Restaurant Concepts & Location PDF

Concept, Location, and Market Research 1 Objectives After reading and studying this week, you should be able to: • Recognize benefits of a good restaurant name • Explain the relationship between concept and market • Explain why a restaurant concept might fail • Discuss some qualities of successf...

Concept, Location, and Market Research 1 Objectives After reading and studying this week, you should be able to: • Recognize benefits of a good restaurant name • Explain the relationship between concept and market • Explain why a restaurant concept might fail • Discuss some qualities of successful restaurant concepts • Identify factors to consider when choosing a restaurant’s location • Identify factors to consider when developing a restaurant concept • List restaurant knockout criteria 2 Restaurant Concepts Matrix of ideas • Constitute what will be perceived as the restaurant’s image • Should fit a definite target market • Distinguishes the establishment as D&B (different and better than the competition) • May be necessary to modify as competition arises • Best concepts are often the result of learning from mistakes 3 Restaurant Concepts (cont’d) Tips: • Make it different enough from the competition • Do not let it be too far ahead of current times • Do not price your menu out of the market • • • • • • Pay attention to food costs Make your concept profitable Good concepts are on-trend Make your concept easily identifiable Take inspiration from others and love your concept Make sure the concept and location fit Concepts: Clear Cut or Ambiguous? • Many restaurants lack clear cut concepts ✓ No integration of the atmospherics ✓ Everything should fit together • Concept is strengthened if it establishes an identity • The name of the restaurant is part of the image. • The restaurant name can tell the guest what to anticipate 5 The McDonald’s Concept and Image • Greatest restaurant success story of all time • Concept: all-American family restaurant • Clean • Wholesome • Inexpensive • Fun • Simple, straightforward menu • Key to effectiveness of McDonald’s advertising 6 Defining the Concept and Market • Selecting a concept ✓ Define it precisely in the context of which markets will find it appealing ✓ Market may constitute a small percentage of the total population ✓ Coffee shop with counter service appeals to interstate travelers • There must be a market gap ✓ Need for the concept offered 7 Restaurant Market Research Market research is used to discover what people want, need, or believe they want and need, and will help determine the makeup of your goods and services. Once your research is complete, your results can be used to determine how you should market your restaurant to the people you want to serve. These people are your target market. Typically, you will target a particular segment or part of the total population, as not everyone will be interested in your restaurant’s theme or menu items. It’s now your job to capture as large a market share as you can in your area. Market share is a percentage of sales out of the total amount of sales possible in a particular market. This goal of capturing market share means that you want to have the largest possible percentage of potential customers in your area eating at your establishment frequently. 8 Restaurant Market Research Conducting market research is a crucial part of being successful. It is important for determining your customers’ demographics and your competitors’ strengths and weaknesses. To figure out what is “missing” in the area, you have to ask questions. Examples are questionnaires, interviews, and focus groups or group interviews. The data gathered from this kind of research is called primary data, because you are collecting it directly from people and it reflects their current attitude or opinion about food, atmosphere, and other topics. Primary data is only reliable if the parties interviewed do not have a direct interest in your operation’s well being. For instance, a landlord or a realtor would probably not be a reliable source of primary data. You can also go to the area’s chamber of commerce. Ask about the successful and unsuccessful establishments in the area and try to learn why they have prospered or failed. This kind of data is called secondary data. Secondary data is data that has been collected by someone else and stored for Interpreting primary and secondary data will help you formulate a business plan and forecast the potential success of your restaurant. 9 Restaurant Life Cycles Nearly all restaurants have an almost human life cycle: birth, growth, maturity, senescence, and death. • Family lack of enthusiasm • Changing demographics • Fashions change 10 Concept Adaptation Concept development • Always has been important in the industry • Becoming more so now that dining districts are developing in almost every community Concepts that have not been tested • Most need some adaptation to the particular market • Different menus and prices attract different markets 11 Changing or Modifying a Concept Many highly successful concepts that have worked well for years gradually turn sour • Customer base and demographics change • Morale and personal service may decline • Every concept is built on ideas from other concepts • Modifications and changes, new combinations, and changes in design, layout, menu, and service 12 When a Concept Fails • Concept can be changed to fit the market • Conversion can take place while the restaurant is doing business • Name, decor, and menu can be changed • Customers who have left may return if the new concept appeals to them • New concept may better appeal to the same market • Siphon customers away from the competition 13 Restaurant Symbology • Includes the logo, line drawings, linen napkins, and service uniforms • All helps to create the atmosphere • César Ritz: waiters dressed in tails • Chart House: servers dressed in Hawaiian attire • McDonald’s: Ronald McDonald • Take cues from larger companies to come up with symbols and signs that reflect the restaurant’s concept 14 Sequence of Restaurant Development • From concept to opening: • Choosing a location • Business marketing initiated • Layout and equipment planned • Menu determined • First architectural sketches made • Licensing and approvals sought • Financing arranged 15 Working blueprints developed Contracts for bidding created Sequence of Restaurant Development (cont’d) Contractor selected Construction or remodeling begins Furnishing and equipment ordered Key personnel hired Hourly employees selected and trained Restaurant opened 16 Common Denominators • Some common factors: • Human needs met by the restaurant • Menu prices and cost per seat • Degree of service offered • Space provided for each customer • Rate of seat turnover • Advertising and promotions expenditures • Productivity per employee • Labor and food costs Vending Quick service Seven Categories of Service Fast casual Casual Family restaurant Dinner house Luxury restaurant 18 Square Foot Requirements • Amount of space per customer needed by each type of restaurant 19 Three most important things in starting a new restaurant… 1. Location 2. Location 3. Location Location The restaurant business is like the real estate business: It’s all about location!!! • Downtown vs. Suburbs • Airport vs. Shopping Centers/Malls • Foot traffic vs. Vehicle Traffic • On-site parking vs. No parking • Reservations vs. Walk-in customers Planning Decisions that Relate to Concept Development • Who are the target markets, the customers? • Buy, Build, Lease, or Franchise? • Food preparation from scratch or from convenience Items? • Limited or extensive menu? • How much service, limited or full? • Many aspiring restauranteurs have the money to start-up a restaurant but immediately rely on turning a profit in order to keep the restaurant opened. What if the restaurant needs 6 months, 1 or 2 years to start turning a viable profit? Without a backup of Working Capital, the restaurant owner will find it difficult to cover costs and expenses while they wait and hope for steady business. 22 Planning Decisions that Relate to Concept Development (cont’d) YOUNG PART-TIME EMPLOYEES OR OLDER CAREER EMPLOYEES? PAID ADVERTISING OR WORD-OF-MOUTH ADVERTISING? GRAND OR QUIET OPENING? ELECTRICITY OR GAS? 23 Concept and Location • Good location depends on the: • Kind of restaurant • Roadside restaurants • Clientele • Professionals • Size of potential market • Price structure • Criteria for locating a restaurant • Restaurant Business https://www.restaurantbusinessonline.com/ • Annual Restaurant Growth Index https://www.statista.com/statistics/21474 7/us-restaurant-performance-index/ 24 Location Criteria • Includes: • Demographics of the area • Visibility from a major highway • Accessibility from a major highway • Number of potential customers passing by the restaurant • Distance from the potential market • Desirability of surroundings 25 Some Restaurants Create Their Own Location • Dinner or family-style restaurants • Need not place the same high priority on convenience of location • Necessary for casual and quick-service establishments • Sources of location information • Location decisions • Based on asking the right questions and securing the right information • Real estate agents are prime sources • Other sources: chamber of commerce, banks, town or city planner, other restaurant owners, etc. 26 Knockout Criteria • Includes: • Proper zoning • Drainage, sewage, utilities • Minimal size • Short lease • Excessive traffic speed • Access from a highway or street • Visibility from both sides of the street 27 Other Location Criteria • Includes: • Market population • Family income • Growth or decline of the area • Competition from comparable restaurants • Restaurant row or cluster concept 28 • Downtown versus suburban Other Location Criteria (cont’d) • New restaurants continually displace old ones • Average travel time to reach restaurants • Most diners-out select restaurants that are close by • Matching location with concept • Size of the lot, visibility, availability of parking, access from roads, etc. all have an impact on style of restaurant that will fit a location 29 Minimum population needed • Restaurants need a certain population within a specified radius. • Some ‘ special occasion’ restaurants may pull guests from even further. 30 Criteria • Takeover locations • Restaurant topographical surveys • Cost of the location Visibility, Accessibility, and Design Criteria • Visibility and accessibility • Important criteria for any restaurant • Design • Needs to correlate with the theme and includes: • the exterior, the entrance and holding area, the bar or beverage area, the dining area (including the table arrangements), the kitchen, and receiving (including access for deliveries), and storage and trash areas Checkpoint You should have already: • Purchased and Sign-Up for the Knowledge Matters platform • Review the TLP and calendar • In –Class Assignment # 1 will be held on week four during regular class hours Questions or Concerns [email protected] • I always do my very best to respond to emails as soon as I receive them. 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