When the arrival of a new restaurant can affect your sales
The situation can be more complicated than it looks. A competitor restaurant opens, and it opens strong…
In this article
Whether you are facing that situation right now or you see it as unlikely, it is always important to be prepared and to know what to do if a new competitor arrives and puts your restaurant at risk.
From my own experience, I can tell you that when a restaurant becomes your direct competitor, it will almost always affect your sales during the first few months, because diners are always curious to try the new place, and one way or another there is a risk that you will take a hit.
If everything goes well, as I mentioned, the problem will last only the first few months and then things will settle down. But you need to be clear that there is a risk that this stability simply will not come back if you do not make the right decisions to deal with the problem.
The more specialized your restaurant is, the greater the risk.
For example: in certain countries where the market is not too saturated, a sushi restaurant or a Japanese food restaurant in general almost always takes a hit when a similar new restaurant opens in the same area.
Tell me about it… I had to close a sushi restaurant because an extremely strong competitor arrived and I simply could not compete with it anymore. I share that experience at the end.
4 realities and recommendations you need to consider
The first reality to consider is that many of your customers will feel comfortable at the new restaurant and will stop visiting yours. Like it or not, that is almost always how it goes.
That is why it is important that you always keep your efforts active when it comes to attracting new customers through advertising and other strategies like the ones in these articles:
Growing the number of regular customers at your restaurant
Increasing a restaurant's revenue through search engine positioning
The second is that most of your customers, or all of them in some cases, will go try the new place, even the most loyal ones. But a good percentage will simply keep coming back to yours if you have made the effort to provide the conditions that inspire customer loyalty.
You can explore those conditions in these links:
A key factor for increasing a restaurant's revenue
A strategy to keep customers visiting your restaurant
How do you build customer loyalty in a restaurant?
The third is that you must stay alert and keep track of your numbers. You have to immerse yourself in your numbers today more than ever, so you are clear about how much they change week by week after the new competitor arrives.
You cannot fall back on thoughts or phrases like “we already have a great position, everything will be fine,” “I don't have time to get tangled up in the numbers right now, there is too much work, let the accountant or the manager do it,” “we have a place in our customers' hearts, they will support us and keep visiting our restaurant.”
Optimism is good, but in these cases you need to tone it down a little…
In the same way, focusing fully on keeping things under control in our restaurant is good, but you cannot neglect the numbers. On the contrary, you need to devote more time to them than usual…
The fourth reality is that you must become a direct spy on the new competitor. You have to be clear about every move they are making: you should go eat there yourself or send someone, check their social media every day, and stay on top of their promotions, ads, and actions, so you are absolutely certain how things move in enemy territory.
You cannot take a passive attitude, because there can be a lot at stake.
You will run into an interesting situation: many of your customers will tell your servers how things are at “the new restaurant.” But even though these are our valuable, wonderful customers, you cannot take their words as a starting point for your decisions, because in these cases a customer's opinion simply loses objectivity and will not be entirely transparent.
Come on, it is simple and logical: if a customer visited the new restaurant and then kept visiting yours, it is because they like yours more, whether because they feel they are treated well, they like your food better, you have better prices, etc.
You will rarely hear them talk about “hundreds of good things” at the new restaurant; chances are you will hear the opposite, and that only creates the risk that you let your guard down, which simply does not work in your favor.
That is why it is better for you to verify for yourself how things work at the new restaurant, even if you are not the one going and you send someone instead.
You have to be prepared, even if the possibility of a new restaurant opening seems remote, or even if you consider that it is a factor that cannot affect you because you have been in the market for many years.
If you have already been through the arrival of a new competitor and you were not affected, believe me… that is no reason to assume that a truly strong competitor cannot affect your business later on.
For that reason, I recommend that you always stay watchful, and I recommend that you keep an attitude of constant improvement at all times.
The more effort you put into improving day by day, the better prepared you will be, and even if a new restaurant never arrives to affect you, all the work you do focused on improving will help you attract more customers, increase your loyalty rates, and generally grow your revenue.
To wrap up, here is a case study where I tell you about the sushi restaurant: When I had to close my restaurant because a competitor arrived.
