Why & How to Conduct a Fast-Food Competitor Analysis

The restaurant industry has always been highly competitive. Take a walk in your neighborhood or do a quick Google search. How many other businesses that sell food and target the same type of customers as you are in your area?

If the answer is a lot, then it is a must to conduct a fast-food competitor analysis. It will help you identify their strong and weak points, so you can take advantage of them to make your restaurant the more popular choice.

We’ll show you how:

A fast food competitor analysis is a lengthy process that involves analyzing your direct and indirect competitors from a variety of angles to understand the market and identify strengths, weaknesses, and opportunities.

You would usually perform this analysis when you create the business plan, well ahead of opening your doors. You can also do a competitor analysis when you want to reposition your restaurant and change your target market.

By running a fast-food competitive analysis, you ensure that you not only have a place in the market, but you will also be able to attract enough clients to run a successful business.

Here are some more advantages you will enjoy as a result of this analysis:

• Identify the market gap you can fill: ideally, you should find a niche that not many other restaurants are competing for. For example, a craft doughnut bakery when there are only chain bakeries in the area;
• Create an outstanding menu: by knowing what your competitors offer, you create better menu offerings that potential customers will want to try;
• Attract investors: a restaurant competitor analysis will help you create an accurate business plan that leads investors to believe in your chances to succeed;
• Competitively price your menu items: you need to know how your competition prices their items, so you can choose a pricing strategy that will cover the target market;
• Make better decisions for your business: by gathering knowledge about the competitors, you learn what works and what doesn’t for the market you are trying to break into.

While it may take you some time to do properly, there is a minimal cost involved in doing a fast-food competitor analysis. You will only need a small budget that will go towards restaurant visits where you can observe how your competitors work.

Your competitors are the food businesses that offer similar products and services and battle to attract the same target audience. There are two main types:

• Direct competitors: these are the restaurants that sell almost the same type of food as yours and have the same type of service.
• Indirect competitors: these are the food businesses that target the same audience but have a different type of cuisine and service.

Therefore, map out the areas where you plan to open your restaurant, identify the competing businesses, and categorize them as either direct or indirect competitors.

You can gather information about your competitor’s operational processes by checking their website and visiting their location if they don’t list everything. Here is what you must find out:

• When did they first open?
• What are their operating hours?
• How many seats are in their restaurant?
• What is their concept? Do they have a theme for the restaurant?
• Are they a chain or an independent business?
• What is their mission statement? How are they making their business unique?
• What is their type of service? Do they serve at the counter or the table?
• What type of technology do they use? Do they use an online ordering system? Do they have a QR code ordering system? Do they employ a POS system?
• How are their employees trained? Is upselling a big part of their strategy?

Analyzing the menu offerings is a big part of the fast-food competitor analysis as it is the first thing clients are interested in. You will usually find the menu on their website, delivery apps, or in pictures on review platforms.

Try to identify:

• The size of their menu: how many items are there?
• The type of cuisine: do they only cook dishes from one cuisine or experiment with a mix?
• Pricing: look for their most expensive and cheapest items and also make an average for each category on the menu.
• Portion sizes: are they big enough to justify the price?
• Best-selling dishes: what do people usually order?
• Diets and allergens: do they have menu items that cater to specific diets or mention their allergens and nutritional values?
• Specialty items: do they have seasonal items according to current trends?

Promotions are very important for attracting new and recurring clients. How do your competitors go about creating offers and promoting them? Check out their website, menu, and social media profile to find out:

• What type of promotions do they have?
• How often do they change the offers?
• Where do they add their promotions? Are they visible in the menu?
• How easy is it to take advantage of the promotions?
• What images and texts do they use to advertise the promotions on social media?
• Do they also organize promotional events like live music or tastings?

Nowadays, most people rely on the trusty Google search or social media to find new places to eat. That’s why having a spotless online presence is a must-have for increasing visibility and building trust with customers.

Therefore, as part of a thorough fast-food competitor analysis, you must identify:

• Is their website optimized for Google and customers? How high do they rank in searches? Does the website lead customers to the menu?
• What social media channels are they using?
• What are the types of posts they use to promote the restaurant? How often do they post?
• Do customers engage with their posts? How fast and often does the restaurant reply?
• Is their Google Business Profile optimized with all the information?

After the menu, reviews are the second thing customers research about a restaurant. If the score is under 4, many restaurants won’t gain new clients. You can learn a lot by analyzing a food business’s reviews:

• Positive reviews: check out all the review sites your competitors are on and look at the 4 and 5-star reviews to see what clients appreciated. What is the food, the service, a specific promotion?
• Negative reviews: find out what customers complained about so you can avoid doing it at your restaurant.

After you gathered all the information necessary for a fast-food competitor analysis in the previous steps, it is time to analyze it using one of the most common methods: SWOT.

Find out how you can outshine your competitors by doing a SWOT analysis:

• Strengths: what are your competitors doing right and are being prized for? Learn from it and do it better at your fast-food joint;
• Weaknesses: are there any areas where your competitors could do better? For example, if they don’t have a website, you can surpass them with a sales and SEO-optimized website from us;
• Opportunities: how can you exploit their weakness to make your business better? Maybe by allowing customers to place orders directly on your website with our online ordering system.
• Threats: is your competition doing something unique that you can’t replicate? Then you will have to find something different to attract attention.

Performing a fast-food competitor analysis is a must before you even think about a location. By finding out everything about your competition, you can create a plan that will help you succeed for many years.