The restaurant industry is a competitive space, and restaurant owners need to do everything they can to maximize profits and deliver top-quality customer service. Carrying out a SWOT analysis for restaurants can be an excellent way to discover what a food business is doing well and what could be improved.
Whether you’re opening a new restaurant or want to improve the processes and boost profitability in an existing restaurant business, a SWOT analysis can help you gain critical insights into your business’s operations — what it’s doing well and where you have room for improvement.
If you’re new to the business world and need help, don’t worry — we’ve got you covered. In this handy guide, you’ll discover what SWOT stands for, how it can help your food business, and ways to implement a SWOT analysis for your restaurant.
SWOT is an acronym that stands for strengths, weaknesses, opportunities, and threats. Restaurant SWOT analysis lets a restaurant management team discover the strengths and weaknesses of their business as well as any external factors that might affect its long- or short-term success.
By carrying out a SWOT analysis for restaurants, restaurateurs can see what’s going well and what needs to be improved. From raising brand awareness or improving your restaurant marketing strategies to refreshing your interior design, SWOT analysis helps you understand various aspects of your business.
Most business owners divide their SWOT analysis into two sections: internal factors (strengths and weaknesses) and external factors (opportunities and strengths).
Strengths and weaknesses are internal factors — or elements of the restaurant itself that you can analyze.
A restaurant’s strengths are the things your restaurant does well. It could be that you serve excellent food made from quality ingredients or offer quick service for diners in a rush.
In contrast, the weaknesses of a restaurant are any areas where your business is falling down. Perhaps you have a limited menu or frequently run out of a particular dish.
Opportunities and threats are external elements that can impact the success levels of a restaurant.
Identify any opportunities that could benefit your restaurant by helping you attract new customers or break into a new market. Perhaps you’ve heard of a piece of software that could simplify your processes, or maybe there’s a new local business opening up that you can collaborate with.
Threats are elements beyond your control that might affect your profit margins. Identifying potential threats to your business can help you keep an eye on new competitors (such as restaurants serving similar cuisine) and ensure you’re prepared for changes in the marketplace.
If you’re just setting up your restaurant, it’s a good idea to carry out a SWOT analysis as part of your restaurant business plan. Of course, you won’t be able to clearly state what your strengths and weaknesses will be in terms of customer service or food quality, but you can focus on elements of your business that you know will be successful and where you think you’ll need to improve as time progresses.
Once your restaurant is up and running, it’s a good idea to regularly carry out a SWOT analysis as part of your ongoing restaurant operations. You can identify issues and redevelop your business plan to improve your market share.
Now that you know what a SWOT analysis for restaurants is and what it entails, you’re ready to start carrying out an analysis of your own. Here are a few valuable tips to help you conduct effective research into your business’s strengths and weaknesses and identify any forthcoming opportunities and threats:
Use online reviews: Look at online reviews for your restaurant to assess what you’re doing well and what needs improving. If you don’t have many, ask customers to leave you reviews or provide anonymous feedback cards when you take the check to diners.
Consider local competitors: Visit other restaurants in your area to see how they compare with yours. What promotions are they running? Do they seem to have regular customers? Are their prices higher or lower than yours? Take each of these elements into account when considering your own business.
Follow industry news: Keep an eye on industry news — both national and local. This can help you learn about any incoming regulations, changes to the market, or other aspects that might impact your business. Consider purchasing a local trade magazine subscription, signing up for a newsletter like Eater, or looking out for trends affecting the restaurant industry.
Follow global news: Similarly, staying on top of global affairs that could impact the economy is crucial. Otherwise, you could be surprised by a sudden downturn in customers if there’s an economic crash or another pandemic, for example.
It’s not enough to simply carry out a SWOT analysis for your restaurant; you also need to enact changes that will help you reduce the number of weaknesses, prepare for any threats, and take advantage of opportunities.
Look at the overall picture created by your SWOT analysis, and write down the key takeaways that can help you inform your future business decisions.
For example, consider changing your ordering system if you identified slow service as a weakness. Fast-food or quick-service restaurants could add self-service devices to keep queues from getting too long, leaving your staff free to focus on food preparation. An easy-to-use self-service app, like KioskBuddy, lets you turn a tablet or iPad into a self-ordering station. Customers can simply tap through the menu and pay for their orders.
In all likelihood, the features of your restaurant SWOT analysis will depend on your restaurant type. Therefore, we’ve compiled some examples of SWOT analyses for different restaurant concepts.
Let’s start with an example of what a SWOT analysis might look like for a fast-food restaurant. Here are some of the strengths, weaknesses, opportunities, and threats you might encounter.
Popular menu items perform well
Low prices
Good brand loyalty
Service too slow
Limited menu
Single-use takeout packaging
Expand gluten-free, vegan, or vegetarian options
Offer online ordering
Set menu deals
A new sandwich shop opening down the street — could impact lunchtime orders
Labor shortages
Bad ratings on review sites
Now let’s look at an example for a fine-dining restaurant and how the strengths, weaknesses, opportunities, and threats may be different.
Loyal customer base
High-quality ingredients
Excellent service
Poor social media presence
Lack of ambiance
High cost of ingredients
Expand online presence
Broaden delivery service area
Increase customer loyalty
Supply chain issues
Increased operational costs
A local economic downturn, which means people are eating out less often
After completing a thorough SWOT analysis for your restaurant, you can look at the changes you need to implement to boost profitability and improve the customer experience. Changing your business can be scary, but it doesn’t have to cost an arm and a leg.
If you’re struggling with long lines, slow orders, or even a labor shortage, KioskBuddy can help. It’s an easy, affordable solution that turns your tablet into a self-ordering device. Reduce reliance on staffed ordering points and speed up your process by installing a couple of tablets in your restaurant. You only need an iPad, the KioskBuddy app, and a Square Kiosk hardware.