Knowing How to Handle Competition for Your Restaurant

How to Compete with Restaurants in Your Area

How Your Restaurant Can Keep Its Competitive Edge

The restaurant industry is highly competitive; even with a star chef and a unique cuisine you may have to struggle to stand out in the crowd. Gaining a competitive edge requires a detailed analysis of the demographics of the surrounding area and the nature of existing competitors. And, even if you are successful at first, new competitors could enter your market at any time to steal your clients. The trick is ensuring that you shoot to the head of the line – and stay there.

Easier said than done…

It’s a Diner’s Market

Diners have plenty of options these days. According to Franchise Times, an estimated 1 million restaurants are open for business in the United States. And, according to the National Restaurant Association, roughly 60,000 new restaurants open each year—and 50,000 close. As a result, the net gain is about 10,000 new businesses in a typical year. However, U.S. restaurant trends in terms of real dollars spent on dining out has only increased by about 3 percent over the last few years, and you and your competitors have no choice but to fight for every one of those dollars.

USP – Unique Selling Proposition

In order to know what sets you apart from other restaurants in your area, you have to identify your unique selling proposition (USP) – or unique selling point. According to Entrepreneur, the USP is the “factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition.” In other words, your USP is what your restaurant stands for. Instead of being known for everything (which is the same as being known for nothing), your USP should stand for something specific. It’s what makes people remember you. To be successful, your new restaurant needs to be so different, and so appealing, that people will want to visit again and again. Whether it’s your menu items, your marketing, your staff, or your processes, it’s worth your while to define your unique selling proposition.

Do's and Don'ts of Fighting the Competition

Do’s and Don’ts of Fighting the Competition

If you’re just starting out, directly competing with an entrenched rival is a bad idea; instead, look for an area where no one is serving food similar to yours. Choose a highly visible location that has a suitable consumer base nearby. For example, don’t open a family restaurant in an area full of office buildings. A residential area with a high percentage of families with young children would offer more potential clients, especially if there are relatively few local restaurants currently serving that demographic.

Choose a focus for your restaurant that takes into account your competitors’ strengths and weaknesses. Your restaurant should deliver a service that nearby competitors can’t match, such as novel foods, higher quality, or faster service. Offering lower prices than your competitors might attract consumers, but don’t compromise on the quality of your food and service.

Take Care of Your Customers

Don’t just wonder what your customers want, ask them. To take the guesswork out of customer expectations, visit tables and see how diners are doing. You can conduct surveys discussing different areas such as the menu, the service, and the atmosphere. Make marketing a priority, and always emphasize what makes you different and special.

You want your customers to return, so give them a reason to. Make each visit memorable, and ensure that your staff is thoroughly trained in the art of customer service. This is one of the key areas in which you can set your restaurant apart from the competition. Reward your loyal customers by providing them with an incentive to return; use a loyalty program and promote it in your restaurant, on your website, through email, and social media.

Stay informed on the latest trends in business

Stay Relevant

The restaurant industry is always changing – so keep yourself informed. Make sure you are subscribed to restaurant magazines, blogs, and social media accounts that will keep you updated on changes that can impact your business. You want to stay true to your roots, but you also want to be relevant to your customers, so make sure you add your own twist to the industry’s newest trends.

Make sure to integrate technology into your restaurant operations, and don’t be afraid of change. Get a Point of Service (POS) system that is easy for you and your staff to use, and that will tell you things about your business that you can address. Incorporate technologies that allow customers to interact digitally, such as ordering food and drinks online before they get to the restaurant; or paying with their smartphones.

When There is a New Player in Town

Even if your restaurant is doing well and you have seemingly beaten back the competition, a new restaurant opening near your established eatery is nerve-wracking. People like new things, often rejecting the tried-and-true for the new and shiny. When new competition crops up, a slowdown in business can be expected. Hopefully, the downturn will be temporary; if it lasts more than a month, however, you should consider revamping your advertising and marketing approach, and looking anew at your food offerings and customer service.

If you are losing business to a new restaurant, ask yourself why; try to figure out how you can turn the situation around, and what you can do to bring back your old customers. Try to obtain a copy of your competitor’s menu to check out their offerings and their prices. Your goal is not to replicate their menu – you have your USP and you should remain true to it; nor do you want to lower your prices and lose money. Instead, invigorate your efforts to advertise and to promote your restaurant’s specialties. Launch an aggressive publicity campaign that will cause old and new customers to take another look at your restaurant. It may take time, but a renewed effort to advertise your restaurant to the public will soon lower the pressure that the competition has brought to your bottom line.

Look to your customers for feedback

Look to Your Customers for Feedback

If you’ve become complacent, and new competition is threatening, try to get customer feedback about your restaurant. Comment cards are an opportunity for customers to praise your restaurant, voice negative opinions, and make suggestions. They offer feedback to restaurateurs about the menu, the atmosphere, the décor, and the service. Be prepared for criticism; in that way, you will be pleasantly surprised at the positive reviews guests send your way.

Your Wait Staff Can Help You Beat the Competition

While you’re training your wait staff, let them know that you also consider them an integral part of your sales staff. “Up-selling” should be part of your employee training from the very beginning – regardless of competition or slow periods. Waiters should know how to increase sales by offering top-level liquor, describing the pricier items on the menu in a particularly tantalizing way, and by detailing the specials (which are usually the most expensive items on the menu) to make them attractive. If done correctly, up-selling can increase your restaurant sales, your servers’ tips, and your customer satisfaction.

The Take Away

When you and your restaurant face competition, ask the basic questions: What do you stand for? Is your new restaurant really different from established restaurants? What makes your restaurant special? As you ponder your unique selling proposition, promote it and build your restaurant around it. It is okay to offer other items, just be sure you have something that makes you stand out from the crowd. That’s how you will outperform the competition and stay ahead of the game.

Leave a Reply

Your email address will not be published.