How to Conduct a SWOT Analysis for your Restaurant
Updated: Jun 21, 2020
Planning is crucial in a restaurant, or in any business in general. It takes a lot of time, knowledge and effort to plan that is why it is always smart to have strategic planning.
The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, can be a useful framework for you to have systematic and precise planning for your restaurant.
It is always a good idea to gather a lot of insights and perspectives in January or a few months prior so can you get clarity on what you need to focus on for your restaurant within a whole year.
Conducting a SWOT analysis is a very tactical and simplified way to concentrate on different areas of your restaurant that actually matter.
There are so many things that probably get into your restaurant that are extremely frustrating, some may be small while some may be big. But solving those small problems will not give us big results. So we want to focus on some of the bigger problems to get bigger results.
One thing that you can consider is that when you run a SWOT analysis, you can do it on a macro-level or micro-level.
Macro-level means that you are covering a large-scale of various aspects of your restaurant, while micro-level is focusing more on small and specific parts of your business.
It is critical to put your team, especially your management team through the SWOT analysis for them to do this analysis without your help so you can gain a lot of perspective as to what is that they believe or perceive as being the strengths, weaknesses, opportunities, and threats of your restaurant.
So let's talk about Strengths and Weaknesses!
You need to take like 15 minutes to think about all the strengths that your restaurant has and then print them out as a PDF file for the checklist of your strengths. These strengths can apparently be your weaknesses.
What you need to do here is think about your restaurant in comparison to other restaurants that sell the same food that you have, whether you are a pizzeria, a Mexican restaurant or a burger joint, or a bakery, it does not matter.
Compare yourself to other restaurants in your 3-5 mile radius that sell the same cuisine and then compare your restaurant to all the other restaurants including your grocery store that also markets similar food that you offer.
Here are some of the areas of your restaurant that could be your strengths or weaknesses that you may consider including in your checklist:
✅Variety of food
✅Hiring and termination system
✅Brand story and how you communicate daily
✅Finances, books, etc.
✅Labor percentage in relation to the sales
✅Core management team
✅Location and easy access visibility
✅Business and working relationships
✅Unique selling proposition
✅Decor and ambiance
✅Diet options in your menu
Are you wondering if these are your weaknesses or strengths?
Is your ticket time your strength because you are providing the fastest in serving your customers? or is it that you are the cheapest, or is it your branding or your reputation?
Is it your menu offerings or the variety of food, etc. that you provide versus the other restaurants don't offer? Like do you have a section for gluten-free people?
That could be a strength or something that makes you stand out or maybe it is a weakness because you don't have it.
So what you need to do is to look at all of these things I combined together or you can add your own. Look if you are very strong in those areas. Again, you want to look at your strengths and your weaknesses.
Next, we are talking about Opportunities!
The following are some good examples of opportunities you have (or maybe you are not aware that you have) in your restaurant:
1. Where there is a gap in the market is ultimately the opportunity you have that you need to maximize so you can take your restaurant to a higher level.
If you continue to do what you've been doing, you are going to continue to get the same results.
But what we want is to grow our sales tremendously by 10, 15, or 20 percent, month after month, quarter after quarter, so we got to be looking for opportunities and continue to discover new marketing strategies.
2. Another opportunity is to identify which demographic is underserved.
Presumably, the bars or the places that serve a variety of craft beers may have a lot of customers but they are not very family-friendly, right? So which demographic is underserved?
Take that opportunity to offer what you have in your restaurant to that underserved demographic.
3. What food offering is missing in the community that you could add?
For instance, you are a pizzeria and nobody else offers gluten-free or is it probably no one is considering Keto diet option, that could be a great opportunity for you.
Again as an opportunity, you capture a new demographic in the segment of the market.
4. The dining options that you can explore if you currently don't offer.
Are there new dining options that you can offer? or supposedly, you currently don't have any deliveries or your take out process isn't very smooth.
That could be a great opportunity because as you know, more and more people want their food delivered or they want to pick it up.
5. Also, look for opportunities with a partnership that would be a fantastic opportunity to take your business to the next level.
Can you have a business partner that doesn't necessarily compete with you, for instance, there is a bouncy house business that serves families with young kids and you are a restaurant owner who serves families, how can you partner with them?
Are there opportunities around you to form partnerships that will help you grow your sales and attract new customers? Then grab that opportunity.
6. Other opportunities that you can think about are equipment that you can purchase that would increase your capacity and would be an opportunity to grow your sales.
What has happened to us is that every time we have gotten a new oven and increase our capacity.
Somehow, we've been able to serve more people and our sales have grown, and maybe part of it is that we were able to lower our ticket times.
But there has got to be a strategy in doing that.
7. Other possibilities that you can think of, trend-wise, is going on a national level that it is an opportunity for you to ride along in cash and into.
Hypothetically, for the "Healthy Movement", is there an opportunity for you to add some healthier food options? popular examples are the Healthy Food Movement, Blue Apron Movement, and the Grubhub of the World Movement.
These companies are popping out of nowhere, that could be a great opportunity for your restaurant and think about how can you add an option like food that people can take home and bake in their oven, something like that.
What's going on at a national level that you can tap into these trends as an opportunity to grow your sales.
Let's talk about Threats!
You need to pay attention to threats especially when things are really going really well to your restaurant.
We must be on offense, always thinking about what threats are coming our way that we need to prepare for before they arrive.
The following could be threats that you must be on the lookout for:
New restaurants or entertainment centers are coming into town that could be a threat to your sales.
They may serve food similar food that you serve or not even. For instance, for us, we are getting two movie theaters with a bunch of restaurants around them, threats are part of the food that they serve are pizzas.
Moviegoers can get pizzas in there in-house store and bring inside the cinema while they watch a movie.
The ability to get a staff.
We do have an Amazon facility near our restaurant, they offer people with a starting salary of $12 an hour.
There's IKEA that has just recently opened and for sure, they are going to pay their employees more.
So that is a challenge for us finding staff.
That is a threat to our restaurant and we need to think about how are we going to attract employees and have our pipeline full of people who would work for us because that is a big challenge.
Now let's apply the 80/20 rule!
So now that we have the outline of our strengths, weaknesses, opportunities, and threats, we need to view this like, how can we turn those weaknesses into our strengths?
How can we turn those threats into opportunities? Then what you must focus on is to apply the 80/20 rule. What is that 20% that is going to have an 80% impact?
Which one of your weaknesses that has a potential that if you would turn it into a strength can have an 80% impact in your business? The same is with the threats.
As you are thinking about the projects that you want to work on or new systems to create or new marketing initiatives that you are going to start, we must do the SWOT analysis so you get a good perspective and understanding of where your businesses are at.
I hope that this analysis is insightful and maybe you can even have some surprising results of things that you do not consider.
I hope you involve your team so you can get their feedback and their perspective so you have a richer perspective when it comes to your decision making.
Let's take up the Micro SWOT analysis further!
Moreover, I want to discuss briefly what I meant by micro-level SWOT analysis that you can do with your team.
Micro SWOT analysis refers to isolating smaller aspects of your business and look at its strengths, weaknesses, opportunities, and threats.
For instance, running a SWOT analysis of your back of the house, SWOT analysis of your training systems, SWOT analysis of your front of the house, and SWOT analysis of your marketing systems.
You can also have a SWOT analysis of your kitchen managers, what are their strengths, what are their weaknesses?
What are the threats that you can see as opportunities for these people? I think that information can be insightful if you are going to have a performance evaluation of your managers, right?
Now, go way more in-depth with all the questions and all that details on the checklist that I mentioned.
The purpose of a SWOT framework is to get owners and managers to think about everything that could potentially impact the success of a new plan for your restaurant.
Failure to analyze a significant strength, weakness, threat or opportunity could result in poor business decisions.
I hope these pieces of information that I shared with you would be helpful to save your time so you can focus on the right things to get the right results and grow your sales like never before! Make a whole lot of dough folks!
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