When you set out to start a food service business you will design a concept based on what you prefer and what you feel will be successful. The problem is that you need to be able to show investors or the loan officer exactly how you know that your business will succeed and be profitable. Even though you may have great ideas, no one that is placing money into your business will do so strictly on those ideas. They need concrete proof that your concept will work and that you will become a viable business.

The best way you can gather this proof is through extensive research of other establishments that have the same concept. You want to find any direct competitors in the area where you plan to open your business. Being in the same area is vital because location and traffic can all be a major factor in the success of a food service business. Once you have located those businesses you will need to gather your information. This process could take some time and creativity. What you want to know is what type of daily sales that business has during the week. Unfortunately, most establishments are not willing to share that information with potential competitors.

You should begin by understanding the average cost that a customer will spend on a meal in the business. This lets you know several things, including how their prices compare to yours and whether that influences the customers on their choice of establishments. You can obtain the average cost easily if you can look at the menu for the business. Some provide carry-out menus that you can use. If not, you may have to visit the establishment for a meal in order to properly conduct your research.

Once you know what people are spending with the competition, you will need to know how many people eat there. This information gathering is not as easy as looking at a menu. You may have to do a stake out of the establishment and spend time counting the customers that enter the building. You want to be sure to do this on several different days and at different meals so that your figures are completely accurate. When you know how many people eat there in a day you can multiply that by the cost of the average meal and you will have the day’s sales for the competition. This lets you know what is possible for your establishment once it is open. It also gives you research to show others before you ask for funding.

When you write your business plan and your financial plan then you will want to include this data that you have collected. This lets any potential investors or banks know that you have thoroughly researched the idea and understand fully what you can expect. It also shows them that other establishments with the same concept have shown success. Knowing your projected sales will help them to believe that your business and your concept can be profitable and worthy of the initial investment.

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