Your Restaurant Location and Demographic Evaluation (Part One)
How do you tell a businessman here are the ways to properly gather facts that can lead to a better restaurant, but, in reality, there are so many subjective factors that cannot be labeled, factually identified and computed that the ultimate demographic and location impact on your restaurant is largely an educated guess. That is exactly what the goal is here; get as many facts as you can about your market and make your best educated guess with regard to the demographic support of your restaurant.
As part of the research for this article, I reviewed a document produced by Michigan State University titled Restaurant Market Analysis. While the article was well laid out and logically constructed, it was clearly produced by non-restaurant analysts. Broad assumptions that the average restaurateur would not accept were taken for granted and other factors were ignored such as server training, ambiance, and cost to value ratios in competitive operations. These are significant factors affecting the potential marketing results of any restaurant operation.
When evaluating the area you define as your market around your restaurant, there are common elements you need to determine in order to make a judgment on the strength of your customer base as it relates to your concept. In other words, get the facts and make sure they relate to what you are going to sell. Planning a restaurant selling old fashion country cooking in a health conscious Y generation neighborhood probably won’t work. Placing a pizza operation in the middle of a neighborhood that has 15 other pizza choices within a three mile radius isn’t too wise.
The steps to obtain objective facts are:
- Area Definition – Define your market on a map. Depending on your location and concept, it could be a radius of 1 to 5 miles or just a few blocks. A hot dog stand in downtown Chicago may have the potential to draw from only a four block square area, while a suburban fine dining dinner restaurant may have a 5 or 6 mile drawing radius.
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Gather Facts – You have a number of resources to get information about the businesses and households in your defined target area. Many of the sources have online details. The resources include:
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U.S. Census Bureau Data – households and income.
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Chamber of Commerce – businesses and area details.
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Local Library – demographic
publications and studies. -
Newspaper Archives – searchable articles on area demographics and trends.
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- Competition – There is only one accurate way to get competitive details, visit them. Locate each competitor in your market area that is in your general meal period and price/value range. Eat at each at least once noting all the factors that go into producing the customer experience like, food, quality, service and location.
Market analysis is a science and could be conducted by trained professionals at a cost that may far exceed your budget. In the final product, there is still a subjective judgment that is necessary to compare, evaluate and make assumptions about your market area. Making those decisions based on accurate data will make the guesswork a little more accurate.
Using the facts obtained in your analysis to open a restaurant or design a marketing plan to improve sales at your existing restaurant, will help to point out strengths and weaknesses you didn’t know you had. You can implement marketing tools that differentiates you from the competition.
In Part Two of this post, we will explore exactly what data you need to collect and a handy checklist to help your competitive analysis.
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