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Competitive Analysis
By David Lipton
Whether you’re just starting out in the restaurant business
or you’re an industry dinosaur, dealing with the competition
is an inevitable part of the job. And no matter how hard you try,
simply ignoring competitors will not make them go away. Even the
most loyal customers may become curious about the “new joint”
down the street, an in the process, they may find out there’s
something it has that your operation doesn’t. That something
may seem small and insignificant to you, but it could mean the difference
between an anniversary celebration and a going-out-of-business sale.
While some call competitive analysis immoral and unethical, others
call it necessary for survival. Restaurants that ignore customer
needs and desires are the ones that don’t last. Survival is
guaranteed by staying one step ahead of the competition, but in
reality, that doesn’t always happen. It’s vitally important
to be sure your menu is not lacking the one dish everyone is seeking
out, or to ensure that you décor is not passé compared
to competitors. Restaurant owners must have a sharp, keen ear for
the latest industry trends; staying attuned to what competitors
are offering, how they offer it and why.
Competitive analysis involves using a number of techniques and
tactics. The following list represents a few techniques.
- Broadly define the competitive landscape. Don’t overlook
businesses that could easily become you competition by making
minor changes to their operation.
- Attend industry conferences and trade shows. This will allow
you to monitor trends and keep track of important issues that
may affect your business.
- See your competition through the eyes of a customer. Being a
customer enables you to get a first-hand look at how an operation
is run, and their quality standards in terms of service and products.
Posing as a customer to experience the competition first-hand
is one option. A third-party mystery shopping program can also
provide an in-depth assessment of the competitor’s strengths
and weaknesses, as well as how it compares to your establishment
(from an impartial third party’s point of view)
- Talk to your competitors’ customers. Find out what they
like and dislike about it, why they dine there, and what keeps
them coming back. Conducting exit interviews and/or focus groups
are some of the ways to obtain this type of information. Comparing
that information to the same information from you own business
can show you exactly what you are doing wrong—or right.
- Find out as much as you can about the people who run competing
businesses. They may have had training or education that your
staff is lacking. Also, since buying out the competition to grow
your business is a common strategy in all industries today, knowing
how that business runs and who runs it could probe to be invaluable
in the long run.
- If you’re looking at a publicly traded company, obtain
information through the investor relations department. Shareholders
have access to certain information, such as financial records
and strategies that may not be otherwise acceptable.
- Check public filings. This information will allow you to obtain
insight on how the company is actually doing and what its future
plans are.
- Use the Internet. A lot of competitive information is readily
available to the public with a little bit of time and Internet
searching know-how.
- Assess the competition’s goals in relation to your own.
You may wish to alter certain aspects of your business to better
accommodate your customers, or target the competition’s
customers.
- Be aware of the potential for new competition. With today’s
technology reducing communication time, business concepts are
easily duplicated or developed in a very short amount of time.
Keeping up with the times and knowing what your competitors have
up their sleeves is just as important to a restaurant’s longevity
as serving the freshest meat and vegetables. Knowing your competitor’s
business is as important as knowing your won. Everything from becoming
a customer, to talking to customers, to conducting surveys, or accessing
public records is a small but key component of thorough competitive
analysis. The key to beating the competition is to always be alert,
and never let them have the upper hand. |