Restaurant Competition: How to Make Your Restaurant Stand Out

Opening and managing a restaurant isn’t easy. Thin margins and evolving food trends make the restaurant industry particularly challenging. When direct and indirect competitors are added to the mix, things only get harder—and more interesting!

Competition is so fierce that the U.S. restaurant industry is said to be 45% more competitive in 2024 than the previous year. However, there are plenty of mouths to feed in the U.S., so if a restaurant positions itself correctly among the competition, it’ll thrive.

It’s been taught that comparison is the thief of joy, which is true in many cases. However, as a business owner hoping to stand out in a saturated market, it’s essential for survival, not just success. 

There are many ways to first of all identify your competition and then use findings to adapt and overcome. In this guide, we will cover how to conduct a competitor analysis and what you can do to come out on top. 

How to Conduct a Competitive Analysis

Keeping tabs on the new restaurant across the street isn’t enough to stave off competition; you’ll have to think of the bigger picture. This is where competitive (also known as competitor) analysis comes in. It’s a process that involves multiple steps, all of which provide essential information to help you gain the upper hand. 

There are two types of competitors you should be familiar with: 

• Direct competitors: In this context, these would be similar restaurants in your local area. Perhaps they have a similar target audience and menu items. 

• Indirect competitors: These are not exactly in the same line of work but still take a portion of your customers. Examples include food trucks and ready-made meals in grocery stores. 

With competitors on the map, you can analyze their strengths and weaknesses. What elements of their service do customers use most? What are the most frequent complaints? Questions such as these build a foundation for your competitive analysis. 

To get an authentic customer experience, visit competitor restaurants and see for yourself how they do things. You can also take this opportunity to talk to fellow diners for valuable insights. 

Don’t forget about branding! Research how competitors present themselves to the target audience. Pay attention to their engagement rate and how it fluctuates depending on the content. 

Other elements such as interior decor, price, and, of course, menu items are really important to add to the analysis. At the end, you’ll have a comprehensive document outlining your findings to either implement into your business model or avoid at all costs. 

How to Overcome Restaurant Competition 

Understanding competitors is one thing, but focusing on your own business model is just as important. If you put in the work and let your creative process flow, your restaurant will naturally reel in the same customers as the competition or even the majority. 

Here are some of the most effective ways to stand out in the competitive restaurant industry and earn your place at number one. 

1. Know Your Customer Persona

A customer persona is a profile of who will most likely walk through the restaurant door. It uses demographic and behavioral information to build a thorough image of who this person is and why they have chosen to dine at your establishment. 

In a college town, for example, your customer persona would be an individual in their early 20s looking for an affordable meal in a trendy, affordable restaurant. Using a profile equips businesses with the best tactic for catering to specific needs. This drives a loyal customer base as they have everything they need!

The majority of restaurants have multiple personas, but the top five are what matters most. While it’s good to accommodate as many groups as possible, you don’t want to spread yourself too thin. Doing so dilutes your restaurant’s brand identity and leaves you worse off. 

With a collection of potential customer personas, return to your restaurant’s sales data and correlate the customer with what menu items they order. A great way to ensure a positive customer experience for each person is by entering information into the restaurant’s customer relationship manager (CRM) system. 

2. Map Your Restaurant’s Competitive Footprint

Google Maps has valuable information regarding your competitive landscape. 

Step into the mind of your customer persona and search for competitors as they would. For example, it may be through food concepts (Italian food) or your dining style (family-friendly). 

Once you have your keywords identified, it’s time to take a Google deep dive into the competition. As you search, a big list of restaurants will appear, but don’t panic. 

Narrowing down the list of competitors is tricky, but you can focus on particular areas since you now know how your guests are looking for your restaurant. 

If you get a lot of foot traffic, search within a mile of your food establishment. Is your restaurant easiest to access via public transportation? If so, look at the nearby bus or train stops to see similar restaurants. For restaurants with guests coming by car, you’ll want to search a much broader area, about a 10-mile radius. 

3. Implement the Best Industry Technology

As much as restaurants are about food, drinks, and ambiance, they are also about technology. This doesn’t mean robots serving dishes, but instead, the equipment that holds the whole operation together. Without technology, your restaurant will be left behind while competition easily races ahead. 

Toast’s Point of Sale (POS) system is a brilliant example of a tool that all successful restaurants have in common. It streamlines everything, including taking orders, processing payments, and organizing inventory. Kitchen display systems (KDS) are also very effective for digitizing the whole order process. Orders are more accurate and delivered faster; what’s not to love? 

Cutting-edge technology like this is your secret weapon to keeping customers happy and making everyday operations much easier. 

It’s also important to mention ordering food online. A 2024 study showed the percentage of those in the U.S who said ordering takeout or delivery is an important part of their lives is as follows: 

• Adults (52%)

• Millennials (67%)

• Gen Z (63%)

As you can see, this trend continues to rise among younger generations. This bodes incredibly well for restaurants with online ordering capabilities. If you’re not one of them, it’s better late than never! Staying up to date with the latest technology to boost customer convenience is a 

huge part of beating the competition. 

4. Introduce Promotions, Deals, and Events

Due to rising restaurant prices, many people choose cheaper alternatives, such as skipping appetizers and desserts or not dining out at all. In fact, 68% of people reported making these adjustments to cope with the increased costs.

With this in mind, offering customers a way to enjoy your menu items at a discount gives you big brownie points compared to competitors. Promotions like discounted combo meals or offers on select days encourage those on a budget to visit your restaurant. Even customers not on a budget love a deal!

You can also introduce loyalty programs to keep a loyal customer base. Repeat diners earn rewards like a free meal on their next visit. It adds incentive and makes them feel appreciated.

Restaurants are the perfect place to host an event. Live music nights or cooking classes open up the customer market and create a sense of community many of your competitors are likely missing. 

5. Create an Enjoyable Dining Experience 

Finally, though obvious for some, you need to create a restaurant worth visiting. We mentioned that ordering food online is on the rise, so it’s important your dining experience wins over the couch at home. 

The dining experience encompasses everything from interior decor to live music to how dishes are presented. Think about your business model and how your brand will be presented in the dining room. 

It’s good to be inspired by competitors' strengths in this department, but don’t be a carbon copy. Add your own twist and make your brand stand out with a unique vibe and approach. Be creative, stick to your business concept, and keep your target audience in mind every step of the way.

A great way to gauge whether customers enjoy the dining experience is to track your location or hashtag on social media. Instagram, TikTok, and Facebook let you see firsthand what people think through comments and reviews. 

Stay Ahead of Industry Competition with Toast

With this knowledge, your restaurant is ready to take on competitors and blow them out of the water. It all begins with a simple competitive analysis, followed by some hard work, and before you know it, your restaurant will be the one to beat. 

To give yourself an even bigger advantage over competitors, refer to our 2024 Restaurant Trends Report. This showcases what consumers have been loving throughout 2024 and will likely continue to do so in the coming years. Our report uncovers trends in customer behavior, costs, and locations.   

FAQs

What are restaurant competitors?

Restaurant competitors are other food establishments that are trying to get the attention of your target audience. Direct competitors are restaurants in the same market that perhaps serve similar food or are local. Indirect competitors are grocery stores and food trucks. 

Is the restaurant market competitive?

In short, yes. As of 2023, there are about  749,000 restaurants in the United States! You aren’t competing with all of them of course due to difference in cuisine, location, and price, but it shows the importance of standing out. 

As prices rise and people turn to order takeout at increasing rates, vying for customers is becoming challenging but rewarding! 

What sets a restaurant apart from its competitors?

A restaurant’s unique combination of factors sets it apart from others. It could be a unique menu, exceptional service, or a memorable experience that gets people talking. If you start with a strong brand identity, you’ll stay on the right track and pave your own way in the industry.