We all have our favorite meals. Elvis was partial to peanut butter and banana sandwiches. You may like fried bologna, and you may be able to prepare it exceedingly well. But would people pay money to eat it?
Of course, if you’re starting a restaurant you won’t center the menu on a dish that generates a trash can full of red plastic circles, but the concept is the same. You need to know whether the food, the theme, the décor–everything–that is fantastic in your eyes will meet with the same approval from customers.
Certainly there are elements that you can establish through trial and error. You create a new appetizer, provide samples for each table, and then see if they take off as a regular item. If the reaction is underwhelming, you simply strike the item from the lineup–as long as you haven’t broken the bank on excessive supplies or equipment to produce it.
But you can’t play a guessing game with the big picture. Before you open a snazzy bistro, you need to know if your city is overloaded with them. If you’re thinking seafood, you must analyze the local palate. In short, you need to do market research.
Market research is what separates the aforementioned trial and error from sound business decisions. And while it isn’t infallible, it’s far more effective than guessing.
Most entrepreneurs know the value of market research, but it sounds so daunting that they simply don’t feel they could perform it effectively without an extensive background in it. But you don’t have to reinvent the wheel. Much of the groundwork has been assembled for you, as far as what you need to learn.
Food & Beverage market research can provide a positive boost to your fledgling enterprise and give you the in-depth analysis you need to understand your industry. Let’s review some points already addressed above and add some other elements to consider as well.
Market Saturation
Saturation is such an appropriate word for this market condition. Either an area is bone-dry in need of a certain genre of restaurant, or it’s sopping wet with them and the excess is running off.
Certainly a windshield survey–that is, a drive around town–can tell you a lot. What defunct restaurants do you see? If the last three barbecue restaurants to take a crack at your city are now idled and empty, you’re well served to skip that option. But if the line is out the door at existing soul food locations, there may be an opportunity there for you.
Product Offerings
We return to the specific things you’re serving up. This too can be an offshoot of market saturation; if every storefront in town is offering a deep-fried onion with a flowery name, you probably don’t want to wade into that vat of oil. Some time spent serving up free samples at hungry destinations like large employers or educational institutions (think of where your customers are coming from for each meal of the day) can tell you a whole lot about what people are interested in eating.
Price Tolerance
Back to those customers… If it’s impoverished college students who are attracted to you as a thrilling alternative to more instant noodles, you must be priced accordingly. This is where overhead and inputs come into play; if you’re aiming for those without a big lunch budget, you should locate in a building that will keep your prices in line. Your inputs will factor into this too.
But if you’re locating just a few yards from high-end shopping, you will find fewer customers seeking a $5 lunch special and more who are willing to sit down to something more costly.
The point is this: Take the time to investigate what your market is before it has the chance to teach you the hard way. Good market research will keep you better positioned to succeed.