A guide to SWOT analysis for restaurants

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Running a restaurant isn’t a one-size-fits-all experience. Whether you just opened a new restaurant or have an established locale, you must embrace the financial aspects of operating a restaurant business.

It’s best practice for any business to step back and analyze what works and what doesn’t. But it isn’t all number crunching. The good news is that while you evaluate your restaurant business plan, you can also make changes to the parts of the business that you’re passionate about, like menu items or your dining experience.

In this article, we’ll share some tips on how to conduct a SWOT analysis for restaurants effectively. We’ll learn about SWOT analysis by breaking down what each letter of this time-tested business acronym represents and how it specifically applies to the restaurant industry.

What is a SWOT analysis for restaurants?

SWOT analysis for restaurants: entrepreneurs having a meeting at a restaurant

A SWOT analysis is a tool that helps you develop a business strategy that takes into account internal factors, such as restaurant operations, and external factors, such as threats from competitors. If used correctly, it will improve efficiency and profitability.

The method has been used since the 1960s and applied to thousands of businesses of all shapes and sizes. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Your objective is to examine your current operations through those four lenses.

Tips for a stellar SWOT analysis

SWOT analysis for restaurants: entrepreneurs having a meeting at an office

To get the most out of your restaurant SWOT analysis, pick participants from every part of your restaurant. Don’t just focus on FOH management, but include staff who see the best and worst aspects of your restaurant and can offer great insight.

SWOT analysis for restaurants can–and should–take an entire day, so plan accordingly. Find a time and place that suits you and your chosen participants. Perhaps conduct your meeting online. Staff your restaurant thoughtfully so you can concentrate on the task at hand without worrying about restaurant management.

Individual ideas can lose their strength when everyone adds their two cents to the discussion. To combat this, let participants brainstorm at home and bring their ideas to the meeting. Offer an agenda, so input is shared in an organized manner. This will allow everyone to contribute thoughtfully and help prevent groupthink.

The agenda should guide your SWOT analysis meeting. Discussion should be democratic, and participants should vote for their favorite ideas.

Now, let’s take a deeper look into each section of SWOT analysis and see how they apply specifically to restaurant businesses.

Strengths

A SWOT analysis for restaurants begins positively: You get to list what makes your restaurant effective, unique, and profitable. Think about what successful processes you have. Consider your physical assets, the skillsets of your team, and the advantages you have over your competition. Some restaurant SWOT analysis examples for Strengths may include:

Striking interior design or outdoor space
Commitment to restaurant sustainability
Premium location near a large suburban area
Strong social media presence with many influencers

Weaknesses

Now that you’ve patted yourself on the back, it’s time to get honest. Restaurant owners must admit to obvious problems and ask participants about what doesn’t work. Do you have operational costs that are narrowing profit margins? Does your marketing strategy need more work? Let’s look at some examples of Weaknesses:

Zero gluten-free options
Poor integration with local delivery services, need a new POS system
Restaurant lacks overall ambiance
Guest feedback indicates a lackluster customer experience

Opportunities

Now that the painful reality check is over, it’s time to consider external factors that you can capitalize on. SWOT analysis for restaurants should consider upcoming events that could be great opportunities for both profit and marketing. Are there gaps in the market or trends that you can take advantage of? Some possible Opportunities may be:

Promote the restaurant by offering a loyalty reward program
Ask customers to fill in questionnaires to improve the customer experience
Update menu items to reflect new cuisine trends
Retrain staff with an external trainer

Threats

There are external factors within the business world that we have no control over. What can you put in place to overcome such issues? Your SWOT analysis could highlight how changes in technology could affect your business. Is there pressure from a local, new restaurant offering a similar cuisine type? Here are some examples of Threats:

Rising expenditure costs
Customers choosing a new competitor’s restaurant over yours
Losing social media influencer support
Supply chain issues

Tools you can use to implement your SWOT analysis findings

Restaurant owner using a laptop

Restaurateurs find themselves itching to make changes after a SWOT analysis. You want to get busy with your findings to make immediate and lasting change. There are some nifty software solutions from Yelp that could help you implement these changes quickly:

Yelp Connect: Weaknesses of a restaurant include a low commitment to sustainability, and customers often call this out on social media. You can use Yelp Connect to tell a new story about improved eco-friendly restaurant practices directly to people looking at your Yelp Business Page. Show potential customers details about a composting project or food donations to a local homeless shelter. You can then see who engages with your posts and track your influence with your chosen demographic.
Yelp Ads: A Threat may be a rival restaurant offering suspiciously similar cuisine to you opening up across the street. You need to up your advertising game. Try Yelp Ads and promote your restaurant to people who are already looking for a place to eat (Yelp averages 93 million unique visitors per month). Impressions are free and you only pay when somebody clicks your ad. Plus, you can set a daily budget that suits your restaurant marketing spend.

Lessons learned from restaurant SWOT analysis

Group of people happily talking and eating at a restaurant

Once you complete your SWOT analysis for restaurants, you have the foundation to formulate your business strategy. Review each section and devise action steps to solve problems and grow your business.

How can your restaurant’s Strengths help create your Opportunities as well as prepare you for upcoming Threats? Get your team to help solidify what your Opportunities are and keep meeting regularly so that you can take advantage of current trends. Lastly, make sure your Weaknesses are dealt with as soon as possible to increase your market share and ensure business longevity.

Your SWOT analysis may reveal a Weakness in your restaurant’s technology solutions. Take charge of your front-of-house management and improve your customer’s experience with Yelp Guest Manager. This software supports your team by handling reservations and waitlists, allowing customers to check themselves in, and much more.

Get a demo and include using Guest Manager as one of your Opportunities in your SWOT analysis. After all, restaurants that start using Guest Manager experience up to 2X the traffic on their Yelp Business Page. And restaurants that use Guest Manager paired with the aforementioned Yelp Ads experience up to 2.3X the traffic!*

*Yelp Internal Data 2021. Based on average results from a sample study of restaurants that purchased Guest Manager for at least 90 days (in Q2-Q3 2021) versus the 90 days prior to making a purchase. Results may vary.