods for qualitative research:

• Interviews: One-on-one interviews to get in-depth insights from customers.

• Focus Groups: Group discussions to get customer opinions and attitudes.

• Archival Research: Analyze existing records and documents to understand historical trends and customer behavior.

Let’s get into focus groups. These are where you can get up close and personal with participants to gauge interest in your concept and get to know your target market better.

Here’s a step-by-step guide to running a focus group for your restaurant:

1. Set your objectives

What do you want to find out? In this case, you’ll probably want to know about your target market’s dining habits and values.

2. Choose a venue

Pick a comfortable, relaxed space. Make sure it’s quiet enough to record the conversation for future reference.

3. Prepare your questions

Limit yes/no questions and use open-ended questions that encourage thought. Start broad and then narrow down. Aim for 10-12 questions.

4. Recruit participants

Find objective participants through ads on social media or local publications. If budget is tight ask friends to reach out to their networks. Focus groups are usually 5-10 people. Consider offering incentives like gift cards.

5. Collect demographic information

Have participants fill out a confidential demographic form before the session, including fields like age, gender, city, neighborhood, marital status, children, profession, and income bracket.

6. Release form

Explain the purpose of the study, confirm participants know they’ll be recorded, and how the research will be used.

7. Run the session

Guide participants through the questions, keep them on track, and prompt for details if needed. Be curious, friendly, and make eye contact.

8. Analyse your results

Listen to the recording and note down what participants said, what they preferred, and what they did. Look for patterns in their answers.

Quantitative research involves larger sample sizes and statistics. If you need data from many people use methods like experiments, polls, or surveys to get it.

Takeaway