Q:We are in an area where there is plenty of construction. Many of the retail spaces will be filled with new restaurants. How can I prepare for a rash of restaurants opening soon?

A:One of the benefits of living in a thriving city is constant growth. If your business is in an area without many restaurants, having more open around you will likely drive new traffic into the area. The downside is you will have to deal with short-term pain and weather the storm. If you run a restaurant in an already thriving area, there may be longer-term impacts to the restaurant. Either way, to compete with new businesses opening around you, contemplate the following:

Anticipate a 10 percent drop in regular guest traffic for three months.

Since the majority of sales come from repeat guests, anticipate a loss of some of those frequent visits to trials with the competition. It’s natural for your regular guests to try new restaurants. Your regulars already know the way to you neighborhood, where to park and how to get around the area, so this familiarity means less traffic for you in the short run while they test the new place on the block. Anticipate it and schedule for it.

Pursue new guests to offset the loss of frequent guests.

If you know you may lose sales of regular guests for a period of time, you have to build a bigger base of new guests. If your restaurant has $200,000 PER $1,000,000 in sales coming from new guests, you have to bump that to $300,000. At $25 per person that is an extra 4,000 new guests or about 11 more guests ore day. That won’t happen without using new, aggressive guest acquisition tactics.

A recent study found that in the most successful companies outside the restaurant industry, the average salesperson perform 93.8 activities per day. This is a foreign concept to the restaurant industry where new guest acquisition tends to be passive, except for national brands with aggressive ad campaigns. Pour effort into learning new sales techniques. Make phone calls, visit businesses, join the chamber of commerce and make an effort to perform several guest acquisition activities every day.

Know your competition, but concentrate on our own business and dial it up.

The best time to improve your business is before new competition opens. If you try after it opens, you’ve left a window open that you may never shut, especially if your competition knows what it’s doing. The best thing that can happen close to you is to have a quality operator open a restaurant close by and then outperform this new competition. Strengthen service, freshen product by making it more interesting, polish the facility, and install a higher standard of excellence.

Focus on the guest experience from start to finish and speak about it in every interaction.

New competition will likely stumble out of the gate with inconsistent service and mediocre execution. Be sure you are providing memorable service and flawless execution. Eventually, the new competitor will settle in and be better at executing on the guest experience. While the new competitor is improving, put the focus on providing memories regardless of the sector of your restaurant(s). You have an advantage during the “trial” time when the new restaurant is in the learning phase. Be sure during this time to remind guests with thorough, experienced execution why your restaurant is the best choice every time.

New competition brings new opportunity. An aggressive new guest acquisition strategy will improve your business in the long run and accomplish what new competition is really aboutL Growing a flourishing economy while taking your business to the next level.


For more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, a Seattle restaurant accounting and consulting firm specializing in helping companies grow profitability.