Q & A | Is the market too saturated for a new restaurant?

Q & A is where Entrepreneur Campfire will get our panel of experts to answer your business questions. If you have a business question, write in to ask@entrepreneurcampfire.com

Question from reader:

Andrew’s reply:

Three restaurants in your area selling Italian food may not show saturation. In fact, it may mean there is demand for Italian food. That is a good thing.

Here is what I recommend you to do:

Try out the food yourself

The first thing you should do is to have a meal at all three restaurants. Find out the type of customers that frequent the restaurants and what they order.

Are they sophisticated customers who know about Italian food? Or do they order simple Italian dishes like spaghetti bolognese and pizza?

Whether a restaurant succeeds depends on three factors:

1. The type of food served,

2. The quality of the food served, and

3. Your customer service

You need to take a long term view and find your niche. You can do this by asking yourself:

Who do you want to serve?

What do you want to serve?

How do you want serve them?

At the end of asking yourself these questions, you may even find that what you want to create is not a restaurant. It could be a food kiosk.

Know what customers look for

I understand your concern about having too much competition. But, here’s the thing.

Competition can be direct, like the Italian restaurants next door. Or it can be indirect, like restaurants selling other types of food.

To beat any kind of competition, you need three things: a winning concept, quality food and great service.

When customers like your concept, food and service, your customers will remember your brand.

Performing well in these three areas will differentiate you from other restaurants.

Know your customers

Survival in an F&B business also depends on how well you know your customers.

When you know them well, you can create a business that matches their needs.

The best way to get to know your customers is to talk to them. Ask them questions to find out:

What do they like?
What are they willing to pay for Italian food?
What environment do they prefer to dine in?

By knowing these, you can decide on the type of F&B business you are able to start.

Will it be a lunch box delivery service? A small take away kiosk? A small restaurant? Or a large scale restaurant?

Decide on the amount of capital you want to start with

Finally, the type of F&B business you start with will depend on how much capital you have.

If your capital is small, you can start with a delivery service.

Then, as you grow, you can upgrade to a takeaway kiosk. After that, a small restaurant and finally, a proper Italian restaurant.

The important thing here is to start with what you have, then grow your business into what you want.

Good luck!

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