Your restaurant may serve the most delicious food in town, offer top-notch customer service, and have the most alluring ambiance in the city, but if you simply ride the wave of past success and get complacent, your profitability could suffer.
Understanding every aspect of your business can help you find ways to improve it, which can help generate growth, revenue, and sales.
Knowing which areas are doing well in strategic planning is just as important as knowing which areas need improvement. After all, if you're not constantly improving your business , you risk falling behind the competition. Because auditing your business to learn what you can do to improve it may seem daunting.
That's where a SWOT analysis can help.
An acronym that stands for Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis is a strategic tool used by restaurants to turn weaknesses into strengths and potential threats into opportunities for growth.
A SWOT analysis involves examining both internal and external forces that are both within and beyond your control. Factors that you can control, to some extent, include your brand image, online menu, customer service, and interior design. External elements that may be beyond your control include factors such as food costs, new competition, economic shifts, and regulatory changes.
A SWOT analysis can assist you with reimagining your online menu, creating a more cost-effective marketing strategy, and implementing new technology, all of which can help to boost sales and give you a competitive edge.
Performing a SWOT analysis for your restaurant can not only help you identify your position in the marketplace, but it can help you shape (or re-shape) your unique brand and pinpoint opportunities for growth.
Due to constant economic fluctuations, evolving consumer trends, and transformations in technology, it's important for restaurants to stay proactive by conducting a SWOT analysis on an annual basis (at minimum). Similar to menu engineering, a SWOT analysis is a method for keeping your business moving in the right direction: up!
For more about the art of menu engineering, see our related post, Step-by-Step Menu Engineering for Restaurant Delivery with FREE Downloadable Worksheet.
What is a Restaurant SWOT Analysis?
A SWOT analysis is an exercise used to analyze a restaurant’s strengths, weaknesses, opportunities and threats.
Strengths: Positive aspects of a restaurant, this includes internal factors such as a strong brand image, a loyal customer base, a unique menu design, superior service, and efficient operations.
Weaknesses: Areas that need improvement in a restaurant, these are internal factors could be anything from poor customer service, an outdated menu, lackluster decor, and high employee turnover.
Opportunities: External factors that could benefit a restaurant, include elements like expanding to new locations, introducing new menu items, utilizing the latest tech, and collaborating with influencers.
Threats: These are the external factors that could negatively impact your business, such as strong competition, shifting consumer preferences, economic challenges, regulatory changes, and poor online reviews.
Step-by-Step Restaurant SWOT Analysis
Performing SWOT analysis is not as difficult as it may seem. The most efficient way to perform a restaurant SWOT analysis is with the help of your entire team. This includes everyone from management to kitchen staff. There are several steps to effectively running a SWOT analysis for your restaurant. We’ve put together this lis to get you started:
Gather Information
Investigate your restaurant's financial reports, sales data, and customer feedback to gain deeper insight into every facet of your business. Gather pertinent information to support your analysis, including customer reviews, online surveys, delivery platform ratings, social media engagement, and experiential data from guests and staff.
2. Recognize Internal Strengths and Weaknesses
Strengths: What Your Restaurant Does Best
It’s the things that make your restaurant stand out from the competion that qualify as strengths. Start by assessing all the strong points of your restaurant. IOW, what makes people choose your restaurant over others and what keeps customers coming back for more?
Is it your unique creative seating arrangement, your brunch specials, how the menu is crafted, the variety of cuisines you offer, or your team's ability to attract a crowd during slow times?
Strengths to Consider:
Positive Reputation: A positive reputation attracts new customers and keeps regulars coming back.
Unique Menu Offerings: An enticing menu, inviting ambiance,and friendly atmosphere differentiate your restaurant and boosts business.
Consistent Delivery Services: Customers appreciate deliveries that arrive on time, packaging that’s in good shape, and dishes that appear the same as depicted on your website.
Innovative Tech: By leveraging the latest technology, you can enhance operations, optimize the customer experience, and gain valuable insights that set your restaurant apart.
Weaknesses: Aspects of Your Business That Need Improvement
While it's important to recognize your strengths, it's equally important to address your weaknesses. Are you offering a dish that’s not getting great feedback? Does your chef have poor time management? Has there been high employee turnover? Is your parking situation keeping customers from coming in your door? These are areas that need your attention.
Though zeroing in on your negatives may not be a pleasant experience, facing these flaws is the best way to overcome them.
No restaurant is perfect, so taking a sharp look at your weaknesses is critical for your business’ growth.
Ask yourself:
Is your restaurant spending too much on labor, rent, ingredients?
Are you addressing poor customer reviews and complaints in a timely manner?
Do you need to explore new markets because of a slump in sales?
Is a lack of innovative technology slowing down service, decreasing food quality, and affecting efficiency?
Do you need to invest in training and development programs to ensure your team offers the best service possible?
Why can’t your team get orders out-the-door faster?
Why are some customers unhappy?
Which members of your staff are not pulling their weight?
Could your front-of-house staff benefit by more training?
3. Examine External Factors
Opportunities: Strategies to Help Your Restaurant Grow
Next, think about external factors that can have a positive impact on your business.
Opportunities to Consider:
Expand: Opening new locations in new markets can help broaden your customer base.
Get Down-to-Earth: Institute sustainable practices such as upgrading your take-out and delivery packaging, reducing food waste, and sourcing local ingredients.
Innovate: Implementing new Online Ordering Systems can help streamline operations and improve the customer experience.
Optimize: Introducing new menu items or services like catering can help attract a wider audience.
Niche Down: Accommodate dietary restrictions and customer preferences by adapting your menu to include health-conscious, low-carb, vegan, or gluten-free options.
Engage: Collaborate with local businesses to promote community engagement.
Get Social: Work with local influencers to build your social media presence.
Threats: External Forces That Impact Your Business
Finally, consider the external forces that could be taking a bite out of your bottom line. Though these factors are generally beyond your control, what you can control is the way you respond to them. This is when it's important to "make lemonade out of lemons," so to speak. If, for example, supply chain issues are causing delays, making it hard to access beef for your top-selling burgers, consider turn this roadblock into an opportunity to experiment with new ingredients.
If, perhaps, your research has shown that your customers are hungry for sustainable options, but you have yet to dip your toe into the plant-based space, ask your chef to come up with some new meat-free burger alternatives. Not only might this help to keep your regulars satisfied, but it could open the door to a whole new customer base.
As another example, if your bottom line has taken a hit due to the high cost of fresh vegetables and fruit, consider joining the "ugly produce" movement. Embracing less-than-perfect fruits and vegetables and seeing the beauty in ugly produce is a great way to save money, cut waste, and decrease your carbon footprint. It's also a cost-effective way to add healthy, vibrant, and unique dishes to the menu.
By turning these negatives into positives, you may witness seemingly threatening situations becoming opportunities in disguise, paving a path towards a reimagined menu and higher profits.
For more information about sustainable menu options, read our related posts:
Threats to the success of your business could include:
Inflation and Economic Downturns: When the economy is lagging, it could lead to reduced consumer spending.
Market Saturation: Too many restaurants targeting the same customer base can make attracting and retaining customers a challenge.
Increased Competition: As new restaurants and food delivery services move into your area, it’s important to consider ways you stand out.
Disruptions in the Supply Chain: Whether caused by seasonal changes or production issues, supply chain disruptions can increase costs and impact customer satisfaction.
Evolving Consumer Behavior: Shifts in the economy or lifestyle preferences can indicate needs to adapt your menu offerings or operations.
There can be other potential threats as well, such as an increase in the price of the ingredients you regularly source, or an increase in the social media following of your closest competitor.
The more you stay vigilant about what could dampen your restaurant’s profitability, the better equipped you will be to put out fires before the match strikes.
Read more about the rising cost of food in this related post: Fueling Frustration Over Inflation: Dealing with Skyrocketing Gas Prices and Food Costs.
5. Network
Engaging with other restaurateurs and industry insiders will help you assess how your competitors are doing and where you fit in the marketplace. Visit other restaurants in your niche to learn more about their menu offerings, customer service, and demographics.
Get a clever picture of your competitors' marketing strategies by following them on social media and subscribing to their email lists.
6. Brainstorm
Seek the opinions of the people who know your business best—your staff. Your team has a unique perspective of your restaurant’s operation. They see it from a variety of angles that change with the season, time of day, day of the week, and situation. This gives them unique insights that may not be readily obvious to managers and owners in the midst of the hecticness that is food service.
A brainstorming session can be accomplished by meeting with the whole crew at once or by speaking to each team member individually. Either way, acquiring this information is a critical step in your analysis because their honest assessment of your restaurant's strengths, weaknesses, opportunities and threats is invaluable.
7. Create a SWOT Analysis Spreadsheet
Using a SWOT analysis matrix, create a spreadsheet that indicates your strengths, weaknesses, opportunities, and threats. A good SWOT analysis can be as simple as a four-square, grid-style table with bulleted lists.
Using Canva or a similar graphic-design tool, it’s simple to create one for your restaurant. Alternatively, you can customize one of the many free templates online.
When to Conduct a SWOT Analysis
A SWOT analysis can be performed at any point to identify these key areas of your business, but it's important to conduct one before making a big decision about your business.
Put a SWOT analyses into action before the following scenarios:
Experimenting with a new revenue stream
Changing marketing strategies
Considering new initiatives
Planning a change in your business model
Altering internal policies
Considering new opportunities
Forming new collaborations with other businesses
Partnering with an influencer
Expanding to new locations
Redesigning dining room
Reimagining your menu
Offering direct delivery
Revamping your website
Making major changes to menu offerings
FAQs
What are the 4 components of a SWOT analysis?
Strengths and weaknesses are internal factors of which you have control. Your strengths are areas where you excel, and your weaknesses are areas that can be improved. Opportunities and threats are external factors over which you have no control over
The four components of a SWOT analysis are:
Strengths
Weaknesses
Opportunities
Threats
What are examples of threats in a SWOT analysis?
Threats in a SWOT analysis are external factors that threaten your organization. They can be anything from the weather to government regulations. Common examples of threats include:
Inflation/Economic Downturns/Unemployment
Supply Chain Issues
Road Closures/Construction
Weather
What is the most important aspect of a SWOT analysis?
Though all parts of a SWOT analysis are important in helping you make decisions, analyzing your internal factors, such as strengths and weaknesses, can help you determine which areas you need to focus on the most. Because these factors are within your control, they are typically the easiest to strategize. When it comes to external factors, though they are generally not something you can control. you can control the way you respond to them.
Take Away
Conducting a restaurant SWOT analysis on a regular basis can help operators identify strengths, threats, opportunities for growth, and weaknesses.
Though a SWOT analysis may be incorporated into a restaurant's business plan, it can be performed whenever challenges arise and crucial decisions need to be made.
A restaurant SWOT analyisis is a tool that can help operators gauge a business's strengths, address its weaknesses, examine opportunities, and help tackle obstacles as they emerge.
By Eileen Strauss
