It is generally unwise to overdo market research, although the temptation is strong when you are in your research phase to gather as much information as possible. Too much information will only lead to information overload. The do-it-yourself approach to economic research will provide the necessary information to evaluate your business’ chances at success. If your new business is going to be a restaurant establishment there are two main questions to ask of your research: where will the store’s location be, and who are the customers who will frequent this establishment? Let’s assume you’ve already selected one or two locations to scope out.
1.When examining a location, was there a store in the location previously? What type of business was the previous store and why did the previous business fail? If other restaurants have tried to open a store in that location before, why did those restaurants fail and do you really want this location? The easiest way to find out this information is to ask businesses that are located nearby, or ask the building management. Be discerning when you find out this information and make sure that the building management isn’t just telling you what they think you want to hear in order to secure your business with their location.
2.Ask yourself what the future of the location could be. Will road construction or store closings affect your new business? Or is the location in an area that has a growing population? Is the location fostering economic growth through new businesses?
3.Interview shoppers that are in the area and ask them questions about why they shop or eat in that particular location. Do they live or work nearby? Do they simply like this area or this particular part of town better than other areas? Do the shops draw them from far away or is convenience what mainly dictates their shopping decisions? Be very careful how you phrase questions or you may only hear what the people that you interview think you want to hear, rather than honest answers.
4.Examine the area around the selected location(s). Is there competition in the same area? If two restaurants are right next door and both appear to be extremely busy, this might help your research tremendously. This may be a location that has a tremendous need for more restaurants. But if both the existing restaurants are similar to the one that you want to open, and both have similar menus and prices, why would customers suddenly change their spending habits and come to your restaurant over the existing other two?
5.Another part of examining the area is looking at traffic patterns. Certain restaurants are more popular for the lunch crowd, while others are more popular for the evening dinner crowds. An easy and cheap way to conduct research of this type is to sit in your car and observe the traffic patterns throughout a few days. Is the area busier in the afternoon or the evenings? Depending on what type of restaurant you plan to have, you may prefer a restaurant that is busier during the day or during the evening.
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