Restaurant Market Research: the Ultimate Guide

Jul 24, 2024

In this guide:

Restaurant Market Research – Getting Started
Defining Your Restaurant’s Target Market
How to Carry Out Market Research for Your Restaurant

Market research has always been a crucial part of business strategy and success. It helps drive sales, boost brand loyalty and maximize budgets.

But since COVID-19 transformed the commercial landscape, what people want from their favorite businesses has never been more important to discover. That’s where the power of market research comes in.The restaurant industry is estimated to be worth an astonishing $800 billion¹ in the US alone – so competition has never been tougher.

Whether you are new to the food and drink table or are relaunching your enterprise, it’s well worth researching the new landscape we find ourselves in. Not only will this highlight the target market for your restaurant, but it can also identify potential opportunities and key competitors in your space.

Keep reading to discover why it pays to be proactive, and learn how to carry out market research for your restaurant.

Restaurant Market Research – Getting Started

Your customers’ behaviors are constantly changing, and this has been clearer than ever in recent months.

Market research can help you stay one step ahead of the curve. It lets you understand your customers’ perspective, know your marketplace even better than before, and test new ideas before you put them into place.

What do we mean by market research?

Market research is the act of finding out whether a new business, service or product is worthwhile by asking current or potential customers for their views.

It allows you to run an idea past the people you want to get business from, and gain feedback from those people. You can then use the resulting insights and data to see how competitors are doing in the same field, gauge customer loyalty and develop your business plans.

More generally, it can also mean researching the current industry you’re operating in or a particular audience, locally and/or nationally.

What does it involve?

It involves collecting information about customers, the marketplace and suggested ideas. Most commonly, market research is done through focus groups, interviews or surveys, but desk research is also possible.

It depends on what information is already available and how selective you want your data to be. For example, there may be plenty of data around Greek restaurants in the US as a whole, but fast-food gyros in San Jose? Not so much.

How to set market research priorities for your restaurant

It’s important to outline what you hope to achieve from your market research ahead of time, and set actionable, realistic goals.

Consider how you want to use this information when setting your objectives. For instance:

New menu – if you’re wanting to add new dishes or change your menu altogether, a taste testing session might be the top priority.
Customer behavior – want to better understand your customer and their dining behavior? Set up a focus group and ask them when, what, why, how and where, when it comes to going out for breakfast, lunch and dinner.
Competitor analysis – desk research is a great way to see how your competitors are doing. Check social media and trusted review sites like Trip Advisor to gain some knowledge.

Defining Your Restaurant’s Target Market

The food and drink industry is huge – employing roughly 1.5 million people in the US and contributing to around 5% of GDP².

While your small business might not be competing with the likes of Starbucks and McDonald’s on a national scale, you can still dominate in your local space through careful and thorough target market research.

What does restaurant target market mean?

Your restaurant’s target market is the audience that your menu choices and marketing efforts are aimed at. For example, a food van in an up-and-coming part of a city center may target younger demographics with a limited amount of time, while a fine dining restaurant by the shore might focus on affluent couples or visiting businesspeople.

The individuals in your target market may share similar characteristics, such as location, income or age.

Why does it matter?

These are the people most likely to recommend your restaurant to others, interact with you on social media and visit your establishment regularly – so it’s crucial to understand what they are looking for, and meet those expectations.

Here are just some of the benefits of identifying your target market accurately:

Save money on your marketing
Find new ways to grow your business
Create brand loyalty and interest
Stay ahead of the competition
Understand your customer preferences.

How to define your target market – top tips

While customer loyalty can stay steady over time, the people who were loyal to you last year are not necessarily going to be your target market this year or the next.

Here are our tips for identifying and reidentifying your target market:

Check out the competition – visit some of your top competitors and make a note of the location, type of customers and the menu range and price.
Conduct primary research – carry out an online survey, set up and run a focus group or ask customers to fill out a feedback form after dining. This can help identify key likes, dislikes and patterns of behavior.
Find out who’s in your area – you can check your local government site to see the breakdown of people living and working near to your restaurant. This should give an idea of the type of customers likely to step through your doors.
Identify your restaurant’s unique selling points – what makes your restaurant different and what pain points are you hoping to solve? Are you affordable, quick, family-friendly, award-winning…?

How to Carry Out Market Research for Your Restaurant

As the restaurant industry is so highly competitive – with more than one million establishments in the US alone³ – you should aim to carry out market research at least once a year to make sure you stay at the forefront of your customers’ minds.

If you’re not prepared, market research can be costly. Instead of gathering any information related to your restaurant, be selective in your data with the right approach. Here’s five effective strategies to get you started.

Conduct a market research survey

A survey can help you narrow down your target customer and improve your overall dining experience, as you tailor what you offer to their needs.

There are countless survey types to choose from, including multiple choice. Remember to keep questions short and simple to avoid losing your customer’s interest, and consider posting online – through your website and social media – for maximum reach.

If you are already an established brand, invite your existing customers to take the survey. For new businesses, keep it open and share from the moment you launch. Don’t forget to add an incentive, such as discounts, a prize draw or exclusive invites to special events, for those who complete it.

For more assistance, check out our specialist guide on how to create your own restaurant market research survey.

Run a focus group

Focus groups are more intimate and personal than surveys, but they do require more time and effort.

Set a goal for the session, such as getting people’s thoughts on a new menu item or opinions on your rebranding.
Try to keep questions open-ended and encourage natural conversations, rather than dictating thoughts.

Be sure to have someone taking notes, but it’s also a good idea to ask your participants to fill out a form too, so you can start to see patterns in consumer behaviors and compare this back to your target market.

Utilize useful tools

If you’re short on time, money or both, then using existing market research tools can be hugely beneficial. Consider:

Hootsuite – this social media management tool allows you to see how your posts are performing, and where your brand or industry has been mentioned in social conversations.
SEMrush – gain digital insights, manage social media campaigns and analyze your competitor’s website performance in this handy tool.
Google Trends – like Hootsuite but for search engines, Google Trends offers a glimpse into your customer search behavior and industry trends.

Analyze the local market

Take a look at the interesting trends in your area using local market data. A lot of this information can be found on your local government website, via newspaper articles or through sites such as census.gov – and can really help identify opportunities.

Areas to analyze include:

Cuisines offered and their success
Sales and profit margins
New businesses versus closed ones
Average income/spending habits for residents nearby
Trends in consumer habits (is your area going through a “health kick”, for instance).

Get to know your competitors

When conducting your market research, it’s important to consider how you size up against your competition. Think about:

Review sites – what do customers have to say about your competitors on sites such as TripAdvisor? Can you learn from any problems they are facing in customer service, menu variety etc, and improve on that?
Social media – again, this can show you how customers view your competitors. Do they have a lot of engagement on their posts, or is it mainly radio silence?
Promotions and offers – do your competitors offer any discounts for select groups? Are they running any events, or have they introduced certain deals on specific days?

Don’t be afraid to see what competitors are doing well, and emulate it – as well as noting what they are not doing well, and ensuring you do better. You can begin to grow your audiences even further and refine your target market with Groupon Merchant. Sign up today to become part of a growing community of business leaders, with access to fantastic support and partnerships.

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