How Do I Compete With a New Restaurant?

Female cafe business owner talking on cell phone, working at laptop
••• Hero Images / Getty Images

A new restaurant opens up down the street from your restaurant, with both similar menu items and pricing as compared to yours. How do you compete with the new place? You don't have much money for a big advertising campaign and you know some of your customers have already gone there a few times. Proactive steps such as some detective work, customer communication, and social media usage can serve as effective tools to build your customer base and keep your business going strong.

Check Out the New Competition 

Whenever a new restaurant opens, it creates anxiety for nearby existing establishments because people like new things and restaurants are no exception. The benefit of competition, though, is that it keeps you on your toes. While a dip in business is inevitable, if it lasts more than a few weeks, it's time to closely examine your operation from menu and pricing to customer service and ambience. Get your hands on your competitor's menu (because they most likely have yours) to see what they’re offering, and at what prices.

Send in your scouts to test out the food, ambience, and style of customer service.

Don’t duplicate the competition's menu or undercut their prices to a point where you're losing money. Instead, refresh your menu by improving or rotating out older items; adding in new, fresh dishes; and offering updated menu specials. Analyze your competition's operation to identify where they're better and ask what weaknesses they have which could work to your advantage. Understand your own weaknesses as well so you can improve and consider what customers get at your new competitor's place that they aren’t getting at your restaurant.

 

Talk to Your Customers

Work on increasing rapport with your customers, and ask for honest feedback about your restaurant. This will allow you to identify problems and also let you know what you’re doing right. Implement a system which allows customers to fill out anonymous customer comment cards. This provides them an opportunity to give you instant feedback on your servers, food, and atmosphere. You can also ask what additional menu items they'd like to see, such as additional health-conscious dishes or an expanded kid's menu.

While some customers will offer criticism, you may be pleasantly surprised at the amount of positive feedback customers leave on your comment cards.

Use Social Media to Your Advantage

Consider ramping up your advertising through social media, which doesn’t cost much, if any, money. Sometimes your customers need a gentle reminder that your restaurant is still the great place they've enjoyed previously. Social media marketing pages let restaurants take advantage of word-of-mouth advertising and potential sales of additional products and services such as catering, branded merchandise, and gift certificates.

Social media utilizes sites like Facebook, Twitter, Flickr, Pinterest, Yelp, Foursquare, Stumbleupon, and Instagram to help build an online identity for businesses. While these sites cost nothing to use, some sites like Facebook have pay-per-click, targeted advertising as an added option. The sites don't take much time once you’ve set up your initial accounts and pages. Use your social media pages to broadcast special offers such as neighborhood discounts or fundraising promotions for school sports teams, then post the team pictures on your restaurant's social pages to attract followers.

As a bonus, having accounts on these sites allows you to also observe and follow your competition's online presence.

Turn Your Servers Into Sales People

Along with good customer service, training your staff to upsell can help improve customer experience as well as increase check averages. Make effective and tactful up-selling part of your employee training. Have all servers use the up-selling techniques to offer top-shelf liquor, give mouthwatering descriptions of menu items, and increase sales of appetizers and dessert items. Up-selling not only increases restaurant sales, it could result in larger tips for servers and show that your staff is knowledgeable and ready to help customers get the most out of their dining experience.