Hotels and restaurants provide services like traditional food, fast food, drinks, coffee, and accommodation. We have to agree on one thing that hotels and restaurants are a very successful business and they play a very important role in the economy of a country.
However, if you’re planning to invest in this business and you want the bank to back you up with more capital. Then you have to perform a complete SWOT analysis for your restaurant by discussing the strengths, and weaknesses of this industry. What opportunities your business could take advantage of and the possible threats you have to face from the market and the economy. Only then you would seriously be able to convince yourself; and also the investors to invest their capital and the resources in this venture.
Here it follows the SWOT Analysis of a Restaurant.
Table of Contents
Strengths of a Restaurant
Following are the major strengths of a local restaurant business.
Clean & Tidy
Neat and clean are such qualities that you would experience in any big restaurant. If your establishment is neat and clean, then it would attract the attention of many people. Usually, hotels and restaurants are very messy, smelly and flies are everywhere. That’s why people from the elite and the upper-middle-class avoid visiting hotels. When your restaurant offers a clean and tidy place with a pleasant atmosphere, then local people would love to visit and bring their guests to your establishment.
Usually big five star hotels and restaurants are very costly and unaffordable to the people of the upper-middle. If you would offer the same service at a cheaper price, then it would bring the upper and middle class at your restaurant.
Better service comprises of many things like clean atmosphere, clean and tidy rooms, quiet and lighted place, separate parking lots, good security, neat kitchens, well-dressed waiters and chefs, and educated staff. All of these things make you feel good and comfortable because a peaceful and pleasant atmosphere has a great impact on our mind and soul. It makes you feel like you’re at heaven. As a result, your product increases because of mental satisfaction.
Variety of Products
The limited and short menu is one of those things that people don’t like in a hotel. If your menu includes multiple items and dishes, then it would convey a good impression on the customers. It would make them feel like that the restaurant has a well-versed staff, who are capable of cooking a variety of dishes.
Your restaurant is going to be the new brand in the area that people would come to visit a new place. Other hotels and restaurants are good, but people have already visited. The new brand has a charm of its own, investors and it would attract many people towards it. If you successfully convey a good impression, then it would make them visit it again.
Weaknesses of a Restaurant
Here you can find the weaknesses of a restaurant business.
Having said before that the new restaurant has a charm to many. But many people in the demographic are loyal to the previous brand. They won’t be easily convinced by the idea of a new brand or restaurant. They want more than just a new name. If you want to impress them and want them to visit your hotel, then you have to offer them something new and a unique experience. If you’re offering the same services with a new name, then they won’t come.
When it comes to offering customers a unique experience of visiting your place, then it would require a lot of investment in different service areas. Like good location, trimmed lawns, beautiful garden in the premises of the hotel, and well-trained staff. Providing such services to your customers would require a lot of capital and resources. If you don’t offer such unique services, then you’d lose a good chunk of market share.
The unique experience offered by the hotel is such a quality that would make people visit it again and again. Currently, your restaurant lacks this unique experience feature because you’ve had less resources. Without this feature, you would only attract dissatisfied customers from your competitors, but not new customers.
Location is out of the City
The building of your restaurant is out of the city and market, and you’re offering the same services that your competitors are offering. Then you should ask this question to yourself why your customers/tourist would travel and visit your restaurant. Even though you’re not offering something new or unique; you would receive only the leftover of your competitors. The survival of a business in such circumstances becomes very difficult.
Opportunities for a Restaurant
Below are the important opportunities of a restaurant.
New Market in the Premises
The building of the restaurant is indeed out of the city, but a new market is developing in the premises of your hotel. People from this market won’t go to the city; they would prefer your hotel because it is nearer.
New Residential Development Nearby
The construction work of new residential area and housing society are underway in the premises of your building. Newmarket, commercial area, housing society and the development of residential areas show that a new town would be establishing. It would be a slower process because these things take time. But when it does, your restaurants would be the oldest and only place in the town. Other competitors would be new in the market.
Although it seems like a risk under the current circumstance; but when you study these factors, it would make you think that this restaurant is worth taking risks.
The market and the residential area is developing, you also have an opportunity to develop with them at the same. When the market is developed, you’d find no place to stand a chance in the market. Currently, there no competitors competing with you in this developing market.
When the market and the residential area would be developed, then you’d be experienced by that time. Therefore, when new competitors enter the market, then you’d be in a position to expand your business and push the competitors out of the market.
Threats to a Restaurant
Find out the greatest threats to a restaurant business.
Big brands in the Area
Old and well-established restaurant brands are operating their business in the area. Therefore, it’s very difficult to meet expenses with the current revenue. Of course, it’ll be a successful business one day. But it’ll be very difficult to reach that stage under the current circumstances.
Increment in the Operational Cost
Various operational costs like employee salaries, building rent, supplier costs, and building maintenance costs are making it difficult for the restaurant to meet the income. Establishing a quality restaurant is easier, but maintaining the same status over some time is much more difficult. It is because you have to carry many fixed and variable costs in your balance sheet, especially your business isn’t making enough revenue.
Reduce prices by the Competitors
Rich and successful brands are lowering the prices to push the new competitor (our restaurant) out of the competitors. Therefore, you need a plethora of back up resources to pass through this difficult time and face the competition. One thing is certain that the competitors won’t offer cheap prices forever. When they’re sure that you’re going to stay in the market, then they won’t bother you anymore.
Concluding SWOT Analysis of Restaurant
It is no doubt that hotels and restaurants are a very successful business, but it needs a huge investment and back up resources to face the current competition. Once you pass through this difficult phase, then you’ll be the only big brand and restaurant in the newly developing town.