How To Start a Restaurant That's Ready to Scale | Part 2 - Understanding your Customers
In the first part of this series, I covered business planning, and stressed the importance of understanding your customers in order to properly plan your business. In this article, you'll have the chance to discover exactly why this stage is so crucial, and how exactly to do it, even if you've already started trading.
Did you miss part 1 of this series? Click here to learn all about the planning stage!
Why understanding your customers is absolutely critical for your success
A common mistake that I see business owners make is basing important decisions on what they like. Branding, products, add-ons – they’re all selected according to the owner's wants and likes. But ask yourself this: at the end of the day, who's handing over the money for your offering, you or your customers? Obviously, it's your customers. This means that making sure you're spot on with what your customers desire and need is hands down the most important aspect of your business.
And while there's still room to make your own mark on your business – that's what makes you special, right? - what will determine whether you flop or whether you succeed is how well you actually know your customers.
And this is why. People will only buy from you, and return and recommend you, if you understand them. Try putting yourself in their shoes; have you ever been somewhere where they’ve known just what you want? Chances are that you’ve even paid more for something because you are getting exactly what you want, all in a great environment.
Love 'em or hate 'em but Starbucks is a great example of this. They know, for example, that location will play a large part in what their customers want. In business districts like Canary Wharf they offer their Mobile Order & Pay service to allow customers to order ahead and skip the waiting time, saving precious minutes on their way to work.
Case study: Pret
Pret, too, are spot on. Through reaching out to their customers and analysing their data (58% of their sales take place outside of lunch time) they know that, while their customers prefer healthier food, they still want access to great tasting, convenient snacks - so Pret gives them just that with products like the Protein Snack Pot. Another really important attitude Pret have taken is actually listening to people's opinions. It's far too easy to follow through with the customer suggestions that back up what you already have in mind, rather than continue to let the customer steer your direction. Following customer demand and a double digit sales rise in vegetarian options in 2015, Pret opened their pop-up, Veggie Pret, in London in June 2016. Product development was strongly led by customer suggestions. This prompted brilliant word-of-mouth marketing when their customers – delighted to have their needs met – organically spread news of the new products to their network. The success of the store meant that it has now become a permanent site rather than the planned 4-week pop-up.
Insight can be used to increase income and reduce costs
Understanding your customers' problems and needs doesn't just give you returning custom and loyalty. You'll also benefit from:
- A healthy Gross Profit (GP) - knowing what you will sell, and identifying the correct price point
- More accurate bushiness forecasting - knowing when your busy periods and slow periods will be is invaluable when planning staff rotas, stock ordering and cooking production
- Reduced marketing costs - targeting the right people, at the right time, with the right message is more cost effective and get you a return much more quickly than a scatter gun approach to your communications
- Reduced recruitment cost - hiring the right people is less costly and less time consuming, since you'll be equipped with more detail about who's the right fit for the business (based on products, customer types, service styles and price point)
- Increased revenue through strategic partnerships – knowing which potential partners will complement your restaurant business can help ensure that you're investing your focus in the right direction e.g. a gym for a health food restaurant, a premium hotel for a premium wine bar, a surf shop for a beach diner, or a football club for a sports bar.
Be relentless with your research
If you have not yet test traded, my advice is to do it. But before you even start with test trading, you should do some concrete desktop and field research to identify the needs of your customers as a starting point. I want you to uncover exactly what solution you need to provide your customers with, so they choose you and not your competitors.
Some things you may need to think about:
- Why are they visiting? For meetings? A quick bite on their way somewhere? A social evening meal?
- How old are they?
- Male or female?
- Are they single or married or families?
- How do they want to pay?
- Are they cash-rich or cash-poor?
- Are they time-rich or time-poor?
- How long do they want to wait?
- What type of food do they like?
And caring about your customers isn't enough. You also need to be clear on what they care about:
- Do they value the ethical sides of a business?
- Do they care about the provenance of their food?
- Are they health conscious?
In such a competitive sphere, being able to go above and beyond by meeting values like these can give you the USP that defines your competitive edge.
Analysing data to gain insight
If you have already begun trading, it's important to analyse your data to gain more insight into your customers’ needs. Your EPOS till system will provide you with this invaluable information, along with other sources, so make sure you capitalise on this information to get super in tune with your customers' behaviour.
Unfortunately, analysing data can be a lengthy task if this is not something you’ve done before, and it can be difficult to know where to start. But like anything in business, don't let a small hurdle sabotage your vision for scaling your restaurant. Reach out and ask for help! This is where my expertise lies, and I'll be able to help you make sense of things so you know exactly what to do next.