Regardless of the concept of your food service business, you will find yourself with competition for your target market. Competition in the industry is not always a bad thing. You can have a healthy competition and still bring in the customers that you need. However, if you do not know enough about your competition, it could easily hurt your business. It is best if you thoroughly research the area and understand who your competitors are, and what they offer before you design your concept and space. Knowing a few things about them will help you to improve your business.

Who is your competition?

The first thing you want to know is exactly who your competition is. This requires canvassing the area and making notes about other establishments that are drawing in business. Take note of any establishment that could potentially take customers from you even if their concept is vastly different from yours. You should also jot down the distance bewtween their establishment and yours. The more information you have on your competitors, the easier it will be to keep your business one step ahead of the game.

Are they direct or indirect competitors?

You will have two types of competition when you open your business. There are direct competitors and indirect competitors. Your direct competition will be any establishments that are similar to yours. They may have the same concept, be targeting the same market and offer more or less the same menu prices as you do. These competitors will affect your business since they offer customers another option of which restaurant to choose. Indirect competition covers any other establishments in the area. They may not have the same concept as you, but they could still attract customers who are not necessarily basing their decision on a particular concept.

What are the advantages of choosing the competition?

You have to take the time to look at the situation from the perspective of your ideal customer. What would make the competition appeal to them over your establishment? Is their location one that easily attracts customers while yours is not? Maybe they have more space than you or a larger parking lot. Compare the menu prices. Do they have better menu prices than you plan on having? Anything that could cause a customer to choose another food establishment over of yours, should be considered. Some of these things can easily be changed and used to help you attract those customers.

It is best if you scout the area and understand your competition long before you establish a business plan and ask for funding. Being able to prove to the bank how your business will stand out and succeed over those local competitors, will go a long way towards ensuring your approval for a loan. It is also better for your business if you understand how the competition can help or harm you before you start. This way you can develop a plan to combat any potential problems. This will help your business become more successful and allow the competition to remain one that is healthy for both establishments.

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