3.8: Classroom Preparation Assignments

Competitive Analysis Exercise \(\PageIndex{1}\)

1. Introductory paragraph
2. Direct competition
3. Indirect competition
4. Types of food
5. Price, quality, service, hours of operation, etc.
6. Rank your competitors
7. Discuss strengths and weaknesses – theirs and yours
8. Discuss opportunities and consider threats

Example

Competition in the Gulch
FILLING A NICHE IN A COMPETITIVE NEIGHBORHOOD

The Goal

The first concept explored the demographics and psychographics of The Gulch district of Nashville. To recap, this district is the only LEED certified neighborhood in the southern United States. Its many condominium complexes are home to a large percentage of young, educated, working-class millennials. The Gulch is also home to a 20% minority of older individuals who are old enough to receive Social Security but have not yet retired. In addition to this local population, the neighborhood is located in the heart of Nashville, a location that still attracts a significant amount of tourism to the area.

This data indicates certain parameters that, if implemented in a restaurant’s image and marketing, could lead to establishing not simply a successful restaurant in this neighborhood, but an institution that becomes as much as part of the neighborhood as its residents are. To do so, we must carefully compete with not only the other restaurants and institutions in the area, but also the ones that will join the neighborhood in the future.

My goal, therefore, is to establish a restaurant that will become the neighborhood’s go-to spot for a quick, filling lunch that the locals will fill fulfilled when they spend their money here. Since this is a local business catering primarily to educated, working-class local customers, I’d like my restaurant to be part of their lifestyles, a choice they feel good about making on all aspects: financially, health-wise, and even environmentally.

EXISTING COMPETITORS IN THE NEIGHBORHOOD

The area is very much a ‘social-centered’ development area denoting the careful, specific, and detail planning of every aspect of the neighborhood; it did not become the South’s only LEED certified neighborhood just on random chance. One aspect of a social-centered development is its generally well-established market niches, and The Gulch is no exception. The competition—both direct and indirect—must undergo careful assessment in order to find the right niche for my restaurant, even if it means sharing and competing within that niche with other restaurants.

Direct Competition

Though there are several restaurants in The Gulch, we must especially consider those that will compete with our aim to become a local go-to spot for residents to grab a quick bite without making a large social or financial commitment. The financial commitment is an important one. Of the 25 eateries in the neighborhood, eight are fine dining restaurants with pricey menus; many even require reservations. These are not direct competitors for my restaurant. We will focus on inexpensive meals for working, busy locals. However, that leaves over a dozen eateries that are competitors with my concept, so I must examine these to fill a niche in the neighborhood.

Arnold’s Country Kitchen (insert pictures)

Located down the street from the condominiums’ and businesses of the neighbor-hood is one of the most famous southern food eateries in the city, if not the south in general. It is casual as well as cheap, with most meals being under $10. This restaurant a Nashville institution that attracts locals and tourists alike. The cafeteria-style eatery is constantly busy, often with a line leading from the cashier exiting the restaurant. On paper, it may be a fierce competitor with my concept. However, from personal experience, many locals do find the food overrated, especially considering the lines one must brave in order to receive the plate of food. In addition, Arnold’s is only open for lunch during the week. It closes on the weekends. This leaves a lot of opportunity to attract people who may want a cheap lunch, maybe even southern country cooking, but who do not want to battle exorbitant lines, and who may want to eat it for lunch or dinner any time of the week.

Otaku Ramen (insert pictures)

This ramen shop is located in the heart of the residential condominiums, and, in fact, markets heavily to the locals who may live right above the shop. Though its menu is very limited, featuring only ramen and a few appetizers, all bowls are $12, making it a relatively easy decision for those who want an inexpensive, filling lunch. It is open for breakfast and lunch all days of the week except Monday. Otaku Ramen tends to market to the same segmentation profiles I would like to attract to my concept: young, workers who may live or work nearby and want a casual, inexpensive lunch that is filling and unique. It features an open kitchen, which is also a bar for individuals to sit at, as well as an additional beverage bar, which offers more individual seating as well. For an extra fee, this ramen shop even delivers to nearby locals. From my personal experience eating and working at this restaurant, there are aspects customers dislike. As with Arnold’s, the restaurant is nearly constantly busy, and the space is very small, so the environment is not often as relaxing as customers would like it to be. Secondly, though the meal itself is inexpensive, the drinks offered are limited and expensive. Therefore, a $12 bowl of ramen with a Coke and a tip to the server can easily end up costing one person $20.

Saint Anejo (insert pictures)

Featuring a Mexican-style menu with dozens of offerings for both lunch and dinner under $10 as well as a sizable and inexpensive drinks menu, Saint Anejo could potentially be an ideal lunch spot for locals heading into or coming out of work or for meeting friends at a spot that will not break the bank. However, Saint Anejo has the same problem Otaku Ramen or even Arnold’s has: locals might simply get tired of the food if all they serve is one type of cuisine. The Saint Anejo menu is static even though it is a locally owned restaurant. Locals might simply get tired of the food if there is not enough change. Additionally, getting to Saint Anejo is a bit of a walk, as its a few blocks from the cluster of condominiums and breweries where many live and work.

Potbelly Sandwiches/Subway

Because these two business serve the same type of meal for similar prices and are located in the same area in the neighborhood, I will group them together. These businesses are certainly competition to a restaurant that aims to be a quick, inexpensive bite to eat for working locals. They are not a far walk from any of the residences, and they are consistently cheap. However, they do one thing: sandwiches. Potbelly makes milkshakes and ice cream while Subway can do breakfast and pizzas, but their primary meal is the sandwich. Realistically, I see myself competing the most with these two businesses. They are quick, cheap, casual, and consistent. However, they are also chain restaurants. They will not offer daily specials, and they do not offer any alcoholic drinks. They will not cater to the local crowd and make them feel like this is “their spot.” Simply, these businesses are competition, but they are not an institution like the one I am aiming to be.

Other Competitors

The five restaurants mentioned above are the five restaurants that share qualities of the establishment I hope to have. There are many other restaurants in the Gulch, but they do not share the qualities of my concept for many of the reasons listed above. The other restaurant competitors tend to be chains, much like Subway or Potbelly, or they have specialized cuisine, like Saint Anejo or Otaku Ramen. They might serve only burgers or only breakfast, but those places leave a niche for people who do not like to eat chain-restaurant burgers every week.

Indirect Competitors

Local businesses other than restaurants will consume the disposable income of the neighborhood as well. It would be wise to examine these, too.

The Turnip Truck

A local grocery store dedicated to selling organic and/or local produce, The Turnip Truck would be a destination for a young, educated worker who wants to eat consciously and healthy. This is exactly the market I am targeting. Though this business is not a restaurant, this will be where the locals spend their money on food if they do not go out to eat. I need to market my restaurant in a way that locals will realize I am serving the same healthy, environmentally conscious foods that they can buy at the Turnip Truck. Perhaps once my business is established, I can see about collaborating with The Turnip Truck to serve their produce while using their name to associate my business with the fresh, local produce they offer.

Zollikoffee

Though this is a coffee shop or a restaurant, I cannot ignore their cheap offerings for lunch and dinner. The atmosphere a local coffee shop offers is especially one that would attract locals who like to relax for breakfast or for lunch. One feature is that Zollikoffee is a good distance’s walk from the hustle and bustle of the neighborhood. If I locate my business more conveniently to the residential buildings, perhaps Zollikoffee will not be a major threat to my operation.

POTENTIAL COMPETITION

The Gulch is Nashville’s fastest-developing district. Even a fast-food chain coming into the market could be a threat to a business like mine. However, The Gulch lacks a restaurant with a menu that changes often, according to what is in season. It lacks an eatery with a complete focus on fresh ingredients for lunch and dinner for working-class folk. A fast-food chain cannot compete with a local restaurant with a fluid menu. This is how my restaurant will become an institution in the neighborhood.

Discussion Questions \(\PageIndex{2}\)

1. What are the seven basic principles of hospitality marketing?
2. What are ‘entry barriers’ to a marketplace?
3. Why would you want to emulate qualities of successful operations in a marketplace?
4. Why is it important to understand your competitors’ strengths and weaknesses?
5. What is the advantage of a market niche?
6. What are the twelve general weaknesses foodservice operations must overcome?
7. How important is the customers’ price /value perception?
8. How does a restaurant acquire a poor brand image?
9. What are the primary sources of information to assess a competitor?
10. What are the criteria for a competitor analysis and how could each of the criteria be advantageous or, a hindrance to your operation?