A SWOT of restaurant operations is an analysis of four main components:
- Strengths
- Weaknesses
- Opportunities
- Threats
Around 30% of restaurants fail within the first year. Even if your restaurant has had years of success, a SWOT analysis of a restaurant will be beneficial. It's never a bad choice to learn what your eatery’s strengths and weaknesses are and how to make adjustments to continue growing your operation.
In this guide, we’re going to cover the steps you need to take when running a SWOT for restaurant owners. However, it’s also important to know what an analysis includes and the benefits of running one for your eatery.
What is a SWOT Analysis for Restaurant Success?
Conducting a SWOT analysis for a restaurant involves the following to determine strengths, weaknesses, opportunities and threats:
- Internal business factors
- External business factors
- Current potential
- Future potential
In essence, your analysis is a study of your business’ operations that sheds light on what you’re doing right and wrong as well as internal and external factors that impact your eatery.
When you know each strength and weakness of a restaurant business, making the right adjustments can be greatly beneficial.
Benefits of SWOT Analysis of Restaurant Businesses
Applies to Businesses of All Types
Once you know how to create a food business SWOT analysis, you can apply this same tactic to any business. If you expand into new markets or open up another restaurant, you can leverage the steps below to learn each company’s:
- Strengths
- Weaknesses
- Opportunities
- Threats
Even if the business is in the same plaza and has the same menu, the SWOT can be completely different.
Allows You to Better Manage Business Complexities
Operational weaknesses are opportunities of a restaurant to strengthen its business. However, when you create your own report, it allows you to:
- Discover complexities
- Narrow these complexities down
- Find ways to eliminate weaknesses
When challenges in a restaurant are too difficult to identify or overcome, they’re easy to overlook if the company is profitable. However, the business can become more profitable and be better positioned to handle future challenges after a SWOT analysis.
Shines Light on External Business Factors
SWOT restaurant analysis goes beyond internal factors that you can control. You'll uncover external elements that may be harming operations now or in the future. Owners can use these insights to limit future risks.
SWOT Analysis for Restaurant Business is NOT Expensive
Finally, you can find the weakness and strengths of restaurants inexpensively. For example, you can have every person in management help you gather the data to run a SWOT report. You don’t need to hire outside help, allowing you to improve operations without spending a lot of money in the process.
How to Perform a Restaurant SWOT Analysis
Step 1: Define an Objective
Every SWOT analysis in the restaurant should have an objective of some kind. For example, you may aim to understand how new menu items may be received, finding out what you’re doing right or wrong or what external factors are a threat to your operations.
Additionally, your goal may be expanding operations and understanding if you’re in a position to do this.
Step 2: Discover Your Strengths
Strengths are the S in SWOT, and this is an enlightening step because you’ll have to be honest with yourself and ask:
- What do you do right?
- What do customers like about your business?
- What do you do better than your competitors?
- What makes your eatery unique?
- What assets do you own?
You'll want to add in any additional questions you may have to understand your strengths better. Be sure to include your employees during this step so that you can find all of your strengths.
Step 3: Uncover Your Weaknesses
Next, you’ll want to uncover the weaknesses of your operations. Again, a series of questions should be asked and answered honestly. SWOT only works when you’re 100% honest with the answers or use data to back the answers up properly.
A few of the questions you’ll want to ask, include:
- How can the restaurant improve?
- What do customers want to see us improve?
- What are common complaints from customers?
- What is the competition doing better than we are?
- What resources are we lacking?
- Are customers waiting too long for food?
- What are your profit margins? Are margins too low to remain profitable?
Uncovering your eatery’s weaknesses is one of the most insightful things that you can do as a restaurant owner. You’ll want to be sure to poll your workers for ways that they think your business could be better or is lacking.
Step 4: Reveal Opportunities
A SWOT analysis sample for food businesses should also outline all of the opportunities that you have. These questions may include:
- What markets can we expand into?
- What items can we add to the menu that are in demand and lacking in the area?
- Can you expand with a ghost kitchen?
- Would offering delivery improve your bottom-line?
Opportunities and strengths are similar in nature, but they’re not the same. Opportunities, for the most part, are external factors that you can leverage to improve operations.
Step 5: Identify Threats
Finally, every eatery needs to look at threats to its market share. You'll need to ask more questions, such as:
- What are competing restaurants doing that we are not?
- What weaknesses make us vulnerable to losing market share?
- What trends can we not overcome or are ill-prepared to manage?
If there are local economic issues that can negatively impact operations, you need to identify these as threats, too.
Now, you have a lot of items in each of the four categories of a SWOT and will need to categorize them based on quick wins, or things that you can do quickly to improve, changes that are likely too difficult to justify, big bets that can improve operations (think expanding or major investments) and then additional items that will have a low impact but are easy to improve.
Making changes based on these priority lists is the final step. Revisiting the SWOT and running future ones regularly is recommended.
Conducting a SWOT analysis of a restaurant business is something every business owner should do. You'll uncover opportunities in a restaurant business that you may not have realized existed previously. If you take the right steps after the report, you can begin to improve operations and protect against external threats.