Competitive Analysis

I remember the first time that a store manager asked us to do a SWOT analysis. All he said was, “Google it, watch a YouTube video if you want, and come back next week with what you think”. The meeting was a disaster and the pretext was more to be told what our strengths, weaknesses, opportunities and threats were by a corporate guest speaker. The speech included all the greatest hits of non information; “Your price points are competitive but you guys clearly have the best product, right? Your service is your biggest strength, you guys have a great team here. Your craft beer program is another huge strength, what an amazing draft and bottle list you guys have.” On & on.

This, unfortunately is about as real as it gets for most restaurants. There’s no intense scrutiny, no market research, just 1 on 1 comparisons of what are we good at and, yea, we’re priced alright.

The prospect seems too big to tackle when you’re busy everyday. Market research is something you pay other people to do, or do by running around visiting competitors and giving them money. People often think that an inward focus is all that matters. The world around you shall bend to your will by perfecting your store, like some kind of restaurant Buddhism. Operators are convinced that they can stay on top by being ‘the original’, or by service with a smile. Little do they forget how often history is revised, and how many originals were overrun or stamped out by imitators.

The single greatest return for planning

I wrote in one of my works that, competitive analysis is the single most underutilized and powerful tool for SMBs to navigate the world. If you do 4 real analyses a year on your largest direct & indirect competitors, you will learn solutions, understand the market and the decision points effecting your store far better than you could hope. If you’re a burger place, you undoubtedly have plenty of competition. You probably have competition you despise. You’re also competing with the pizza shop down the street that steals 2/3rds of the lunch crowd with slices, and they’re admittedly pretty good.

Looking your neighbors, the places you respect and especially the ones you don’t will give you a window into how they operate, how they solve issues, what they do better than you and starkly contrast what you do better than them.

Do they have a larger menu? What vendors and margins do you think they have? Is the food an effective drink anchor? Is their beverage program built around volume or mark up? What do you think their PMix is? What does their marketing and social page look like compared to yours?

This is the only way to do a real SWOT analysis. Sitting and thinking about it doesn’t pass muster. Go get copies of their menus, think about what their fire capacity is, look at their rotating beer selection/pricing and compare it to yours. If you go there and have a meal, how does it look? How is it in comparison to their promotions? Does the staff seem educated and collected? Are they short staffed for the night you’re there?

Making it manageable

Not only should you compare the known competitors, but you should be looking at everything around town. How do you compare what you don’t know? Where do you start this process? Simple. Beyond writing down the four people you can name and look up to as businesses, open up your city’s public record portals and find business licenses yourself for every restaurant that’s operating legally. You might be surprised to find what is in your city you don’t know about when you’re staring down the barrel of bureaucracy. Public health inspection reports can also tell not just consumers, but other operators about what’s going on in your organization. Awareness and disclosure is the point of these documents, and you already pay taxes for this structure, why aren’t you using it?

Menus, pricing and volume are all as easy as going to websites, getting copies of carryout menus, and taking a walk or drive around town instead of staying planted in your own store. How often do you see crowd disparities between you and your neighbors? What about competitors across town? Do they just have the convenience of a better location? What are they doing better than you? What’s your plan to grab dollars back from the marketplace, from them?

Think about local vendors, ask for quotes, imagine volume pricing and breakpoints on key ingredients for other concepts.

What does it mean?

Food and bev is always changing. The business right now is grappling with lower alcohol numbers, the collapse of many a brewery, media driven changes in menu composition, and overall increases in QSR competition. None of these can escape analysis. You escape competing with none of them. Certain battles you will never win, like pricing and convenience of the chicken wrap place next to the office building on Main St. They get a lunch rush every day and you can’t compete with the pricing, fine. But they can’t compete with atmosphere, dine in experience, work happy hours (boozy or not) and they certainly can’t replace fun and interactive staff with kiosk service. Change your staffing proactively, find gaps in the market and learn where to fight battles against other brands around you so you protect and genuinely offer a USP to your customers.