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SWOT Analysis for Restaurants: Ultimate Guide + Examples for 2024

Updated on January 21, 2024, 80 days ago 7 minute read
Author : Ryan Andrews
Reviewed by : Nezar Kadhem
Updated : January 21, 2024 7 min read
Author : Ryan Andrews
Reviewed by : Nezar Kadhem
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Contents

Your restaurant may have the best ambiance or serve the most delicious appetizers in your neighborhood, but if you don't keep tabs on its strengths and weaknesses or identify the opportunities and threats facing your own business strategy, your profitability may suffer.

This is where conducting a restaurant SWOT analysis can be a useful tool for your best defense against losing ground to your competitors.

Key Takeaways

  • SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats, and is a strategic tool used by restaurants to assess their internal and external factors.

  • Strengths: These are the positive aspects of a restaurant, such as a strong brand image, loyal customer base, unique menu, excellent service, and efficient operations.

  • Weaknesses: These are the areas that need improvement in a restaurant, such as poor customer service, outdated décor, limited menu options, high food costs, and low employee morale.

  • Opportunities: These are the external factors that could benefit a restaurant, such as new market segments, expanding to new locations, introducing new menu items, utilizing technology, and collaborating with local businesses.

  • Threats: These are the external factors that could negatively impact a restaurant, such as intense competition, changing consumer preferences, economic challenges, regulatory changes, and negative online reviews.

  • It's important for restaurants to regularly review and update their SWOT analysis to stay proactive and adapt to changing market conditions.

What is a restaurant SWOT analysis?

A restaurant SWOT analysis is an exercise you can go through at your restaurant business to analyze your Strengths, Weaknesses, Opportunities and Threats.

Usually, a SWOT analysis is visually displayed in a matrix format. In this layout, the upper row outlines strengths and weaknesses, while the lower row highlights opportunities and threats. Internal aspects, such as strengths and weaknesses, find a place in the top row, whereas external factors, like opportunities and threats, are featured in the second row. This strategic planning tool facilitates a comprehensive examination of both internal factors and external elements, aiding businesses in strategic decision-making.

Why is a restaurant SWOT analysis important?

A restaurant SWOT analysis serves various functions. It enables restaurant owners to gauge their standing against competitors, showcasing assets that can be leveraged to gain a competitive edge. Additionally, by prompting them to consider and prepare for challenges, a SWOT analysis helps equip restaurateurs with the tools to effectively tackle obstacles.

Although a SWOT analysis is commonly incorporated into a restaurant's business plan or marketing strategy, it can be undertaken whenever crucial decisions arise in your business.

 How to conduct a restaurant SWOT
analysis?

Conducting a restaurant SWOT analysis is not too difficult. The most efficient way to go about putting one together is with the help of your restaurant team (everyone from upper management to front-of-house staff). You can do this in a group or speak to each individual separately - but ultimately you want to ask them directly what they think are your restaurant's strengths, weaknesses, opportunities and threats.

Below is a step-by-step guide to conducting a restaurant SWOT analysis

  1. Start off on your own. This is when you can start to put together your own research about your restaurant. Spend some time seeing what people are saying about your brand online. You can even ask your guests in person what they think or try to get them to fill out online surveys.
  2. Spend some time everyday writing down what you think is positive about your restaurant. When do you notice customers are happiest? Where do you notice employees doing a great job? Where do you see the business running smoothly?
  3. While its great to focus on the positive, its also important while you're conducting this exercise to also note down what could be improved at your restaurant. Why are certain customers unhappy? Why are some staff not doing as well as they could be?
  4. Now that you've spent some time looking at the positives and negatives of your restaurant, it's time to look outwards. Take some time to study the restaurant industry in your area. What are you doing better than your competition? What are they doing better than you? Are there any events currently happening or upcoming that you could take advantage of?
  5. Once you've worked through steps 1-4, you are at a great starting point to involve your team. This is when you'd gather your employees and draw out a SWOT analysis matrix. Work through noting down any strengths, weaknesses, opportunities and threats that you've gathered during your research period.
  6. With your SWOT analysis matrix filled out, the real work can begin. This is when you and your team can put together a strategy to take advantage of your strengths, minimize your weaknesses, anticipate and action opportunities, and finally, identify threats.

Brainstorming strengths and weaknesses

Start by assessing all the strong points of your restaurant. What makes people choose YOU over others?

Is it the exquisite tapas lined up by your staff? The creative seating arrangement? Is your weekend special? Things that make your restaurant stand out from others qualify as your strengths.

Other strengths might include how the menu is crafted, the variety of cuisines you offer, and your management team's ability to attract a crowd with experiential marketing during those slow times.

The next step is to see what areas of your restaurant are in need of improvement.

If you’re serving a dessert that isn’t getting great feedback or your chef isn’t very effective at managing his/her time, these are areas that need your attention. Employee turnover also has the potential to stunt a restaurant’s expansion.

Zeroing in on your negatives isn’t going to be a pleasant experience (no one likes to acknowledge their flaws), but getting those weak points out in the open is the only way to accept and overcome them.

Recognizing opportunities and threat

The opportunities part is where you think about all the external factors that can increase your sales revenue.

Maybe it’s high time you introduced a separate menu for patrons who’ve adopted a vegetarian lifestyle or participate in a culinary event to reach new audiences.

Another thing you can do is think of ways to expand or grow your existing presence. This could be something as simple as being active on Instagram or offering a deal or two during happy hours. These could be some opportunities you can capitalize on early to increase foot traffic to your restaurant.

Marketing Ideas to think about can include:

Finally, yet importantly, in the SWOT analysis you need the identify all possible external threats to your restaurant.

An example might be that new cuisine scheduled to be introduced by a restaurant in your neighborhood.

Even if you’re catering to the taste of a specific group of diners, this restaurant threatens your sales by giving everyone a new option come lunchtime.

There can be other potential threats as well, such as an increase in the price of the ingredients you regularly source, or an increase in the social media following of your closest competitor.

The more you stay vigilant about what could dampen your restaurant’s profitability, the better equipped you will be to put out the fire before it catches you off guard.

Here’s an example of a SWOT analysis done for an Asian style seafood restaurant:

Swot analysis

It is easy to see that most of the things are more or less similar to what we’ve discussed in the strengths, weaknesses, opportunities, and threats sections.

Apart from a standard SWOT analysis, you could do a restaurant competitor SWOT analysis to identify where others may be surpassing you as well as what leverage they have over your restaurant. We will go over how to conduct a restaurant competitor SWOT analysis further in this article.

Free SWOT Analysis Bundle Templates Make better decisions at your restaurant Download now

Restaurant SWOT analysis example

A good SWOT analysis, is usually done on a four-square, grid-style table, with a bulleted list presented for each of its sections.

You can use Canva or another similar graphic-design tool to create one for your restaurant. Alternatively, you can grab and customize one of the many pre-existing templates from the web.

The SWOT analysis examples below shows what a typical restaurant industry SWOT matrix might look like.

Restaurant SWOT analysis Example Eat App

How to conduct a restaurant competitor SWOT analysis?

When conducting a SWOT analysis, part of your energy could also be geared towards analyzing restaurants that are offering the same kind of food and prices as you are. This is called a "Restaurant Competitor SWOT analysis" and is primarily geared at putting yourself in the shoes of another restaurant to make the same assessment you would towards your own business. With a restaurant competitor SWOT analysis, you can get actionable insights into what your competition is strong at and where you could do better.

When undergoing competitive research, ask yourself where your target audience would prefer to eat, and then analyze the strengths, weaknesses, opportunities threats to get a realistic picture of your market position in the competitive landscape.

Example restaurant competitor SWOT analysis for a French restaurant

Let's use an example where your main competitor is a French restaurant located within a 5-mile radius of your location, the SWOT analysis can be done in a manner like this:

Strengths: Why do people dine at this restaurant instead of other French restaurants in the city? It could be because of the authentic taste of its meals, or its ability to keep guests entertained.

Reading a couple of reviews on TripAdvisor or Google is a great way to know why patrons love visiting a specific restaurant.

Weaknesses: Where does this restaurant struggle in comparison to others? It might be that its menu has just one option for vegetarians. Or perhaps it’s failing to engage millennial diners with a badly-executed Instagram campaign.

Again, social media analysis and customer feedback are great resources to help you identify competitors’ weaknesses (which may highlight a new strength or two for your own restaurant).

Opportunities: What measures do you think this restaurant can undertake to improve its branding, widen its target market, and/or improve its operations? Maybe it just needs to revamp its menu to include a few more appetizers.

Whatever opportunities you uncover through a competitor SWOT analysis can be incorporated into your restaurant marketing strategy to enhance your strengths in related to your competitors.

Threats: These refer to the external factors that are beyond the control of your competitor and could place their profitability and turnover at risk.

For example, an economic downturn may have caused people to look for affordable French restaurant alternatives.

Threats are essential to keep tabs on because what’s threatening your competitor’s business could very well threaten yours as well.

Here’s what a restaurant competitor SWOT analysis would probably look like if your main competitor were a Thai restaurant:

Restaurant swot analysis

Project the restaurant competitor's SWOT analysis against your own SWOT analysis table to see what needs to be changed and what you can do to boost your business ahead.

Free SWOT Analysis Bundle Templates Make better decisions at your restaurant Download now

Final verdict

A restaurant SWOT analysis can help you get a firmer hold on where you excel and which areas of your restaurant need attention.

It may lead you to a previously untapped market or help you identify roadblocks that could hinder your productivity. As you reaffirm your industry positioning, use it to build a solid foundation and let the rest fall into place.

Frequently asked questions about restaurant SWOT analysis

Where can I get a free SWOT analysis template?

To download a free SWOT analysis template or restaurant swot analysis guide, click here. Make better decisions at your restaurant with our free SWOT analysis bundle.

What does SWOT stand for?

SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats, and is a strategic tool used by restaurants to assess their internal and external factors.

What are some weaknesses of a restaurant?

Assessing why your restaurant might struggle in comparison to others. An example of this in action could be that your menu only has one option for vegetarians. Another perhaps is that your restaurant is failing to engage millennial diners with a badly-executed Instagram campaign.

What are some threats of a restaurant?

These refer to the external factors that are beyond your control and could place your profitability and turnover at risk. For example, an economic downturn may have caused people to look for affordable French restaurant alternatives.

What are some examples of opportunities for a restaurant?

What measures do you think this restaurant can undertake to improve its branding, widen its target market, and/or improve its operations? Maybe it just needs to revamp its menu to include a few more appetizers.

What are some examples of strengths for a restaurant?

If you are looking for examples of strengths at your restaurant, you might want to ask yourself "Why do people dine at this restaurant instead of others in the city?". It could be because of your authentic recipes or maybe your ability to keep guests entertained.

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