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How to Gain a Competitive Advantage in The Restaurant Business

A 2019 study predicted that the restaurant industry in the US would hit $1.2 trillion in sales by 2030. However, the COVID pandemic changed all that, and the industry was fighting to stay alive.

However, it’s never been so easy to make a profit in the restaurant industry. It’s a highly fragmented sector that is dominated by independent owners and operators, making up 70% of the sector. The average restaurant generates annual revenue of around $1 million while the operating profit is just around 4 to 5%.

So how can a restaurant gain a competitive advantage in this cutthroat industry? Unless you’re offering a novel cuisine or have a star chef, gaining a competitive advantage can be difficult, but it’s possible.

A Guide to Gaining a Competitive Advantage in the Restaurant Business

Gaining a competitive advantage in the restaurant business begins with a detailed analysis of the demographics of the surrounding area as well as the nature of existing competition that you’re facing.

It’s important not to get complacent even if you start off successfully, as new competitors are always lurking and can steal your clients easily.

When it comes to the restaurant industry, adopting successful strategies from your competitors is a good idea, but if you try to compete directly with an entrenched rival, that’s a bad idea for a novice restaurateur.

People enjoying at a restaurant

So, here are some steps you should consider following to gain a competitive advantage in the restaurant business.

1. Looking for an area with few competitors

It’s important to do your research before you jump in. Start by finding an area that has few competitors that are serving up cuisine similar to yours. Pizza places, for instance, face enough competition from other types of restaurants without needing to fight each other.

2. Choosing a highly visible location

Your choice of location is a crucial factor when it comes to gaining a competitive advantage. Your goal should be to find a highly visible location that offers a suitable consumer base nearby. For instance, opening a family restaurant in an area filled with office complexes is a bad idea.

Instead, you should be looking for a residential area that houses a high percentage of families with young children. Your potential clients will increase, especially if there aren’t many local restaurants serving the same area.

3. Analyzing the local competition

Once you’ve chosen a location, it’s time to analyze the competition. Any region you pick will likely have at least a few competing restaurants that are targeting the same consumers like you. Apart from restaurants, supermarkets and convenience stores are also your competition.

4. Identifying each competitor’s strengths

Each of your competitor’s strengths should be identified. For instance, a supermarket’s ready-to-eat meals offer convenience for your target consumers who are picking up household items.

Similarly, fine dining restaurants have expert chefs who are excellent at cooking in a particular style. Fast food joints offer quick service and low prices.

fine dining restaurant

5. Identifying each competitor’s weaknesses

Just like strengths, each competitor will also have weaknesses. For instance, the same ready-to-eat meals that supermarkets offer may taste stale after a few hours. Similarly, fine dining restaurants may be too expensive for the target consumers to visit regularly.

Fast food restaurants have the weakness of offering the same products, and the consumers may be looking for something new.

6. Choosing a focus for your restaurant

When it comes to choosing a focus for your restaurant, it’s important to take the strengths and weaknesses of your competition into consideration. Your restaurant can focus on delivering a service that your competitors won’t be able to match; whether that’s higher quality, novel foods, or faster service.

You can also consider offering lower prices to attract consumers but make sure you don’t compromise on your service and food quality.

7. Analyzing new competitors immediately

If you start getting new competitors (which is inevitable), you should identify potential drains on your business. Adjust your restaurant to compensate for any meaningful shifts in your competition.

For instance, if a low-cost pizzeria opens near your Italian establishment, focus on your ability to offer high-quality entrees in addition to your mains to maintain your competitive edge.

8. Focusing on delivering experiences

Business leaders know and understand that regardless of the business they’re in, they need to become an experience-led company. An experience-focused company focuses on offering a memorable experience for everyone who interacts with their brand.

Experiences, regardless of the business, are the new competitive advantage. As a restaurant, you can gain a competitive advantage by offering your customers an experience they won’t forget. This goes beyond a high-quality product or exceptional service.

It’s also key to fostering brand loyalty and the secret why retailers like Starbucks can charge $12 for a cup of coffee.

9. Becoming a technology company

Leading businesses know that they’re expected to become technology companies. What this means is that they all need to deploy technology wisely throughout their business. As a restaurant, you can do so by investing in restaurant online ordering.

Digital ordering and automation for pickup, delivery, and dine-in are no longer innovations but are quickly becoming necessary requirements. For instance, investing in MenuCRM will give you a competitive advantage with the help of these benefits:

Customer ordering online

Loyalty + Rewards. Increased ticket count and size with built-in programs that help your restaurant build a loyal following.

Dynamic Menu. A single menu that is easy to edit, handles loyalty pricing, carry-out, delivery, dine-in, and much more.

Easy-Edit. Easily update your menu with images and membership-based pricing to handle last-minute pricing updates.

SEO-Social Media. Makes it easy for your customers to find your restaurant online with powerful HTML-based technology and analytics.

Customer-Connect. Create a community with your customers with personalized newsletters, emails, and text messages.


In conclusion, gaining a competitive advantage requires extensive research into your location, competition, and target consumers. Moreover, restaurants that offer experiences and invest in technological innovation can gain a competitive advantage over their competitors.

About MenuCRM

MenuCRM is a restaurant online ordering and website platform that powers digital ordering for in-house dining, pickup, and delivery, with an affordable entry point and no payment processing fees. Whether you’re looking for an integrated POS system in Texas or a restaurant ordering system in Kansas, MenuCRM can deliver.Get in touch today to learn more or signup for a quick demo to see how MenuCRM can help your restaurant!

Posted 10/18/2021 4:40:38 PM