Restaurants, hotels, and even those hole-in-the-wall cafes are the backbone of the economy. People love to eat, and they’re dying for the next big food trend to satisfy their hungry stomachs. The F&B industry is a very successful industry, and one cannot underscore its importance enough.
But what if you wanted to invest in the business? Sure, creating delicious recipes may get people coming to you. But truth be told, just having good food to eat isn’t enough. You have to manage expectations, which is why you need a restaurant SWOT analysis.
The food and beverage industry depends on delivering products and services to its target customers. However, your profitability can be a hit or miss without identifying strengths and weaknesses. This is where a SWOT analysis for a restaurant can be helpful. It’s arguably a bulletproof vest to prevent you from lagging behind your competitors.
1. What Is SWOT Analysis?
SWOT is an acronym that stands for: Strengths, Weaknesses, Opportunities, and Threats. This is every business’ bible and one by which they swear. It’s how companies take a step back and examine their position within the environment. For a restaurant, it’s more than just the food. SWOT defines every aspect of your business and how well you measure against the rest of the playing field.
2. How To Do A SWOT Analysis?
When conducting a SWOT analysis for your restaurant, it’s vital to analyse restaurants offering the same menu items. Their prices must also be comparable to yours. A SWOT analysis allows you to gather invaluable insights into your competition — what they’re better at and where they’re lacking. Let’s dive deeper into each SWOT element and how you can assess them.
Strengths
For example, you want to position a ramen restaurant in your city. You’ll have to look at who you will be up against. In this case, it’s those already-established ramen chains that have set up shop in shopping malls or hawker centres. Measure your business’ strengths against them. Do this by identifying elements of your business that keep your customers coming back.
Some common strengths for your restaurant may be:
- Food pricing
- Special menu items
- Ambience, location, decor, sanitation
- Location convenience
- Availability of outdoor dining
- Food quality and consistency
- Cocktail pairings
- Staff service
- Authenticity
- Promos
- Great brand awareness
- Highly trained staff
An effective way to gauge what people look for in a restaurant is to read reviews, both online and printed. Alternatively, you could start asking for customer feedback. Leave them a simple feedback form they could answer after they’ve finished dining.
Weaknesses
Unfortunately, you won’t be able to satisfy every customer that comes through your doors. People are a naturally tough crowd. They’ll all have different expectations from your restaurant.
However, don’t let negative feedback deter you. Instead, use it to identify what else you can do to improve. Let’s follow up on your strengths by looking into your weaknesses:
- Inadequate waitstaff or kitchen staff training
- Not stocking up on key ingredients
- Poor restaurant management systems
- Old or broken kitchen equipment
- Outdated POS (Point-Of-Sale) system
- Subpar food
- Limited menu items
- Poor brand awareness
- Unreliable vendors and suppliers
- Strong competitors
- Volatile landscape
Again, browse through all your customer reviews. Listen to your staff, talk to your customers. Excellent, 5-star ratings are nice to hear. But, it would help if you also considered those stray 1-star reviews. Are they just noise? Or are they telling you something that you’ve missed?
Opportunities And Threats
You’ll have a fair amount of leverage over your restaurant’s strengths and weaknesses. You could easily change your hiring processes to onboard better staff. Or, maybe the secret lies in changing your meat supplier to get better quality cuts. All of these are internal forces that you can easily adjust.
The next step in your restaurant SWOT analysis is to get a picture of the external factors: the opportunities and threats. These can impact how well you can execute an effective business strategy. Opportunities allow you to improve your restaurant’s profitability and boost sales. Meanwhile, threats are economical and situational factors that may threaten your business’ success. Let’s digest:
Opportunities:
- Update your menu to cater to consumer preferences. For example, you can include vegan, vegetarian, or gluten-free options. You could even make your restaurant more family-friendly by adding kids’ meals.
- Make your menu more profitable by paying attention to popular items. Indicate which items are best-sellers or set a seasonal, limited-time promo.
- Appeal to a broader customer base by offering alternatives. A majority of millennials, for example, prefer eco-friendly takeaway options. They’d also appreciate healthier choices, like plant-based or meat-free meals.
- Determine slow days and find ways to reign in more sales during those times. For example, a bar and resto may not be profitable on working days. Most of your customers will likely flock to your bar on a Friday or Saturday evening. Try offering takeaway options for your bar grub. It’s a great way to make up for the potential loss of sales during that period.
- Offer retail products. Are you getting rave reviews for your sauces? Add a mini-retail store where your customers could buy them in bottles. Further your reach by putting them up for sale on online ordering platforms.
- Boost your online presence by setting up a user-friendly website. More people can access your menu when they look up restaurants online.
- Teach your staff how to upsell. If it’s your customers’ first time visiting your restaurant, chances are, they won’t know what to get. A well-trained staff in upselling can suggest additional courses, drinks, or snacks.
Threats
Threats refer to external factors that may impact the success of your restaurant. The F&B industry is volatile. You need to be prepared against situations that are out of your control. If you anticipate them early on, you can tweak your business’ supply chain, menu offerings, marketing tactics, or what have you. Here are some examples of threats your business may face:
- A new restaurant with similar menu offerings is opening in your neighbourhood.
- A competitor has recently unveiled a successful marketing campaign.
- Your supplier runs out of business and can no longer partner with you.
- A global pandemic has limited outdoor activities. People stay in for health-related reasons and will resort to ordering food online.
- The cost of key ingredients and raw materials is rising.
3. Why It’s Important To Have A Restaurant SWOT Analysis
Whether it be a ramen restaurant, hawker stall, or a coffee shop, conducting a detailed SWOT analysis is crucial. A SWOT analysis strengthens your business in the long run. You can make informed decisions. Understanding your strengths, weaknesses, threats, and opportunities gives you an edge.
Arm yourself against potential threats that may confront your restaurant. Prevent closures and temporary shutdowns by revisiting what does and doesn’t make your business work.
The SWOT exercise is invaluable for anyone who wants to make it in their industry. Make better choices through actionable insights you can gain from this tool.
Conclusion
Do you dream of setting up a Michelin-star restaurant in the future? Make it happen by conducting a restaurant SWOT analysis. With the simple guide above, you can start identifying factors that may affect the success and profitability of your business. List down your strengths, weaknesses, opportunities, and threats, and tweak your menu or operational workflows based on them. Create a rock-solid foundation so your business can cope in times of economic struggle.
Start a successful F&B business now with the help of NinjaOS! Our online ordering platform, self-service kiosks, and restaurant ordering solutions can make your restaurant run more efficiently. Get in touch with us now and skyrocket your food business to greater heights!
Frequently Asked Questions About
SWOT Analysis For A Restaurant
How Do You Do A SWOT Analysis?
To start a SWOT analysis, you must first define your objectives. Conduct market research and analyse the market and industry. List all your business’s strengths, weaknesses, opportunities, and threats.
What Are “Weaknesses” In SWOT Analysis?
Weaknesses are less-than-ideal internal factors that impact your company’s success. Some examples include:
- Irrelevant target market
- Poor location
- Outdated systems
- Lack of entrepreneurial experience
What Are Some Examples Of Business Threats?
Threats are external factors or factors out of your control that are detrimental to your organisation. Here’s a list of examples:
- Economic recession
- Global pandemic
- Legal issues
- Security breaches
- Higher benefit costs
- Inflation
Can I Use A SWOT Analysis To Evaluate My Employees?
Yes. A SWOT analysis examines your business through a much more detailed lens. Use a SWOT analysis to understand your employees’ strengths, weaknesses, and training gaps. Utilise these findings to implement changes that can improve their welfare and employee experience.
*NinjaOS is a product of Jankosoft
