How to Conduct Market Research for a New Restaurant

Business Planning & Feasibility Analysis

So you need to conduct market research for your restaurant. The question is how? This chapter is dedicated to demystifying market research and making it actionable for you and your business. 

Step 1: Clearly Define Research Goals 

Before you’re able to conduct a market analysis, you’ll need to define your research goals. Let’s say you’re launching a fusion-cuisine takeout restaurant. Your goals might include the following:

• Identify your target customers, including their demographics and eating preferences. 
• Discover who your local competition is, and identify any opportunities left open for your business to fill. 
• Determine optimal menu pricing and popular dishes to offer your target customers. 
• Find the ideal location in your region. 

To assist in this process, you can create a Google Doc or use a tool like Notion to write down your objectives and findings. 

Step 2: Conduct Macro & Micro Market Analysis 

With your objectives written down, start making your analysis. 

Begin with a macro analysis. For your fusion-cuisine restaurant, you’ll want to look at the popularity of fusion cuisine in Canada. Look for signs of growth and demand, as this suggests an opportunity to thrive even among competition from other local restaurants. 

A good place to look for these details is in publications such as the Mordor Intelligence Report or ReportLinker. Just search for insights that pertain to your type of dining and restaurant offerings. 

Then proceed to a micro-analysis. Narrow your focus on the local dining scene in your area to see which restaurants offer similar dining. For example, if you’re in Toronto, you’ll look at restaurants that offer fusion cuisine and the type of foot traffic they bring in (i.e., tourists, office workers, etc.).

Step 3: Identify Your Target Audience 

Next, identify your target audience. This means narrowing down a defined group of people you aim to reach, such as young professionals ages 25 to 45, many of whom have families, enjoy travel, and actively seek out new cuisine and experiences. 

To shape this profile, consider conducting market research ahead of time. Use tools like Google Forms or SurveyMonkey to gather insights on demographics, interests, and lifestyle habits.

You can also consult secondary sources to learn about existing market segments and consumer trends. Websites like Statistics Canada and industry reports, such as Restaurants Canada’s Foodservice Facts Report, offer valuable data to help you understand who’s already engaging in the space you plan to enter. These insights will help you define your audience before you launch, rather than rely solely on post-opening feedback.

Step 4: Competitive Analysis 

The next step is to identify your competition. Finding them is relatively simple. A Google search for restaurants like yours can yield plenty of results. The same approach applies to more trendy AI tools, such as ChatGPT, which sources these eateries, or visit Yelp or TripAdvisor. In your search, enter the type of eatery or cuisine, add “near me,” or your city. 

Now, take the top three to five most similar items between your restaurant and your competitor regarding menu, audience, location, and pricing. Make some comparisons. Ask what they do better, what you do better, and what you can do that they’re currently not.

Look at customer reviews, Google My Business listings, and the website to understand where your competitor excels and what they can improve on. Use this knowledge to develop a competitive edge and strategic offerings for your business. 

Step 5: Location and Site Selection 

Yes, we’ll repeat that cliché you’ve heard many times before—the key to a successful business is the three Ls: location, location, location. 

Choosing the right location involves various factors. You want to pick a location closest to your ideal customer base, which could include more pedestrian or tourist traffic, or is situated close to major attractions, shopping malls, and establishments. There are rental and property costs to consider, so be mindful of choosing a location that fits your budget. 

If your fusion cuisine attracts young professionals, opt for a location closer to the urban core of the city. Of course, that might be expensive, so perhaps you decide to locate a bit further uptown, but settle for a spot that’s close to a major highway or transit stop that connects to the inner city. 

These are just some ideas to help guide your thinking. You can use tools like Google Maps or Foursquare to help you scout locations. 

Step 6: Regulatory Compliance Research 

Next, you’ll need to ensure your restaurant meets regulatory compliance. This involves understanding and meeting all legal and regulatory requirements needed to open and operate a restaurant in Canada: 

• Business licensing and permits (for example, liquor permits).
• Municipal zoning laws. 
• Employment standards and labour laws. 
• Taxation requirements. 

You must follow these regulatory standards, because failing to comply can lead to fines, delays, or even closure. So make sure you’re up to speed!

Step 7: SWOT Analysis 

A SWOT analysis is an abbreviation for strengths, weaknesses, opportunities, and threats. The SWOT analysis helps you better understand where your business stands in the market from a competitive standpoint. 

For example, your diverse menu offerings could be a strength, while your slightly higher price points could be a weakness. However, your proximity to major urban attractions could be an opportunity, while competing eateries can be a threat. 

Capitalize on your strengths and opportunities, while compensating for your weaknesses and minimizing your threats. Uncover your SWOT by using surveys or referencing competitor notes from sites like Yelp or TripAdvisor, which contain customer reviews and business information. 

Step 8: Test Your Concept 

The testing stage can feel both exciting and nerve-wracking. At this point, you want to give people a taste of your offerings, as their reaction and feedback will give you hints about how a broader audience will perceive your food. 

Do this through pop-up tastings, soft openings, or community events where you give people samples or meals from your menu. The goal is to collect honest customer feedback and track sales and transactions. Keep in mind that what you see initially doesn’t represent the “fate” of your restaurant; rather, it speaks to where you are at that moment. 

Use POS systems like TouchBistro or ToastTab to track customer preferences. 

Step 9: Leverage SEO & Digital Marketing Tools 

You may have heard before that if someone can’t find your business on Google, you don’t exist. It’s an exaggeration, but there’s truth in this statement, because searches for business happen on smartphones, search engines, and now ChatGPT, first, and in person, second. That said, it’s crucial to build an online presence sooner rather than later. 

Having a website is still a must-have. That website should be optimized for keywords relevant to your restaurant. So, for example, if you’re running a fusion-cuisine restaurant in Toronto, you might want to use keywords such as “fusion cuisine Toronto.” 

Use local SEO tools, such as Google My Business, which displays business listings. And remember, social media is your friend here. Whether it’s an Instagram or TikTok channel showcasing some of your staff and menu, or a YouTube channel showing a behind-the-scenes look at your kitchen, social media channels can help establish your brand’s personality and give people a more compelling look at your restaurant’s setting. 

Tools such as Google Analytics, Search Console, and SEMRush can help track website performance. Of course, if handling your digital marketing is outside your expertise, you can always hire a marketing specialist or agency to assist you.