For prospective franchisors, analyzing the foodservice market is one of the most crucial steps in the process of expanding and growing locations. Success in any foodservice business relies heavily on comprehensive market research and understanding local food trends and industry changes. To make the most data-driven decisions possible, it helps to utilize specialized resources and platforms, such as Brizo, that are specifically tailored to the foodservice industry.
In this article, we’ll break down the top 10 most important considerations for franchisors when examining the foodservice market for potential franchise locations. Not only will we address the broad market trends, but we’ll also discuss ways to glean deeper insights, such as utilizing sales prospecting, marketing, production innovation, and data enrichment techniques.
1. Market Size and Potential
The first key indicator for any prospective franchisee is to understand the size and potential of the foodservice market in their area. By understanding the scope and size of local foodservice growth today and in the future, entrepreneurs will be better equipped to identify exciting opportunities and build a successful business. Resources like Brizo can provide detailed insights into local markets, such as population size, average household purse size, eating out frequency, new restaurant openings, and more.
2. Branded vs. Unbranded Restaurants
Understanding which branded restaurants operate in a given area is also crucial for any prospective franchisee. While branded restaurants often have a large majority of the market share, it’s useful to consider the smaller, unbranded restaurants in the vicinity, as their menus, branding, and competitive pricing could be reflective of the tastes and preferences of the local population. Market research tools like Brizo can help to identify the unbranded restaurants in close proximity to the desired location as well as any other restaurants that may not be competitors but could provide helpful insights into the demographic, such as quick service chains or takeout spots.
3. Menu Variety
Another critical component of foodservice market research is analyzing the menu variety in the area. Restaurant menus, both branded and unbranded, are a reflection of regional tastes and popular cuisine. Examining the existing menus, as well as the frequency in which they are changing can help entrepreneurs determine the types of foods that will be well-received in the desired location. It is important to note the types and variety of restaurants that are succeeding in the surrounding area and consider any interesting menu trends that could be leveraged.
4. Takeout and Delivery Options
Due to the pandemic, takeout and delivery services have become a primary component of the foodservice industry – and one that many entrepreneurs must keep in mind when analyzing the foodservice market. Understanding the percentage of customers who are spending their disposable income on food delivery and take-away options is essential to business success. Tools like Brizo pairs point-of-sale and delivery data, allowing entrepreneurs to view the breakdown of delivery services utilized in a particular market.
5. Restaurant Technology
Restaurant technology often plays a major role in the success of restaurants today, so understanding the types of technologies that are prevalent in a location is also an important factor to consider. From reservations systems and payment processors to wireless customer engagement solutions, research must be done to identify the type of technology local restaurants are utilizing. Brizo’s RestaurTechnomics report allows entrepreneurs to track key trends in restaurant technology, such as customer engagement and customer data analytics.
6. Food Delivery Platforms
Food delivery platforms are another factor to consider when analyzing the foodservice market. These days, customers are utilizing various third-party delivery apps, such as Uber Eats, DoorDash, and Grubhub, among others, to expand their reach and increase sales. Therefore, entrepreneurs must be aware of the types of delivery platforms customers are utilizing in the area and make sure their desired franchise location is optimized for success in this changing landscape.
7. Pricing Strategies
Pricing strategies are another key component of market research. Analyzing the types of pricing strategies restaurants in the area are using, both branded and unbranded, will provide valuable insights into what customers are willing to pay and what they are not. Additionally, price comparisons can help inform pricing and menu design decisions.
8. Consumer Trends
Consumer trends are always changing and can be difficult to keep up with. As such, understanding the types of foods, flavors, and dishes that are trending in the local area can help entrepreneurs craft more attractive and successful menus. By leveraging data analysis tools that offer insights into current trends, entrepreneurs are able to understand exactly which items, flavors, and dishes are most popular in the market.
9. Competition Level
As the saying goes – Knowing is half the battle. By understanding the level of competition in the local market, entrepreneurs will be better able to design business strategies that will increase their competitive advantage. Tools like Brizo can help provide a more holistic overview of the competitive landscape, including restaurant technology usage, characteristics of successful restaurants, and more.
10. Expansion Opportunities
For franchises that have already established a presence in the local market, understanding the potential for growth is key. Knowing which areas have the greatest potential for expansion will enable entrepreneurs to open new locations with the greatest success. Last, but not least – tools like Brizo can provide insights into economic trends, population shifts, and new construction that could lead to additional sales and growth.
Thorough market research and deeper insights utilizing specialized tools, such as Brizo, can help entrepreneurs make smarter decisions when analyzing the foodservice market for potential franchise locations. From understanding the size and potential of the local market, to exploring consumer trends and competitive landscapes, these 10 considerations will help franchises create successful businesses, build solid brand recognition, and maximize their potential for growth.
