It may sound like just an excuse to eat out, but experiencing the food and ambience of your competitors is essential to writing a persuasive restaurant business plan.
Think about it: you can’t possibly know what your restaurant is up against unless you do your research. Research, in this case, involves visiting, eating at, and making copious notes about the other restaurants in your area.
And research is the lifeblood of a restaurant pitch to investors. They want to see that you have researched your market, and your competition is part of that market landscape. When you include data on your restaurant’s competitors, investors see you understand the obstacles to success and how to mitigate them.
So let’s look at a few of the aspects of your competition that your investors will want to see in your business plan.
Menu and Price Points
First you need to identify a niche in your local restaurant market: something that is lacking in the local food scene that you could provide. Your menu cannot be too similar to other restaurants, but neither should it be gimmicky. Theme restaurants are hard to sell to investors as most diners don’t return to repeat the experience.
Visit all the other restaurants in the area in which you intend to start yours. This includes places that may be a price point above or below yours. They will still be competing for your diners.
Take home a copy of their menu, or take a picture if you can’t get a copy. Explore what they offer on their menu and what they don’t. Note how much they are charging for each item. Pay attention to the standard of service at the restaurant and the general ambience. Even if your planned menu is similar, maybe you could offer something unique in the dining experience.
Closely related to the menu and price point is the quality of food your competitors are serving. If they are charging high prices for mediocre food, your restaurant could charge higher prices for better. If your restaurant’s neighborhood has no high-quality dining options, your restaurant may fill that niche neatly.
While you’re visiting your competitors, pay close attention to the quality of everything they serve you. They may be cutting corners on items like desserts or side dishes. And while appetizers are famously the money makers in a restaurant, no one will come back for frozen french fries or chewy mozzarella sticks. Simply serving better food may be enough to best the competition.
Location and Parking
Your restaurant may be able to offer better access than others if you can find the right location. You’ll need to take a moment to think about your diners: who are they and what are their transportation needs?
If you’re catering to a Gen Z crowd (younger, with less money), you’ll want to be near public transportation. If you’re trying to attract Millennials, you’ll need lots of parking for their family cars. If your competitors aren’t meeting the transportation needs of their diners, you may have a leg up on attracting them to your restaurant. Including this information in your business plan will show investors your location choice is an informed one.
Part of your competitor analysis should include the ways in which your competitors market their business. Look at their social media profiles and see what kind of interactions they get. Also note whether they market via 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 of restaurants in the neighborhood.
All of this information will act as a cheat sheet when you’re planning your own marketing strategy. You’ll see what is working for your competitors, and what isn’t. And investors will love seeing that you’ve compiled a clever marketing campaign informed with real data. It’s a win-win strategy for you and your investors.
Competitor analysis is a vital part of an excellent restaurant business plan, but it’s only one part. A well-rounded business plan and pitch deck instill confidence in investors, and confident investors are more willing to open their wallets. When your business plan is chock-full of real, specific data, you’ll have a better shot at wooing investors.