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2.4 Competition analysis

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Any feasibility study must include an analysis of the competition in your target area. This may help you determine if there is a niche in the area that your type of restaurant can fill. Some restaurants in the target area may be designed on concepts that are similar to yours, and others maybe quite different. Spend some time in the target area and visit your competition. The town economic and development or business improvement office can provide a listing of local businesses. (You will also want to go to the town or city hall to see if there are any outstanding building permits for new construction of restaurants in the area.) This should be part of your feasibility study, and can be updated from time to time after your restaurant is established.

If you discover that there are other restaurants already in the area similar to the one you plan to operate, you must consider modifying your concept to better suit a vacant niche or think about opening in another location altogether. However, you may actually benefit from your competition generating a restaurant district (or “restaurant row” as it is known in the industry). People will often travel to a restaurant row knowing that they will have a greater selection of restaurants from which to choose. All the people and activity in a destination such as this generate a “buzz,” which enhances the total entertainment/dining experience. However, the population base must be able to support the number and variety of restaurants, and there must be other demand generators nearby. Often these “rows” spring up close to supporting venues, such as the live-theater district in cities such as New York and Toronto, or near the waterfront, as in San Francisco’s wharf area. Many towns and cities have cultivated a tourist hub centering around a significant feature of that area, and restaurants are part of the draw. If you are thinking of locating your restaurant in a restaurant row, visit your potential competition to find out how busy they are.

Start & Run a Restaurant Business

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