A New Restaurant

When we went through the overview of a restaurant business plan, I listed the parts as : Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, and Financial Plan.

Last week I posted a more detailed look at what all went into the Company Analysis. Today, I’ll continue on with the business plan series by looking at the Industry Analysis.

Market Analysis

Start your Industry Analysis with a look at your market as a whole. While it’s important to segment your market when you’re looking at your customer make up, right now you want to describe what the total market looks like. Make sure you do this in a way that makes sense. If your opening up a small bar and grill, it wouldn’t be very helpful to run your market data on the whole city. Set a realistic distance that people would reasonably be willing to travel to get to your restaurant. That’s your market.

Gather any information that you think would be relevant to your restaurant. The US Census Bureau keeps a ton of information, and it’s all free to use. Go to US FastFacts, type in a zip code, and you’ll get information on population, age makeup, number of households, median income, education level, and much more. You can even get maps that show how the population is segmented within the zip code area.

Trends

While national trends are helpful when you look at restaurant industry trends, it’s also important to be able to show what the trends are like on a more local level. Restaurant trends differ drastically between markets. The trends in Los Angeles will be very different than the trends for restaurants in Little Rock, AR, which would be different than restaurants in Cleveland, OH. Some areas of the company have seen decreases in population and income levels, while other areas have seen phenomenal growth. Some trends may hold true on a national level, but some of the trends and tastes are much more localized.

For instance, the other day I saw a special on “The Best BBQ in the US.” What was interesting was that every region had a different opinion of what made good BBQ.

You should be able to discuss not only what the trends are, but what is influencing those trends. Be able to tell your investors whether the trends are short lived, or wheter the trend will continue.

Customers and Competition

While this may look like it should be two separate sections, they are related. What do you and your competitors have in common? The customers!

This is where you segment your target market. You have to be able to break the target market down to determine who the customers for your restaurant are likely to be. If you are opening an upscale, fine dining restaurant, the lower middle-class blue-collar family probably isn’t your primary target. Think carefully about what your customers will probably look like, and then determine how many of them live in your area.

Once you’ve figured out who your customers are likely to be, you can start to figure out who your competition is. Don’t fall into the trap of thinking that because nobody is exactly like you that you don’t have any competition. Everyone has competition, and just because you refuse to acknowledge them doesn’t mean they don’t exist. Look very carefully at anywhere your potential customers might spend their entertainment dollars. That is where your restaurants competition is. Being different does not make them any less of a competitor. Is McDonalds competition for the full service family restaurant down the block? Very much so. If the family has a choice, and they choose McD’s, your family restaurant has lost the sale.

Data Sources

When you collect the data for your Market Analysis, be sure to get it from credible sources. The internet has made it easy to find information on many different topics. The danger is that many of those sources are not accurate, or are out of date. Building your analysis and projections on information that was true 10 years ago isn’t going to do you much good. I mentioned earlier about using US Census data. No investor is going to question the accuracy of the US Census. Keep track of where you got all of your different pieces of data s you can back up what you’re claiming with credible sources.