Many businesses in the foodservice industry overlook one of the most important steps in planning, which is a SWOT analysis. This comprehensive analysis gives you the insights you need to make smarter and more informed business decisions. If you are planning a new business or a rebranding, performing a SWOT analysis can strengthen your business plan and your competitive edge.
Benefits of SWOT Analysis Steps
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are within your business, and opportunities and threats relate to the external environment that affects your business.
As you consider the strong points of your rebrand or a new business, these are some questions to ask yourself to identify your strengths:
- Why would customers choose my business over competitors?
- What resources or unique features will my business offer?
- What makes my staff special?
- Do I have anything special that competitors cannot offer or would have a hard time duplicating?
A major benefit of identifying your strengths is defining your unique value. Perhaps you take a different approach to service that reflects your mission, vision and goals. This step gives you a chance to showcase your company culture, brand image and more. Also, it gives you an opportunity to communicate the special skills or training of your staff.
Imagine that you develop your own unique beer brewing process, and now you want to open a restaurant where you will also serve your beer. You may decide to obtain a process patent for your special brewing method to prevent competitors from copying your idea. Customer experience is crucial today, and something that competitors cannot provide gives you the advantage of offering people an experience that they can only have at your business.
These are some questions to ask yourself to help identify weaknesses:
- What does my business lack that it could benefit from?
- Are there any limitations to my services, building amenities or what I sell?
- Do I have any weaknesses in my supply chain?
- Are there financial issues, or do I lack capital for startup costs?
- Do customers leave negative reviews that may affect rebranding?
- Am I prepared, financially or through insurance, for an operational interruption or a potential lawsuit?
This step is important in the beginning and throughout the life of your business. When you examine weaknesses, some top benefits are insights that allow for improvement and even survival. After you open a business, you can ask customers for feedback about their experience, what they would change and what they liked. Hiring a business consultant is worth it if you are having money management issues or if your projections for a new business do not look good. For example, you may lose money to wasted inventory because you have too many menu choices that require a wide array of fresh ingredients. Analysis may also show weaknesses in your supply chain or reveal that it should be more robust.
If financial problems in your existing business include declining sales, find the reasons. Maybe you can add curbside pickup, boost social media interaction, or do something else to entice and engage customers. Analyzing your weaknesses is beneficial since it shows vulnerabilities. For example, you may realize that you lack adequate insurance for a business interruption or lawsuit and may decide to purchase an umbrella policy that could save you in the future.
These are some questions to ask yourself as you research:
- Do new laws or policies potentially affect my business positively?
- Are there new technologies in the foodservice industry that I can use?
- What are the current trends for customer preferences, taste, experience and spending?
- Are there gaps in the industry that I can fill?
You may find beneficial opportunities that serve your market better, such as e-wallet payments through apps, app or online ordering and others. Also, you may learn about local, state, and federal regulations that may benefit you. During this step, you may also discover the benefit of how new technologies can boost your business.
Perhaps you will discover a pain point or gap, which is a deficiency in the industry. For example, imagine that you have a restaurant in a business district where offices send assistants to pick up orders from competitors. You may decide to offer discounts or delivery for regular or recurring orders from nearby businesses to secure loyal customers.
In considering threats in your external environment, these are some important questions to ask:
- Are there any new or disruptive competitors that threaten my business?
- Are any of my competitors getting stronger?
- What is the current economic condition, and what will likely happen to my business if it changes?
- Do any new legislative changes or policies affect my business negatively?
- Is anything related to my service delivery or what I sell becoming outdated?
A great way to find qualitative information about what customers think about your competitors is by reading third-party reviews on Google, Yelp and social sites. This benefits you by showing you clues about how to meet their needs. Maybe your top competitor’s food is average, and there are multiple conveniences they offer that people seem to value more than exquisite food. By learning what customers want and need, you have the knowledge to start building a customer-centric strategy.
Legislative changes can mean that you need to change the way you do something. If this is the case, skipping a threats analysis can be financially costly. By doing your research, you can stay compliant and plan for upgrades or any other related expenses. Analyzing the economy can be difficult for many people. Some events, such as the 2020 pandemic, are especially hard to withstand. Hiring a business consultant is a good way to get a better economic forecast and strategic tips for unexpected events. This can help guide you in the right direction to make changes that may help your business survive tough times.
Why a SWOT Analysis Is a Must For Every Restaurant
Some first-time restaurant or foodservice business owners skip a SWOT analysis because they have an innovative idea or offer a type of cuisine that no competitors currently serve. However, new businesses, disruptive businesses and other factors can quickly make survival harder. With a SWOT analysis, it is easier to consider all positive and negative factors that affect both short-term and long-term planning. When you combine the information, you find with solid marketing and branding strategies, you position yourself to maintain or increase market share.
In planning a new venture, it is also important to conduct thorough market research to ensure there is a market for your business where you want to launch it. Since developing a business plan and incorporating extensive research can be a time-consuming and confusing process, it helps to enlist the assistance of a business consultant with the right tools, experience, and skills.