Restaurant Swot Analysis- And its Competitors

S.W.O.T Analysis 

SWOT analysis is an effective strategic planning tool that has been used by various business organizations to assess their strengths, weaknesses, opportunities, and threats. Through the application of the SWOT framework, business organizations can devise strategies to maximize their strengths and minimize their weaknesses. Efforts are also made to fully capitalize the available opportunities to take complete advantage of them and tackle any threats to minimize their negative consequences for the business. SWOT analysis was developed in the 1960s  by a management consultant named Albert Humphrey while he was working at Stanford research institute. Since its inception, many large-scale and small-scale organizations have used this strategic planning tool to their benefit. Here, let’s know about Restaurant Swot Analysis. The four letters of SWOT denote the following characteristics of a business organization –

• S – Strengths

• W – Weaknesses

• O – Opportunities 

• T – Threats

This article provides information about how a restaurant can use swot analysis to identify its strengths, weaknesses, opportunities, and threats while striving to maximize its profits and gain more customers. 

Benefits of S.W.O.T Analysis 

Over the past years, SWOT analysis has assumed a greater role in the business world. The application of SWOT analysis by a business organization results in a multitude of benefits. The various benefits offered by the SWOT framework are discussed as follows – 

• SWOT analysis enables the business organization to direct its efforts to the achievement of business objectives in a better way. 
• Business organizations by locating their weaknesses through the SWOT analysis can design suitable policies and plans to get rid of these weaknesses.
• The business world is full of new and innovative opportunities. Every business organization has its focus set on making maximum use of every available opportunity. Business organizations using SWOT analysis can identify various opportunities in the external business environment. 
• SWOT analysis helps the organization to make effective business decision making, as it provides the business the organization with a look into the future and helps to identify certain opportunities and threats that may have implications for the business organization. SWOT analysis helps the management of the firm to make better and long-term decisions by considering various internal and external business environment factors.
•  SWOT-analysis helps the business organization to know and analyze their competition in a better way. Competition analysis helps to assess the strengths and weaknesses of rival firms. Through the application of SWOT analysis, an organization gets the information that it requires to face the competitors in a better way.
• SWOT analysis is a strategic planning tool that helps the organization in the short term and long-term strategic planning. Plans can be devised after considering the impact of various factors operating in the internal and external business environment.
• SWOT-analysis helps the organization to develop realistic business goals. These goals are based on the strengths of the organization. SWOY framework also enables the organization to develop strategies for achieving these business goals. 

Restaurant S.W.O.T Analysis 

A restaurant is generally identified as an organization that prepares and serves food to its customers. Customers may enjoy the food on the premises or avail of takeaway service of the restaurant. Some restaurants also provide their customers with food delivery services. A restaurant can use SWOT analysis to enhance its work and achieve better results. The SWOT analysis of a restaurant is as mentioned below- 

•  Strengths – Strengths are the characteristics of the restaurant that enable the restaurant to function efficiently and these characteristics serve as a source of strategic advantage over the competitors. Following factors may serve as strengths of a restaurant- 

1. Quality Staff – For any restaurant, quality staff is a prominent factor that can help it function efficiently. Well-trained chefs and courteous waiters can bring utmost satisfaction to the customers visiting the restaurant. Moreover, the availability of local staff can serve as an added advantage for the restaurant. 
2. Location – The location of a food outlet can serve as one of the major strategic advantages. Restaurants located in prime locations such as near markets, shopping complexes, or gyms can attract more and more customers. Restaurants located close to the customer localities are expected to generate better profits than the ones located in far-off regions.
3. Customer loyalty – For any organization, one of the major sources of strength is its loyal customer base. Such loyal customers are likely to stay with the organization for a long time and they will not shift to rival products easily. A restaurant having a loyal customer base can enjoy a strategic advantage over its competitors. 
4. Interiors and Area – Well-maintained and attractive interior design along with sufficient area for customers to enjoy their food can do wonders for the restaurant. Generally, customers prefer food outlets with large areas so they can comfortably enjoy their meal. Moreover, the attractive interiors of a restaurant serve as a feast to the eyes and help to attract more customers. 
5. Pricing strategy – A restaurant offering quality food at a reasonable price will certainly become the first choice for customers. The pricing strategy used by the restaurant can also help to gain more customers and increase customer loyalty.
6. Customer knowledge – A restaurant that has researched customers in the region can develop its menu as per the needs and preferences of the customers. Thus customer knowledge can serve as an advantage and lead to more footfall in the restaurant. 
7. Financial resources – Restaurants possessing adequate financial resources can plan their operations in a better way. Moreover, the availability of sufficient funds helps the restaurant to absorb business shocks in a better way.  

• Weaknesses – Weaknesses are the characteristics of a restaurant that can hinder its growth and can lead to inefficiencies in work. If these weaknesses are not addressed on time, they can lead to reduced profits. Following factors may serve as weaknesses of a restaurant –

1. Excessive cost – Any restaurant offering food at high costs may not become the first choice of customers. An unreasonable increase in prices of food items may lead to customers shifting to other restaurants in the area. 
2. Negative reviews – With the advancements in technology, customers can provide reviews about the place which they visit. Customers visiting a food outlet for the first time may choose to check the reviews about the restaurant. If the reviews are negative, customers may opt for another restaurant. So negative reviews hinder the growth of a restaurant. 
3. Lack of brand awareness – A restaurant that fails to establish its brand presence may not be able to generate adequate sales. It is important to make the customers aware of the brand. Lack of brand awareness is a severe weakness that the restaurant must address as soon as possible.
4. Limited food items – Any restaurant that wants to attract more customers must offer diverse types of cuisines to them. If a restaurant has limited cuisines on its food menu, customers may not be tempted to visit there, which may result in poor sales and low profits. 
5. Lack of hygiene – Food outlets must be kept neat and clean at all times. This helps to provide a hygienic environment on the premises. So if a restaurant does not pay attention to the maintenance of hygiene, customers may choose not to visit such a place. 

• Opportunities – Opportunities are those factors or conditions, which enable the organization to expand its market share, gain more customers and generate a higher level of profits. A restaurant can identify several opportunities in the external business environment through SWOT analysis. Following are the factors which can act as opportunities for a restaurant- 

1. New branch – A restaurant operating in a particular area may capitalize on an opportunity to establish a new branch of a restaurant in another city or a region within the same city. This will help the restaurant to significantly increase its geographical reach. 
2. Introduction of new cuisines – A restaurant can choose to introduce new cuisines to its menu. The introduction of popular and in-demand food items will lead to more customers and higher sales.
3. Build online presence- In the era of social media and technology, more and more organizations are focused on building their presence on online platforms. A restaurant can build its presence on social media platforms such as Facebook and Instagram. A dedicated social media team may also be employed for this very purpose. 
4. Home delivery – A restaurant operating successfully can launch food home delivery services for their customers. This will help the customers to access their favorite food items from the comfort of their homes. 
5. Advertisement campaigns – Correct advertising campaigns can do wonders for any organization. A restaurant can use targeted advertising campaigns through billboards, pamphlets, TV advertisements to attract more customers.

•  Threats – Threats are the factors and conditions arising in the external business environment which may harm the business activities of an organization. These threats can result in lower sales and decreased market share. These factors are beyond the control of restaurants. A  restaurant through SWOT analysis can identify the various threats. Following factors act as threats for a restaurant – 

1. Increased competition – Increase in the scale of business activity of existing competitors or entrance of new competitors in the market may serve as a major threat to the restaurant. This may result in decreased market share and a decrease in customers as customers may shift to newly opened restaurants. 
2. Economic conditions – Economic conditions prevailing in a country have a significant impact on business activities. Unfavorable economic conditions in the country will result in an additional burden on the pockets of citizens. So in such conditions, a restaurant may see fewer customers and a decline in sales. 
3. Change in customer taste and preferences –  A sudden change in customer taste and preferences may result in decreased footfall in a restaurant. This sudden change may be the result of factors such as – seasonal change or inclination towards healthy eating habits.
4. Pricing strategy of competitors – Aggressive pricing strategy followed by rival firms usually has negative implications for an organization. So if competitors reduce the price of their food items, the consumer may choose them and a restaurant will face a decline in sales. This is one of the prime threats faced by a restaurant operating in an area with fierce competition. 
5. Rise in price of food items – Various food items are used in making the cuisines and dishes offered by a restaurant. If the prices of these food items rise, it ultimately leads to an increase in the price of the cuisines and dishes offered by the restaurant. In such cases, sales may tend to decline.

Conclusion – To conclude, it can be said that a restaurant can assess its strengths, weaknesses, opportunities, and threats through SWOT analysis. Proper application of SWOT analysis helps a restaurant to identify these factors on time. This timely identification helps the restaurant to make effective plans and policies to maximize its strengths and minimize its weaknesses. SWOT framework helps the restaurant to identify the available opportunities and capitalize on these opportunities to gain customers, increase market share and generate higher revenue. Threats are also identified beforehand and if proper strategies are not formulated to tackle these threats, it may result in severe consequences for the restaurant. So to avoid such situations, well-planned efforts should be made to negate these threats to ensure that the negative implications of these threats are minimized. So, all in all, SWOT analysis can help the restaurant to plan its goals in a better way and streamline its operations so that maximum operation efficiency is achieved.

Frequently Asked Questions 

Question 1. Is it feasible for a small-scale organization to use SWOT analysis?

Answer 1. Any organization whether it is small-scale or large-scale can use SWOT analysis to facilitate strategic planning. SWOT analysis is one of the most cost-effective strategic planning tools which can be used by organizations and individuals as well. 

Question 2. How can a restaurant achieve a loyal customer base?

Answer 2. A restaurant that offers quality food and service certainly attracts customers. However, to make these customers loyal to the restaurant, regular customers shall be offered special discounts and facilities to make them special. 

Question 3. How can food home delivery service help the restaurant? 

Answer 3. Restaurants can reap benefits such as increased customer reach and increased brand awareness by offering food home delivery services.