What if your customer asks for Nasi Lemak and you serve them Roti Canai? Doesn’t matter how much effort you put into making Nasi Lemak, the customers care for Roti canai. Market research is the process of gathering all the necessary information about your target customers, competitors, and the restaurant industry. This information is important to help you make decisions regarding your restaurant. Most importantly this helps in functioning according to your customers.
So what if you don’t know how exactly you should do it? We’ve got you covered!
What is Market Research for Restaurants?
Market research for restaurants is the process of gathering information about your target customers, competitors, and the market. It involves analyzing trends, customer preferences, and the competitive landscape. This helps you make informed decisions, such as setting prices, designing your menu, and choosing the right marketing strategies.
Through market research, you can answer questions like:
- Who are my customers?
- What are they looking for?
- How can I attract them?
- Who are my main competitors?
Good market research keeps you aligned with what customers want. According to Statista, the global food and beverage industry is expected to grow by 7.3% annually, which means there is a demand, but competition is also rising. So understanding the market helps you stay ahead.
Why is Market Research Important for Your Restaurant?
Market research is crucial for your restaurant’s success. Here’s why:
- Identify Customer Needs: Understanding your customers allows you to serve dishes that meet their tastes and expectations.
- Set Competitive Pricing: Knowing what customers are willing to pay helps you set prices that attract customers without sacrificing profits.
- Minimize Risks: Investing in market research reduces the risk of opening in the wrong location or serving the wrong dishes.
- Improve Marketing Strategies: It helps you create targeted marketing campaigns, saving you time and money.
For example, a study by Technomic shows that 65% of customers choose a restaurant based on convenience, so if you’re in the right location or offer delivery, you’re already meeting customer expectations.
What Are the 4 Methods of Market Research?
There are four main methods of conducting market research: surveys, interviews, focus groups, and observation. Each one provides valuable insights into different areas of your business.
1. Surveys
Surveys are a quick way to get feedback from a large number of customers. You can ask about their dining preferences, favorite dishes, or how often they dine out. Surveys can be conducted online, in person, or even through social media. Keep surveys short and focused. For example, ask about menu preferences or service quality. A survey by Foodable Labs found that 80% of customers are willing to answer quick surveys if it improves their dining experience.
2. Interviews
Interviews provide deeper insights. Talk to your customers one-on-one to understand their preferences, dining habits, and expectations. Interviews take more time, but they provide a lot of information. Consider interviewing both loyal customers and first-time visitors to get a balanced view of your restaurant.
3. Focus Groups
A focus group is a small group of people who give feedback on your menu, services, or branding. It’s a great way to test new menu ideas or a rebranding campaign. Focus groups give you direct and honest feedback. Include a mix of ages, genders, and backgrounds in your focus group for a well-rounded opinion.
4. Observation
Sometimes, simply observing customer behavior can give you useful information. Watch how customers interact with your menu, what items they order, and how they respond to your service. Observation can reveal things customers might not mention in surveys or interviews. Keep track of popular dishes, busy hours, and customer flow. This helps you make adjustments to the menu, staff schedules, or layout.
How to Do a Market Analysis for a Restaurant?
A market analysis involves a thorough examination of your target market, customer demographics, competition, and industry trends. Here’s a simple step-by-step guide:
1. Define Your Target Market
Identify the specific group of people you want to attract. Are you targeting families, young adults, or office workers? Look into their age, income level, lifestyle, and dining preferences. For instance, a report from the National Restaurant Association shows that Millennials prefer quick, affordable, and convenient dining options, while Baby Boomers focus on quality and atmosphere.
2. Study the Competition
Research other restaurants in your area. See what they offer, their pricing, and how they market themselves. This helps you identify gaps you can fill or areas where you can offer something unique. (Psst! Visit competing restaurants as a customer. Take note of their menu, service, and atmosphere. Think about what you could do differently or better.)
3. Analyze Industry Trends
Stay updated on food trends, such as the demand for plant-based meals, organic ingredients, or sustainable packaging. According to Global Data, plant-based food demand is growing by 8% per year, so adding vegan options could attract more customers.
4. Understand Customer Behavior
Use your POS system to track customer orders and identify popular menu items. For instance, consider adding similar options if certain dishes are consistently popular. Your data can also help you adjust your menu for seasonal changes, like adding more salads in summer.
5. Financial Analysis
Analyze your costs, including ingredients, labor, and rent. Knowing your expenses lets you set prices that cover costs and generate profit. A Small Business Administration study shows that a profitable restaurant typically spends 25-30% on food costs, so use this as a benchmark.
Putting Your Market Research into Action
Once you’ve gathered data, it’s time to use it. Here’s how:
- Create a Unique Selling Proposition (USP): Use your research to create a USP that sets you apart. For example, if your research shows that customers want healthy options, focus on being the best healthy restaurant in town.
- Adjust Your Menu: Add or remove dishes based on customer preferences. If data shows that customers want more vegetarian options, add a few to the menu.
- Improve Customer Experience: Use feedback to improve service. If customers want faster service, train your staff to be more efficient. This directly impacts customer satisfaction and can boost repeat visits.
- Revamp Marketing Strategies: Use the insights to create targeted ads on social media. If you know your customers are young adults, focus on Instagram or TikTok for your marketing efforts.
- Monitor and Adjust: Market research is not a one-time activity. Regularly check in with customers and keep up with trends. Continuous monitoring helps you adapt quickly.
Identifying your restaurant’s strengths and working on weaknesses is the only way to get ahead of other restaurants. Market research will help you with this. Now that you’ve understood the methods of market research, go on and have surveys in your restaurant or send your target customers a questionnaire. One-to-one discussion can also help you understand the psyche of your customers. Prepare a detailed report based on that and create your action plan. Follow this action plan for a while and try to modify it whenever necessary.
