Restaurant Market Research: Ultimate Guide to Market Analysis

Imagine pouring your heart and soul into your restaurant, only to watch your tables remain empty night after night. One of the building blocks you must put in place before starting a restaurant is market research.

Just like a well-crafted mission statement will help guide your business decisions, identifying and understanding your target customers and competitors through restaurant market research will give your business a competitive edge.

Today, we’re giving you a roadmap on how to do restaurant market research well. Let’s take the guesswork out of starting your food business and set your establishment up for success.

Why is market research important for the restaurant industry

Market research helps restaurant owners truly understand their customers. Gathering and analyzing data lets you tailor your menus, services, and overall atmosphere to better meet diners’ needs.

Aside from improving restaurant customer experience, market research also helps you make informed decisions about location, pricing, and marketing strategies. You can identify potential gaps in the local dining landscape and create unique value propositions.

5 steps for effective market research

Doing market research may seem like an extra step in running a restaurant. However, the systematic gathering and analysis of data serves to lay a solid foundation for your business. A data-driven approach gives you concrete insights to make strategic choices.

Step 1: Know your research goals

Before you do market research, you must know what you want to achieve in your restaurant. Clear goals help you focus your efforts and gather the right information. Start by deciding what you need to know.

Do you want to find out which food items your customers love the most? Or maybe you want to understand how much they are willing to spend on a meal. For example, you might set a goal to increase customer retention by 20% over the next year.

Instead of having a vague goal like “Improve my business,” make your goals more specific. For instance, “Discover which menu items are most popular among our target market” is a clear and focused goal. It helps your research stay on track and gather useful data for your restaurant.

Decide how you will measure the success of your research. Will you track customer satisfaction scores, sales of specific food items, or the number of repeat customers?

If your market research goal is to introduce a new menu item, you can measure its success by tracking its sales and customer feedback. Another goal might involve understanding your local dining market’s preferences. In this case, you might run surveys or focus groups to check the potential of new cuisine styles or dining concepts and trends.

Step 2: Analyze the restaurant market

Effective market research entails macro-economic and micro-economic analysis. These may sound technical, but these analyses help you understand broader economic trends in the industry and local market dynamics.

Macro-economic analysis looks at the many factors affecting the entire restaurant industry, like the economy, employment rates, and consumer spending habits.

Here, you take a look at the GDP growth, unemployment rates, and inflation in the restaurant industry. For example, if the unemployment rate is low, people might have more money to spend on dining out.

Read up on third-party full-service market research or other restaurants’ market research reports to understand industry trends. These reports often provide insights into emerging dining trends and potential growth areas.

Food costs are another macro-economic indicator to consider. With the 4.5% increase in average wholesale food prices compared to last year, you might want to update your pricing strategy.

Meanwhile, micro-economic analysis focuses on the specific details of your local market and customer base. Collect data on the age, income, family size, and education level of people in your area.

For instance, a restaurant near a university might target younger customers with affordable and trendy food options.

Use surveys and focus groups to find out what customers might like and dislike. Ask questions about their favorite food items, dining times, and what they expect from a restaurant.

This holistic approach to restaurant market analysis gives you a holistic view of your restaurant’s potential market. The more detailed your research, the better positioned you’ll be to succeed in the competitive industry.

Step 3: Check your food supply

Another aspect to consider is your food supply. Reach out to local suppliers to see if they can provide the ingredients you need. Consider their proximity to your business and the restaurant costs that they entail.

You can also interview restaurants in your area and ask how reliable the suppliers are. This way, you can get a better idea of their service. Additionally, look for potential backup suppliers to avoid disruptions in your supply chain.

If you plan to expand your menu or increase your restaurant’s capacity during peak seasons, make sure your suppliers can meet these demands without compromising quality.

Consistency in delivery times and product freshness is crucial in maintaining a positive customer experience. If your supplier falters, it could impact your reputation and customer satisfaction.

Checking your food supply can give you an idea of the types of ingredients you need as well. For instance, your target market may prefer organic ingredients, so you’ll need suppliers who can consistently provide high-quality organic produce.

Adjusting your menu to what customers want makes your restaurant more memorable and will keep them coming back for more.

Step 4: Develop your marketing strategy

A strong marketing strategy is also important for your restaurant’s success. Start with your unique value proposition, which sets your restaurant apart from the competition.

Look for marketing ideas that highlight your signature food dishes or unique dining concepts. For example, if your market research shows that local customers have a preference for spicy food, you should focus on offering a variety of spicy dishes that aren’t available at other restaurants in the area.

Your marketing strategy helps you understand how to position your restaurant in the market. Consider the channels you’ll use to reach potential customers, such as social media, local advertising, or community events.

Platforms like Facebook, Instagram, TikTok, and YouTube are powerful tools, especially since 72% of guests check social media to find new dining experiences. Create a strategy that will showcase your restaurant’s unique atmosphere and dishes.

Step 5: Test your restaurant market analysis in the real world

Once you have data on the restaurant market, found your suppliers, and developed your marketing strategy, it’s time to test the findings of your analysis in the real world.

By doing so, you validate the accuracy of your research and confirm that your restaurant concept would resonate with customers. Start with pilot testing, which involves running small-scale experiments to see how your customers respond to your restaurant’s offerings.

Run limited-time offers or discounts to attract customers and gauge their interest. For example, you could give away free appetizers for the first 50 customers or introduce a new menu item at a discounted price.

You can also invite a group of customers to try new food items before adding them to your menu. This way, you get direct feedback on what works and what doesn’t.

Don’t forget to test and refine your restaurant’s offerings regularly to make sure you keep on providing the best service and thrive in the industry.

Tools to use for market research

Surveys, social media, your website, and direct interaction with diners can help you gather data on customer preferences and dining habits. With firsthand information, you can make better decisions about your overall restaurant strategy.

Surveys

Surveys make it easy to collect data that can improve your restaurant’s offerings and services. Google Forms is a free app that lets you create surveys. It’s a widely used tool since most people have Gmail accounts so there’s less barrier to collecting feedback.

SurveyMonkey and Typeform are survey tools that offer more customization in terms of design. You can also use pre-made templates specifically designed for the restaurant industry.

To get the most out of your survey tools, keep your questions short and easy to understand. Avoid using complex language as well or asking two things at once.

Provide a small discount or a chance to win a free meal to encourage customers to complete your survey. Make sure to offer the incentive upfront, which is found to increase response rates by 50%.

Social media

Social media is great for understanding customer sentiment since it’s a direct line to them. 72% of diners check Facebook posts and comments to make restaurant decisions, which makes it a powerful tool for market research.

Use social media monitoring tools like Sprout Social or Agorapulse to track customer interactions and feedback. By monitoring hashtags related to dining and your local area, you can gain insights into cuisine trends and potential opportunities for menu innovation.

If many customers praise your fast service, highlight this strength in your restaurant marketing. On the other hand, if there are complaints about wait times, consider ways to improve your service speed.

With the insights you get from social media, you can improve your menu, service, and overall dining experience to keep your restaurant competitive.

SEO analytics

Aside from social media, your website’s SEO performance is also a valuable tool for market research. Use Google Search Console or paid tools like Ahrefs or Semrush to track which pages customers visit most on your restaurant’s website.

Take a look at search terms that bring people to your site, which can reveal customer interests and dining preferences. Check the time spent on different pages and bounce rates to better understand what content resonates with potential diners.

Use relevant keywords from your SEO analysis in your menu descriptions, blog posts, and website content to attract more customers. These SEO insights can also help you build quality local backlinks through other restaurants, which can introduce your brand to more customers in your area.

Comment cards

Placing comment cards on each table allows customers to share their thoughts about their dining experience right after their meal. Getting this type of immediate feedback helps you understand what’s working well and what needs improvement in your restaurant in real-time.

Make sure your comment cards are easy to fill out. Use clear and straightforward questions that customers can answer quickly, such as “Was our food served hot and fresh?” or “How was the customer service?”

The comment cards’ placement also plays a role in getting them noticed and actually filled out. Leave a small stack of comment cards and a pen on each table and place them where they’re accessible but won’t get in the way of dining.

Train your restaurant staff to remind customers to give their feedback as well as submit the comment cards right away to the one in charge. Sort the feedback by category, like food quality, service, and ambiance.

Use the information from the comment cards to make changes that enhance your restaurant’s offerings and customer experience. For example, If many customers mention that the lighting is too dim, consider adjusting the lighting to create a more comfortable dining environment.

Direct conversations

Talking to customers is one of the best ways to get direct, unfiltered feedback about your restaurant. Engage with diners during their meal and ask about their experience.

When receiving feedback, listen actively and keep an open mind. Take notes on their comments and suggestions to show your genuine interest in their opinions.

Direct conversations are even more beneficial if the customer has a complaint. By addressing their concerns directly and professionally, you turn a potentially negative experience into a positive one. In fact, 70% of customers will return to your restaurant if the issue is resolved in their favor.

Train your servers to strike up friendly conversations and report back interesting insights. Restaurant owners can also personally visit tables, giving customers a personal touch and making the process feel more special.

These personal interactions provide a nuanced understanding that surveys and digital tools might miss. With verbal and non-verbal cues, you get authentic perspectives on your restaurant’s strengths and areas for potential improvement.

Get firsthand information from customers

The bottom line is that you must make sure there’s enough market demand for your restaurant to thrive in the industry. You can do that by staying connected with your customers and understanding their preferences.

Leverage surveys, social media, your website, comment cards, and direct conversations to know how to consistently improve your restaurant’s offerings. Successful market research is an ongoing process of listening and learning that directly enhances your customers’ dining experience.

Once you’ve tested and validated your findings, use 7shifts to automate scheduling for peak dining times. With restaurant management software, you’ll always have the right number of staff to maintain high-quality service.