3.4: Evaluate the Competition

Competitor analysis

The simplest way to evaluate a competitor is to use your own judgement about how the operation looks from a distance, the ease of reaching the location, and what it feels like to be a customer. Remember, before you enter a marketplace, you are technically ‘invisible’. You can observe the different day-part menus; and estimate the age and income of the operation and its management. Figure 2.1 lists a variety of important criteria to get a true feel of both the physical customers; or dine in and experience the food, the service, and the attitudes of the employees and similar and psycho-textural aspects of competitors. Do not limit that consideration to only ‘direct’ companies that are to your own concept - extend the analysis to ‘indirect’ operations that could take a bite out of your bottom line.

Personnel

How could workers not be available in a marketplace? Years ago, I took the availability of personnel for granted until I opened a corporate unit in a beach community on Long Island, New York. There was little competition, which was a break from highly competitive markets and a large population who shunned cooking at home. But one of the most exciting aspects of that city, from the standpoint of the customers' ability to support a restaurant operation, ultimately proved to be a nightmare I had not previously faced during the many years I established market units. The city had an average family income of greater than six-hundred thousand dollars. While this sounds good, when the dust cleared, no one of employable age really needed to work. The only workers I could attract were young individuals who needed a job because mom and dad felt they needed experience out in the world. "Could I have Friday night off?" was a horrifying question because money was not the issue or the element that made them stay. I was able to maintain a staff via a competitive reward system, but I learned that a market could always be wonderful in some ways and less so in others. I never approached worker availability as a given again.

While the aforementioned themes are by no means the only ways good workers aid in the success of an operation, it becomes obvious that labor availability in all facets of the operation is never a given. After all, without the lowly dishwasher who takes pride in his or her work and continuously polished the silverware, the restaurant's reputation for cleanliness would go by the wayside. Everyone plays a part - value the pieces in the puzzle that is a restaurant.

As you observe competitors, do they appear to have a sense of value when it comes to their workers? Do workers appear knowledgeable and well trained? Are they smiling when away from the table? Workers seldom conceal their negative feelings when they think the customer is unaware.

Typically, there will be a lot of information to process and digest as you search the trading area for niches and underserved customers. Your study, if done properly, will help to address what you will do, and of the greatest importance - why you will do it. Figure 2.2 provides the appropriate questions to ask and as such, the appropriate and revealing information about competitors that can be vital to your success.

Figure 2.1 COMPETITOR ANALYSIS
Rate each competitor on the following criteria: 5 = excellent and 1 = poor
	Competitor 1	Competitor 1	Competitor 1
Competitor Name	_____________________________	_____________________________	_____________________________
Criteria	Score	Score	Score
Name recognition	_____________________________	_____________________________	_____________________________
Market Share	_____________________________	_____________________________	_____________________________
QSR, casual, fine dining	_____________________________	_____________________________	_____________________________
Food quality	_____________________________	_____________________________	_____________________________
Banquet facilities	_____________________________	_____________________________	_____________________________
Service quality	_____________________________	_____________________________	_____________________________
Price/value perception	_____________________________	_____________________________	_____________________________
Marketing effectiveness	_____________________________	_____________________________	_____________________________
Sales Staff	_____________________________	_____________________________	_____________________________
Organizational culture	_____________________________	_____________________________	_____________________________
Employee skills and attitude	_____________________________	_____________________________	_____________________________
Employee turnover	_____________________________	_____________________________	_____________________________
Speed of service	_____________________________	_____________________________	_____________________________
Cleanliness	_____________________________	_____________________________	_____________________________
Profitability	_____________________________	_____________________________	_____________________________
Information technology	_____________________________	_____________________________	_____________________________
Website - Social Media	_____________________________	_____________________________	_____________________________
Location	_____________________________	_____________________________	_____________________________
Accessibility	_____________________________	_____________________________	_____________________________
Visability - sign, building	_____________________________	_____________________________	_____________________________
Parking	_____________________________	_____________________________	_____________________________
Outside lighting	_____________________________	_____________________________	_____________________________

Figure 2.2: Analysis of Primary Competitors
Who?	Who are our primary competitors? Who are their customers?
What?	What are their primary and secondary products and services? What are their core strengths and weaknesses? What opportunities exist competitively? What threats do they pose to our operation? What specifically do ‘they’ do better? What specifically do ‘we’ do better? What market segments and sub-segments do they attract and why? What competitive advantages do they possess? What distinct competencies do they possess? What are their competitive methods?
Where?	Where do they sell their products and services? Where do they operate?
When?	When are their products and services most in demand (Time of day, week, month, or year)? When do customers see them as their first choice for purchase?
Why?	Why do we compete directly with our competitive set? Why do consumers purchase their products and services? Why do we compete directly with these organizations?

Begin with your potential direct competitors, competitors that you might compete against daily, or those foodservice operations that your customers would consider at the same level with your operation.

Figure 2.3 illustrates some of the primary, or personal, ways a potential new entrant could gather information on the aforementioned points, and others, and secondary information gathered from sources not personally observed to analyze a competitive stance in the marketplace in question. These sources provide a great starting point for your information search.

Figure 2.3 Primary and Secondary Sources of Competitors
Primary Sources
Parking lot observations Customer surveys Vendor injuries Competitors' employees	Daily event or reader boards Mystery shoppers Reservation calls Visiting the competition
Secondary Sources
Business journals Press releases Company brochures Trade Associations Website data Chamber of commerce Travel associations Vendor information	Trade publications News articles Business journals Marketing material Website guest reviews Convention and visitors bureau Tour operators Local colleges and universities

Use Excel charts and sector analysis or box plots to get a visual idea of your proposed marketplace. You may not be the only consumer of the information you gather. Keep in mind, if you will be approaching a lender for financing, they will be interested in knowing how you intend to compete against established foodservice operations. The more awareness and accuracy you display in discussing the competitive environment, the better a lender will feel regarding your chances for success.

Researching Your Competitors

There are many different ways of researching potential competitors. For multi-unit chain foodservice operations with a national geographic focus, other methods might prove more useful than personal observation in creating the 'big picture' of who your competitor really is.

Larger operations may operate across the country or in others and as such, the personal visit may not be the most efficient or helpful way to proceed with information gathering. Thus, if a company is diverse and, or, publicly traded, their information then becomes a matter of public record.

Publications and the Internet are now very effective ways to gather information since larger companies are using these forms of media to communication with consumers. More established foodservice operations have a Website presence with their hours of operation, location, and in many cases a menu. Keep in mind that successful operations practice what they preach. What do the journals and other publications, company marketing material, and the Internet say the company message and the consumer about the competitor, and of great importance, what did you find upon visiting the operation? Is experience the same?