Market Research Analyst Food Industry – The restaurant industry is highly competitive and heavily influenced by ever-changing consumer preferences and habits. One of the building blocks that must be put in place before opening a new restaurant is market research. Just as a well-crafted mission statement can help you make business decisions, identifying and understanding your target customers and competitors through market research will give your new restaurant concept a competitive advantage.
Carlos Silva, founder of Memphis Championship Barbecue in Las Vegas, told Entrepreneur that he neglected to do market research at first and had to catch up before he had a solid clientele.
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“We opened our first business in the middle of nowhere and had to work to get people to it.”
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We want to avoid Silva’s mistake by taking the time to research your market early in the restaurant opening process. We’ve helped make your research easier.
As you gather information and insights about your target customer base, you’ll focus on and define the role of the “regular customer.” The higher the percentage of repeat customers in your base, the more predictable your business will be, so it’s important to meet their needs first.
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Read a breakdown of the 5 most powerful restaurant market research tactics recommended by Certified Money Guy:
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You may have an idea of what you want or who you think your typical customer is, but it can be very different from the people who are most likely to dine at your restaurant. Clarify your assumptions to keep your business profitable, then use market research to test your stress. If you have a specific concept, find a market where your type of restaurant will thrive.
As a real-life example, Fields describes what happened when he tried to open a trendy Mexican restaurant on the west side of midtown Manhattan. He chose the concept to match the existing cuisine of the restaurants he bought, trying to capitalize on national trends in Mexican cuisine.
However, he admitted that he did not consider who his client was. When business began to slow, he realized that the local population of struggling artists couldn’t afford to eat at his restaurant on a regular basis. Meanwhile, for other segments of the local population, baby boomers and pre-theatre crowds, the concept of modern Mexico was too important.
Southwestern style, decor and restaurants are thriving. Fields on his lessons learned: “Your restaurant concept should be chosen to attract the specific type or types of customers who are most likely to patronize your restaurant (the menu, food, ambiance, and pricing structure) (prime target customers).”
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If you want to save time and money on concepts that don’t resonate with your local crowd, Fields recommends identifying the following key demographics to focus on.
Also look out for any “neighborhood traffic generators,” as the entrepreneur says, that draw people to the area, such as other retailers, industrial and office parks, schools, colleges and hospitals.
There are informal (cheap) and formal (expensive) ways to evaluate your concept’s target market. The easiest way is to personally go out and eat with all the competitors in your area. Focus on your experience and use your phone to carefully record your observations for later analysis. And don’t forget to leave a good tip!
Pay attention to foot traffic when conducting informal surveys; how many people live in a square mile; whether there is an apartment or a house or a combination or both; Makes of cars parked on the street, going in and out of the garage; What other businesses and restaurants are in the area?
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Then dive deep into specific local competitors by dining at each one, collecting menus, taking photos, researching price ranges, service speed, quality, and peak hours. We’ll take a closer look at the competition comparison below.
In addition to personal observations, you can also talk to nearby restaurants and real estate professionals to learn more about what kind of people work, live, and eat in the area. Regional demographic information is available from local libraries, chambers of commerce, economic development and city planning departments, local business improvement districts, and the US Census.
Websites like Claritas allow users to enter zip codes to find demographic information such as income, age and ethnicity, and then match those segments to lifestyle characteristics such as what they watch and buy and where they live.
If you are a member of the National Restaurant Association, you will have access to their extensive database
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And if you’re on a budget, you can buy demographic data from credit card companies that collect cardholders’ eating habits.
. You can collect information about residents living in a particular zip code, such as how often groups of potential customers eat out, the average amount spent per meal, the types of restaurants they frequent, and more.
On a more formal level, you can use websites like Google Surveys to create online surveys to gather the food preferences and habits of local residents.
. Unlike focus groups, digital surveys are an easy way to gather anonymous feedback from a large number of people and take less time than in-person meetings.
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Experts recommend taking less than 7 minutes to complete the survey and making it easy to respond quickly. For example, instead of asking open-ended questions, surveys can use responses based on scales that measure the intensity of attitudes and feelings about a subject.
Finally, you can use the knowledge and experience of a market research firm to help you not only conduct research and distribution, but also test your brand and concept to ensure your restaurant concept is targeted.
Your pre-opening research should include not only determining whether your concept is a good fit for local customers, but also how your concept fits with the rest of the restaurants in your market.
In Fields’ example of the shift from Mexican to Southwestern concepts, he says his restaurant is the only Southwestern-style eatery in Manhattan’s theater district, which gives him a unique competitive advantage.
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Note that the restaurant’s seat-to-population ratio alone does not give a clear picture. For example, cities or large cities where very affluent couples without children eat out more often than suburbs with low incomes and many children.
Other signs that your local market is oversaturated include more restaurants closing than new ones opening, and a high turnover of restaurant owners. State and local restaurant associations can provide these details.
The recent closures of chains such as Ruby Tuesday and Dickey’s Barbecue Pit, while others have filed for bankruptcy protection, is proof that the entire US restaurant market is saturated.
Another exciting statistic is that the number of restaurants is growing twice as fast as the population
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After a relatively short stint in Boston’s oversaturated restaurant market, veteran operators have watched popular restaurants close recently.
Defining your target market means differentiating the total addressable market (TAM) from the serviceable market (SAM). TAM is total market demand and is used to estimate the growth potential of a particular market. According to HubSpot, to calculate TAM, multiply the total number of customers in the market by the average annual revenue of each customer.
Since your business may not attract or serve your entire potential customer base, you need to find your serviceable market (SAM) to get a more realistic estimate of how much revenue you can bring in. To calculate SAM, multiply the total number of target customers by the average annual revenue of that type of customer.
We use the term “market” a lot, and some of you may be wondering exactly how you define the geographic boundaries of your concept market. Again, there is no simple answer. You should consider the eating habits of your concept’s typical “regular customers.” For example, people who eat at fast food restaurants or diners usually choose one that is very close.
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At the same time, the warm and luxurious concept can be considered “drive-able” for customers in large geographical areas. In fact, according to the National Restaurant Association, a fine dining restaurant can attract customers from twenty or thirty miles away.
Studies that cite restaurant success numbers show that a casual restaurant with standard table service often attracts customers from within a one-mile radius, while other studies show that 60-80% of the restaurant’s customers live within a five-mile radius.
Determining the market for your services becomes even more complicated if you have to consider both temporary and permanent populations.
Consider Manhattan, where
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