Series 2: Your Restaurant’s Target Audience
Oftentimes, when prospective restaurant owners set out to buy a restaurant, they overlook their own target audience. This is unfortunate because a restaurant’s target audience is one of the most important elements of success or failure. It may actually be the most important aspect of a restaurant’s success. Just because you have a trendy new idea for your establishment doesn’t mean it fits your local psychographics and demographics. This is where extensive research comes into play.
Of course, you probably want an easy turn-key restaurant where all the equipment is already there. But wouldn’t you rather spend just a little bit more to choose a better location? One that is more ideal to the demographics and psychographics of the area? One that will make you a huge success?
Another option would be to buy that turn-key restaurant. You could then change its concept to fit the local demographics and psychographics of your target audience. The problem is that this way of thinking is more entrepreneurial than is typical for a new restaurant owner. Let’s face it, most owners are too emotional about their restaurant’s cuisine and vision to change them, even if it means better fitting their target audience. An example of this would be opening a nice, sit-down restaurant in an area like Wall Street, surrounded by corporations. If you look around, you’ll notice that most places close very early. Once everyone is done working, they all leave and go home.
Before purchasing any establishment, you’ll want to analyze your business’s target audience to see what demographics and psychographics you want to attract first. As a little kid in NYC, I tried food from all the pizzerias around my uncle’s soon-to-be pizza shop. Free pizza as a youngster? Count me in! He would talk to the owners and customers and analyze the locals. Fortunately, you don’t have to do as much of that nowadays because we have the internet. You can see what kinds of people tag themselves at restaurants and read reviews of the surrounding places for days. Once you have an idea of what that area is missing, you can begin to capitalize on your next restaurant idea. But this can only happen once you fully understand your restaurant’s target audience.
Identifying Your Restaurant’s Target Audience
With simple internet queries, you can identify your ideal target audience by researching all of the following:
● Average Household Income
● Average Age
● Business Complex vs Residential
● Education Level
● Marital Status
● Home Ownership
● Average Rent and House Prices
● Major Colleges or Schools
● Major Attractions or Entertainment
● Crime Rate
● Food Trends
Although all of what I listed above is simple enough to research, it might take a while to gather all of the information, especially if you’re analyzing multiple locations. Luckily, there are some statistics based on previous research that can help you narrow your own search to certain audiences based on your restaurant concept.
For example, in a recent study by scholars at Indiana University, several demographic factors have been associated with certain patterns of food consumption.
● Older women are more likely to have a positive attitude to healthy foods.
● People with a higher education level and income are more likely to be aware of diet/disease relationships.
● People with higher income are more likely to be vegetarian.
● People who hold white-collar jobs are more likely to be vegetarian, as opposed to blue-collar jobs.
Below are other statistics from other sources that would help determine your target clientele.
● Households with two adults who work outside the home are more likely to eat out than households with only one adult working outside the home.
● Singles eat out more often than do families with children.
● Millennials eat out more often and spend more money than any other generation.
● 35% of diners are influenced by online reviews when choosing a restaurant.
Keep into consideration that all of these statistics play a key role in your business’s future success. The more you research your restaurant’s target audience, the more customers you will have without much additional marketing.
For instance, if your restaurant is in a high-income area, make your cuisine with high-quality ingredients and lean towards being more health-conscious. People with higher income levels tend to value these characteristics and will be more likely to order more frequently from your restaurant. If you are opening a breakfast or lunch spot near corporations, make sure to put your main focus on speed of service. These consumers have limited time to travel to and from work, as well as order and eat food.
If word gets around that your marketing strategy focuses on speed of service, you will have a higher chance of success within that neighborhood. In that case, I would suggest hiring more people to increase efficiency and having more ready-made food, like cold-cut sandwiches. Another great idea would be installing several self-serve coffee stations.
On the other hand, starting a restaurant in a lower-income area is a great way to get your feet wet if you don’t have the capital for a huge location in a high-income area (especially since that comes with a high monthly lease). In a lower-income area, for a higher chance of success, you need to focus on price value. It would behoove you to not get the freshest and best quality ingredients because that will cost more, and statistics show that lower-income areas are not as health-conscious as high-income areas. In lower-income areas, most customers are looking for the best value.
Another thing to look out for is the crime rate. Even if it’s in a lower-income neighborhood, it doesn’t necessarily mean that the whole area has a high crime rate. A great strategy would be to try to find a location as close as possible to a neighboring high-income area but still situated on low-income blocks.
Determine Restaurant Saturation
After extensive market research, you found a few areas that fit your restaurant concept. Now, how do you choose between them? First, research how many restaurants there are compared to the population of the area. Second, determine which locations have restaurants with a similar concept and how you can compete with them. Your concept can be similar, but then it needs to stand out by having better quality ingredients that bring customers from their door to yours.
Restaurant Saturation Example
An example of this would be going into an area that has a Greek restaurant, especially one with a line out the door. Clearly, it would be a good idea to open a Greek restaurant around there based on this fact alone, but you would need to create a better Greek restaurant concept with a twist. Let’s say this Greek restaurant offers takeout and sit-down dining but their interior has a simple layout. You want to stand out by having a bigger location to ensure customers aren’t waiting outside, by creating a unique atmosphere that makes all of your customers want to post photos/videos on social media, by attractively styling your menu items, by bringing in a DJ on the weekends, and by creating an exquisite outdoor dining space.
Out-of-the-box ideas like these will make your restaurant successful even with a good amount of competition in your local area. Also, if you lean more towards fine dining, you can attract customers from up to an hour away because you provide an experience worth driving for.
Target Audience: Locals vs Commuters vs Travelers
You need to identify if your restaurant’s target audience is predominantly locals, commuters, or travelers. Some studies say that 60-80% of your customers are within a 1-2 mile radius, but I would take that with a grain of salt.
Regardless of where your restaurant is, you’ll want to invest in your community. It’s important to research ways you can do this. For example, see if you can sponsor a local Little League team or be involved in school events. Reach out to local corporations to see if they order food for their workers. Make sure you can provide them with a significant discount and also send the decision-maker free food to try. Check the surrounding area to see if you can partner up with a business that provides parties for children. Most of the time, they don’t have a cafeteria, nor do they want one because of the hassle. Instead, they will often partner with a local restaurant to provide food. It’s similar to private jets because they won’t cook their meals on-premise. Usually, they order from a local catering company.
While your customer base includes a lot of locals, restaurants in certain locations will only be successful if owners take into account that a large percentage of their customer base is made up of commuters and/or travelers. For example, if you’re on a highway leading to a city, your customer base will include mostly early morning commuters. Sure, you’ll get locals, but early morning commuters will stop by if it’s on the way or near their workplace. A coffee shop or a bagel store would be a better idea than a sit-down, table service restaurant.
This is where you should analyze the type of commuters with a map search on the internet or by physically going there to see which side is busier depending on the time of day. Take 5 o’clock rush hour: it’s best to be in the direction traffic is headed at that time. That way, more individuals have the opportunity to stop by and pick up their food on the way home, or even stop by for a drink or two after work. Obviously, there are exceptions to this rule, but it would be wise to look out for patterns like these. They increase the chance of making your restaurant successful with less effort later on.
As for travelers, if you are in a tourist destination area, avoid blending in with similar restaurants or bars in that area. Although I always say you should think outside the box, it’s imperative when it comes to the traveling customer. With this audience, they are there to create memories, and you need to provide an atmosphere where they can take photos and videos ideal for posting to their social media accounts.
An example of this would be the Spirits of Bourbon Barber Chair in New Orleans where customers sit in a barber chair and have shots of bourbon while they are being spun around. Other examples include the over-the-top sundaes or luxurious speakeasies throughout New York City. These restaurant owners know that there are so many competitors they have to think outside the box for success.
Restaurant Target Audience Conclusion
Although this blog may seem like an information overload, I encourage you to take it all in and capitalize on these ideas by also physically going out and researching. For instance, if you want to open an Italian restaurant in a specific spot, go to the best Italian restaurants and analyze their successes and failures. Make sure to include all those restaurants’ successes but also add your own unique twist. And be sure not to take on their bad habits.
In the area in which I live, there is an Italian restaurant with great food and a great atmosphere that gets these horrible reviews a few times a week. I read these reviews for educational purposes and I found there is a theme present in every single negative review. Customers report that the owners are horrible with customer service and there always seem to be problems with their private events. If I were opening up an Italian restaurant in that area, I would make a special point to treat my customers like gold and focus on hosting great private events. Of course, I would still emulate their successes but with my own unique ideas. With any business, you want to find a problem and create a solution. That is where you will find the most success. If you would like to learn more, feel free to contact us.
By Mina Ibrahim