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1
How to open a successful
restaurant?
A practical guide
2
Introduction
3
In this presentation I will show you how to
choose wisely the right concept and
location for your restaurant so that you...
4
We will be talking about 4 main things
Choosing the concept Analyzing target group
Choosing the right location Analyzing...
5
What we will show in this presentation is a part of extensive
on-line course where you can get all additional resources
...
6
The 4 most important
things
7
There are 4 things that you have to get right when opening a
restaurant
The right concept Served to the right target
gro...
8
Getting the right concept means deciding on the following
things
Type of food served
Service level
Look & feel
Size
Capa...
9
You cannot build everything for everybody so you should rather try to be
something for somebody – in this case specific ...
10
Even the best concept can only work at well chosen location where you
target group is present. To decide whether locati...
11
Finally you have to execute the concept according to the promise
conveyed by the concept and the brand in a consistent ...
12
Why you should work
first in a restaurant?
13
Restaurant is a type of very physical
business. It is a mini factory. To understand
it you have to work there. On top o...
14
Below you can find things that you should pay attention to
while working in a restaurant. Later they will prove pricele...
15
How You should choose
the right concept?
16
Introduction to choosing
the right concept
17
There are 3 main ways to get the concept
Franchising
Cloning
Developing new concept
F
C
D
18
To chose the right concept you have to learn more about
concepts the following things
Type of food served
Service level...
19
The method you will use for finding the right concept depends
on the type of concept you will choose
Concept
Storecheck...
20
Introduction to store-
checks
21
5 10 15 5 35
Number of SKU
Location:
Number of salesmen:
Competition: Saturn, Karen Notebook, iSpot
Size:
Number of SKU...
22
10 5 85 00000
Store profile
Location:
Rating of the location:
No. of salesmen
Competition level:
Size:
Number of SKU
Pr...
23
Example of store checks
in restaurants
24
Let’s have a look at the store check done at a Bobby Burger – a
slow burger concept
Country of origin  Poland
Typical ...
25
Let’s have a look at the store check done at a Café Vincent – a
french cafe and bakery
Country of origin  Poland
Typic...
26
Franchising concept
database
27
If you are interested in franchising you should go through
following bases
 You can find here general info on the conc...
28
Recommendation
marketplaces
29
Recommendation marketplaces give you a chance to learn what is
important for them. Reviews give you great starting poin...
30
Check the whole the on-line course where you can get all
additional resources including Excels
How to open a restaurant...
31
Fanpages of restaurants
32
Restaurants are communicating with potential customers using extensively
social media. You can learn a lot through thei...
33
Keyword Planner -
introduction
34
You can learn a lot by having a look at the searches fed into
the google
 You can see for what people were searching
a...
35
…here you have an example of key words for t-shirts in USA
36
Keyword Planner –
example for restaurants
37
Using Keyword you can check the popularity of specific
concepts on the basis of how many searches were made
 You put i...
38
Ready-made reports on a
specific concept
39
Use the main research platforms to find any information
possible on specific concepts
Where you
should search
for ready...
40
On-demand marketplace
41
Check the following on-demand marketplaces
 2.3M
Number of visitors #Ranking in Appstore
 n/a
Number of restaurants
...
42
Check the following on-demand marketplaces
 0.7M
Number of visitors
 68 in US in Food&Drink
#Ranking in Appstore
 n/...
43
How to check whether the
location is good enough?
44
Introduction to choosing
the right location
45
There are number of methods that can be used to check
whether certain location is good for your restaurant or not
Locat...
46
How to use store checks to
check a specific location?
47
You should do store-checks at similar concepts and at the
location where you want to open the restaurant
Passing by
Eng...
48
Have a look at the location related KPIs for Bobby Burger
concept
# of visitors  29
Conversion in-store
In %
 90%
Con...
49
Have a look at the location related KPIs for Vincent concept
# of visitors  44
Conversion in-store
In %
 7%
Conversio...
50
How to use Google Maps to
check a specific location?
51
Traffic
Competition
BigSmall
Small
Big
 Sweet spot – big market and weak
competition
 May also mean that it is too ea...
52
There are 3 main question that you have to answer
What is the catchment area
How many altogether restaurants there are ...
53
Catchment area can be just a street at which your restaurant is
54
Catchment area, especially with a lot of delivery / on-line
orders can be a whole area
55
How to use on-demand
marketplaces to check a
specific location?
56
Similarly like the google Maps we check the on-demand
marketplaces
Define the address for which you want to check
Defin...
57
How to use recommendation
sites to check a specific
location?
58
Similarly like the google Maps we check the on-demand
marketplaces
Define the address / district / neighborhood for whi...
59
How to use Keyword Planner to
check a specific location?
60
How to use daily deals sites to
check a specific location?
61
You can use the daily deal sites to see whether certain location
is not too overcrowded. High level of deals suggests t...
62
How to analyze your target
group ?
63
Defining customer
segments
64
There are number of criteria you can use to segment your
market
Type for criteria you can use
• Gender
• Age
• Location...
65
We recommend choosing 2 criteria to create sensible segmentation. Below an
example of such an attempt – we took the fre...
66
After you have looked at the market it makes sense to pick 1 segment that
will become your primary target. For them you...
67
Age:
After choosing the segment describe your ideal customer
from this segment
Expectation to design:
Frequency of dini...
68
Check the whole the on-line course where you can get all
additional resources including Excels
How to open a restaurant...
69
How to analyze targeted
customer segment -introduction?
70
You cannot build everything for everybody so you should rather try to be
something for somebody – in this case specific...
71
The last group of on-line tools puts at your disposal numerous
solutions giving you in-depth knowledge of your competit...
72
Off-line interviews for
understanding the customer
for known concept
73
Where you can find respondents?
• You can follow people you do not know; If they follow you back you
can write to the
•...
74
There are a few rules of interviewing to keep in mind:
• Minimum of 15 respondents
• Talking face to face
• Do not reco...
75
People say what they think the other person wants to hear, so use
the 4 measures to prevent "guiding the witness" (push...
76
Off-line interviews when
creating new concept
77
As a part of the market research you have to define what
characteristics should have in your MVP. Off-line interviews a...
78
Conducting face-to-face interviews is very important because
it allows you to find or confirm the existence of the prob...
79
There are a few rules of interviewing to keep in mind:
• Minimum of 15 respondents
• Talking face to face
• Neutral pla...
80
While interviewing have in mind the following advices:
Set the stage
Identify the
segment
Introduce the
problem
Test th...
81
Pay attention to the signs saying that your idea is a good one:
YES
Money
Did they already
try to solve the
problem?
Ho...
82
Disturbing signs that may show that the idea is not entirely
good:
NO
Focus
Did they already
try to solve the
problem?
...
83
Use interviews to answer 3 important questions:
Is the problem serious?
Does the
problem affect
a large number
of peopl...
84
You need to assess all interviews according to
standardized scores
Design assessment
criteria
Define
responses
Assign
p...
85
If the total score is below set threshold then
you should reconsider what to do next
Source: Lean Analytics: Use Data t...
86
Below you can find some examples of evaluation criteria allowing
you to check what is the attitude of the respondent to...
87
Using the top-down and bottom-up analysis you can
calculate for how many people the problem is interesting
enough so th...
88
Suppose you want to design a new solution that helps
people lose weight…
89
…then you should check whether people are
trying solve the problem and if yes how do they
do it?
90
The fundamental question to yourself:
Do I want to deal with this problem over the next 5 years?
91
People say what they think the other person wants to hear, so use
the 4 measures to prevent "guiding the witness" (push...
92
Where you can find respondents?
• You can watch someone that does not necessarily have to
reply with the same;
• Do not...
93
On-line interviews
94
You can use a specific tools to conduct fast on-line interviews
Tools
Source of
respondents
Sample size
• Facebook grou...
95
Facebook Audience
Insight
96
Facebook Audience Insight is a module available to Advertisors
but can be also used for market research
97
Customer profile on
facebook
98
You can learn a lot by looking at your potential customers
profiles
 Try to figure out what language use your target
g...
99
Ready-made reports on
customer segments
100
Who produces ready-made reports?
On-demand
marketplaces
Market research
agencies
Others
 On-demand marketplaces on
th...
101
Testing the concept of a
restaurant with MVP
102
What it is MVP?
103
What is MVP?
The minimum viable product is that version of a
new product which allows a team to collect the
maximum am...
104
What is MVP?
105
Characteristics of MVP
Has to be much cheaper than the end-product
You can do it much faster than the end-product
I...
106
You can gamble and open at once the restaurant of your
dreams yet it will be prohibitively expensive and
painstakingly...
107
… or you can try the Food Truck as the MVP….
Cost : 10-100 K
Lead time: 1-2 months
 You test the
whole concept
 You ...
108
… the role of Mr Sandwich who goes from one office to
another and sells sandwiches enables you to test many
aspects as...
109
… another great MVP is catering – especially if your
menu is wider and more diversified
Cost: 2-10 K
Lead time: 1-2 mo...
110
If you dislike the fuss of going around you can have
as MVP dinners at your place – first for friends and
after some t...
111
…. Or if you want to test also the look and fell of the
restaurant just rent an apartment near the targeted
location a...
112
….when you wonder what MVP you should choose compare
them in terms of time and money needed and also….
540
55
2 6 3 8
...
113
….and also have a look what and to what extent you can test
with specific MVP – concentrate on those features which ar...
114
Restaurant model in Excel
115
When you want to set up a restaurant you have to not only
face the monthly recurring costs but also invest a huge
amou...
116
Have a look what you will spend your money on long before
opening of the restaurant
Purchase of the place
Furniture
De...
117
There are plenty of monthly costs that have to be paid every
month
Food and
drinksUtilities (water,
electricity, gas, ...
118
Remember that apart from current costs you usually froze a
lot of cash in the stock
119
Let’s have a look at the simple model
 Number of meals per
day
 Number of days
Restaurant
# of
transactions
Revenues...
120
In the part about the using store checks for location analysis
we were
Passing by
Engaged / stopping
Leaving
Taking aw...
121
Before we go to Excel let’s talk about the logic we used to
build the e-commerce Excel model
 Conversion rate to
cons...
122
Check the whole the on-line course where you can get all
additional resources including Excels
How to open a restauran...
123
KPIs for restaurants
124
There are some
Daily Capacity
% utilization
% of Take-Aways
Average
Transaction
Value (ATV)
% of Ordered
via on-demand...
125
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
...
126
Subscribe to our channels:
www
127
Check my presentation on on-line models to understand
them properly
Business models
Practical guide for startups and e...
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How to open a restaurant?

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Opening restaurants is very demanding in terms of time and cash. I will show you in this presentation how to research the market and plan your business to make sure that you open the right concept, in the right place for the right people. Most restaurants fail because they got it wrong in one of the 3 main factors: location, concept, your target segment of customers. Here I will show you how to find out with little money in advance whether your business idea makes sense or not.

We will show number of techniques that will help you check:

Whether the location is good for your business?
Who is your customer and whether you will have enough of them in your selected location?
What are the good and bad things about certain concept and whether is a good fit for you and the location?
How much money you get from your restaurant business?
I will also show you how to translate it to Excel and create your business plan in this universal tool. It will be useful not only for opening your business but also afterwards managing your business.

I will teach you also how to test your concept in real life without actually building the restaurant.

Published in: Business

How to open a restaurant?

  1. 1. 1 How to open a successful restaurant? A practical guide
  2. 2. 2 Introduction
  3. 3. 3 In this presentation I will show you how to choose wisely the right concept and location for your restaurant so that you have a good chance of becoming successful businessman
  4. 4. 4 We will be talking about 4 main things Choosing the concept Analyzing target group Choosing the right location Analyzing your business in Excel
  5. 5. 5 What we will show in this presentation is a part of extensive on-line course where you can get all additional resources including Excels How to open a restaurant? Click to check my course $95 $50
  6. 6. 6 The 4 most important things
  7. 7. 7 There are 4 things that you have to get right when opening a restaurant The right concept Served to the right target group At the right location Perfectly executed
  8. 8. 8 Getting the right concept means deciding on the following things Type of food served Service level Look & feel Size Capacity Needs it covers The right concept
  9. 9. 9 You cannot build everything for everybody so you should rather try to be something for somebody – in this case specific segment. Therefore, you have to answer some questions Who you concentrate on? What is their socio and demographic profile? What is important to them How do they communicate? What is their consumption level? Served to the right target group
  10. 10. 10 Even the best concept can only work at well chosen location where you target group is present. To decide whether location is good or bad you have to measure the size and quality of traffic Total traffic at given location Who does constitute the traffic? What is the reason for the traffic? What % of traffic does belong to your target group? What is the seasonality of traffic? What is propensity to spend? At the right location
  11. 11. 11 Finally you have to execute the concept according to the promise conveyed by the concept and the brand in a consistent manners Recruitment machine Training machine Consistency of service Procedures and checklists Data driven supervision First-line management Perfectly executed
  12. 12. 12 Why you should work first in a restaurant?
  13. 13. 13 Restaurant is a type of very physical business. It is a mini factory. To understand it you have to work there. On top of that you can learn a lot of nice things
  14. 14. 14 Below you can find things that you should pay attention to while working in a restaurant. Later they will prove priceless • What does the consumer like, prefer, buy, order? • How old are they, what gender are they? • To which social group do they belong? • What is the customer segment? • How many consumers visit the restaurant daily? • How many consumers stay inside and order the food? • How big is the conversion rate? • How long does the restaurant prepare meals? • How much do ingredients cost? • How big is the restaurant? • How many clients can fit in the restaurant / What is the capacity of the restaurant?
  15. 15. 15 How You should choose the right concept?
  16. 16. 16 Introduction to choosing the right concept
  17. 17. 17 There are 3 main ways to get the concept Franchising Cloning Developing new concept F C D
  18. 18. 18 To chose the right concept you have to learn more about concepts the following things Type of food served Service level Look & feel Size Capacity Needs it covers
  19. 19. 19 The method you will use for finding the right concept depends on the type of concept you will choose Concept Storecheck Franchising concepts base Marketplaces with recommendations Restaurant’s Fanpages Keyword Planner Industry reports On-demand marketplace F C C D F C D C D F C D F C D C D
  20. 20. 20 Introduction to store- checks
  21. 21. 21 5 10 15 5 35 Number of SKU Location: Number of salesmen: Competition: Saturn, Karen Notebook, iSpot Size: Number of SKU Presented products Structure of the exposition (%) =100 PC Laptop Printers Phones Monitors Photos Others - 3 E + Knowledge of the product offer Sales skills How active salesmen are Behavior Usage of marketing materials Level of service • Salesman was able to respond to the request placed by the customer and it seemed that he had deep knowledge of the products • Salesman did not try to figure out what price level I was interested in. Surprisingly was proposing always the cheapest products • Salesman did not show the full potential range of benefits coming from the purchase (price of the software was for some models incl. in the price, possibility to buy in installment) • Salesman was very enthusiastic during the talk • Salesman did not try to convince that the price is good and did not try to understand why I leave without the purchase • Salesmen did not try to do some cross selling or up-selling to other customers who purchased the base products Shopping mall 70 sq m 2 Other observations Here you can see an example of store check for B2C – a shop selling computers Laptops: Pendrives: Firma No. of pieces Cool drive Kingston Toshiba 6 1 1 Brand No. of pieces HP Toshiba Asus Sony Samsung Lenovo Fujitsu 10 11 5 3 2 1 1
  22. 22. 22 10 5 85 00000 Store profile Location: Rating of the location: No. of salesmen Competition level: Size: Number of SKU Presented products Structure of the exposition (%) OSB Others =100 - 3 E + Ability to adjust the product to the customer Technical knowledge and knowledge on the application of the products Ocena pracowników składu Center 1 500 m2 4 Service level 3 Plywood Chipboard MDF i HDF OSB Plank Veneer Countertops Furniture fronts Fittings Other 0 0 0 2 0 0 0 0 1 1 Number of competitors in radius of 3 km 3 Fittings No. of SKU Lead time Home delivery Other services offered Shop with fittings Limit on receivables Payment terms Other non standard products immediate n/a no Yes n/a n/a Building materials Here you can see an example of store check in B2B sector for a company selling wooden semi-products Sales skills How active salesmen are Knowledge of the product offer
  23. 23. 23 Example of store checks in restaurants
  24. 24. 24 Let’s have a look at the store check done at a Bobby Burger – a slow burger concept Country of origin  Poland Typical size In sq m  60-120 Investment needed In thousands of USD  50 Average price In USD  6.5 Production of food  Produce to order Staff In people per shift  1+ 2 cook Monthly revenues In thousands of USD  45 Number of open restaurants In pieces  38 Food Main competitors Basic Data
  25. 25. 25 Let’s have a look at the store check done at a Café Vincent – a french cafe and bakery Country of origin  Poland Typical size In sq m  130 Investment needed In thousands of USD  200 Average price In USD  3.5 Production of food  Produce to shelf Staff In people per shift  2+3 baker Monthly revenues In thousands of USD  100 Number of open restaurants In pieces  4 Food Main competitors Basic Data
  26. 26. 26 Franchising concept database
  27. 27. 27 If you are interested in franchising you should go through following bases  You can find here general info on the concept (investment and cash needed, general description of the concept), fees (franchising, royalties, advertising), links to social profiles of the concept  You can select data using filters (type, investment size, location, age of the concept, segments) Franchising.com Description  You can find here general info on the concept (investment and cash needed, general description of the concept), fees (franchising, royalties, advertising), links to social the webpage of the concept  You can select data using filters (type, investment size, location, age of the concept, segments)  There is a ranking of the franchising concept and its historical development  Historical development of the number of units and development over the last 1-3 years  Links to related articles Enterpreneur.com  You can find here general info on the concept (investment and cash needed, general description of the concept), fees (franchising, royalties, advertising), links to social the webpage of the concept  You can select data using filters (type, investment size, location, age of the concept, segments)  Examples in Poland are: : http://franchising.pl/ , http://portalfranczyza.pl/, http://franczyzawpolsce.pl/ Local databases in your country in local languages
  28. 28. 28 Recommendation marketplaces
  29. 29. 29 Recommendation marketplaces give you a chance to learn what is important for them. Reviews give you great starting point  Yelp develops, hosts and markets Yelp.com and the Yelp mobile app, which publish crowd-sourced reviews about local businesses, as well as the online reservation service SeatMe and online food- delivery service Eat24. Description  164M Number of visitors (all world)  2 in US in Travel  54 in US in All #Ranking in Appstore  50K in New York  95M reviews (19% restaurants) Number of restaurants  24 in US in Food&Drink  6M  124M  5 in US in Travel  165 in US in All  31B  2 in US in Social networking  5 in US in All  Zomato - similar to Yelp; concentrates on restaurants. Strong in Asia and Easter Europe (thanks to acquisition)  TripAdvisor is the world's largest travel site*, enabling travelers to plan and book the perfect trip.  10K in New York  Profiles of restaurants of the facebook. Facebook allows giving reviews  37K in New York  n/a data
  30. 30. 30 Check the whole the on-line course where you can get all additional resources including Excels How to open a restaurant? Click to check my course $95 $50
  31. 31. 31 Fanpages of restaurants
  32. 32. 32 Restaurants are communicating with potential customers using extensively social media. You can learn a lot through their accounts and social media  How important it is for your type of concept?  How many fans do they have?  How do they communicate with the customer?  How the concept and dishes look like?  What specific concept is praised or criticized for? Description What you can learn about the concept? The most popular social media used
  33. 33. 33 Keyword Planner - introduction
  34. 34. 34 You can learn a lot by having a look at the searches fed into the google  You can see for what people were searching and how many searches there were  Size of the market (in terms of people interested or rough number of transaction) can be estimated on the basis of it Size of the market Description Tips  Key word planner gives you estimate how much you would have to pay per click for a given keyword  If you know how much paid traffic you want to attract you can estimate the needed budget for google AdWords (ads showing when people search) Potential money you would have to spend on marketing  Use many different phrases  Look what keywords pop-up  Look how many clicks there were per keyword  Look at the price per click but also look for the number of searches performed. Ideally you would want to have a lot of searches at lowest possible cost  AdWords gives some estimation on the level of competition  Sometimes it is not that optimal (for conversion purposes) to go for Page 1 in searches. Those willing to go beyond Page 1 are more likely to convert  Always when thinking about the marketing budget have in mind how much you benefit from a customer. CAC should be much lower than LTV
  35. 35. 35 …here you have an example of key words for t-shirts in USA
  36. 36. 36 Keyword Planner – example for restaurants
  37. 37. 37 Using Keyword you can check the popularity of specific concepts on the basis of how many searches were made  You put in the Keyword search some words that can help you see what is the most popular concepts. For example if you want to see the situation in San Francisco you should put “San Francisco restaurants”  Afterwards you put the same phrase in Google o see what answer you will get. You do the same for the keywords suggested by Keywords Planner, Popularity of concepts Description Aim  Discover to what extent people use the restaurant google to look for a restaurant  See what is really popular (how man people search for a specific concept, what is he competition what phrases do they use  Keyword generated related words connected to the keyword you have submitted Specific words used by people  See how do people phrases they searches
  38. 38. 38 Ready-made reports on a specific concept
  39. 39. 39 Use the main research platforms to find any information possible on specific concepts Where you should search for ready made reports Description  Full market reports  Interviews with CEOs, owners, managers  Commercials for specific concept  History of  Franchising booklet / Franchising introduction  Conference materials What you should look for
  40. 40. 40 On-demand marketplace
  41. 41. 41 Check the following on-demand marketplaces  2.3M Number of visitors #Ranking in Appstore  n/a Number of restaurants  10.6M  1.4M  1.8M  0.06M  9 in US in Food&Drink  7 in US in Food&Drink  23 in US in Foos&Drink  4 in UK in Food&Drink  8 in Germany in Food&Drink  330 in New York  330 in New York  450 in New York  n/a Name and website
  42. 42. 42 Check the following on-demand marketplaces  0.7M Number of visitors  68 in US in Food&Drink #Ranking in Appstore  n/a Number of restaurants  0.05M  0.5M  0.17M  8 in France in Food&Drink  3 in US in Food&Drink  96 in US in Food&Drink  n/a  n/a  Not applicable  Not applicable – operates many brands  Not applicable – operates many brands  300 K Name and website  Not applicable – operates many brands  Not applicable – operates many brands  40 K
  43. 43. 43 How to check whether the location is good enough?
  44. 44. 44 Introduction to choosing the right location
  45. 45. 45 There are number of methods that can be used to check whether certain location is good for your restaurant or not Location Store checks Google Maps On-demand marketplace Marketplaces with recommendations Keyword Planner Daily deal sites (i.e. Groupons)
  46. 46. 46 How to use store checks to check a specific location?
  47. 47. 47 You should do store-checks at similar concepts and at the location where you want to open the restaurant Passing by Engaged / stopping Leaving Taking away In store
  48. 48. 48 Have a look at the location related KPIs for Bobby Burger concept # of visitors  29 Conversion in-store In %  90% Conversion take-away In %  3% Engagement rate In %  10% Estimated revenues In K USD  45 Location Data
  49. 49. 49 Have a look at the location related KPIs for Vincent concept # of visitors  44 Conversion in-store In %  7% Conversion take-away In %  73% Engagement rate In %  3% Estimated revenues In K USD  100 Location Data
  50. 50. 50 How to use Google Maps to check a specific location?
  51. 51. 51 Traffic Competition BigSmall Small Big  Sweet spot – big market and weak competition  May also mean that it is too early to enter for some reasons  What matters for you is the traffic of your target group 1 When you are looking for a location you are actually looking at market size and competition level  Big market with established players  You are likely to get your share of the pie  Probably difficult to be massively successful 2  Potential niche - you may create small successful business 3 4  Avoid as it will be a blood bath  You will compete with many players for small market
  52. 52. 52 There are 3 main question that you have to answer What is the catchment area How many altogether restaurants there are in the catchment area How many of them are similar concepts
  53. 53. 53 Catchment area can be just a street at which your restaurant is
  54. 54. 54 Catchment area, especially with a lot of delivery / on-line orders can be a whole area
  55. 55. 55 How to use on-demand marketplaces to check a specific location?
  56. 56. 56 Similarly like the google Maps we check the on-demand marketplaces Define the address for which you want to check Define the category you are interested in Check how many restaurants there are within the distance Define the distance within which you consider them competitors
  57. 57. 57 How to use recommendation sites to check a specific location?
  58. 58. 58 Similarly like the google Maps we check the on-demand marketplaces Define the address / district / neighborhood for which you want to check Define the category you are interested in / filters Check how many restaurants there are within the distance Define the distance within which you consider competitors
  59. 59. 59 How to use Keyword Planner to check a specific location?
  60. 60. 60 How to use daily deals sites to check a specific location?
  61. 61. 61 You can use the daily deal sites to see whether certain location is not too overcrowded. High level of deals suggests that you can have troubles Overall discount level for the location Number of restaurants that provide daily deals in the location Total number of restaurants in the location Category discount level for the location Number of restaurants in a specific category (i.e. sushi) that provide daily deals in the location Total number of restaurants in a specific category (i.e. sushi) in the location
  62. 62. 62 How to analyze your target group ?
  63. 63. 63 Defining customer segments
  64. 64. 64 There are number of criteria you can use to segment your market Type for criteria you can use • Gender • Age • Location • Money spend per meal • Frequency of visits • Type of cuisine you are serving Examples • Usually men and women • 0-12 year old • 13-18 year old • 19-25 year old • 26-35 year etc. • The capital • Big city, Average size city • Suburbs, Center • By states, provinces, districts • Etc. • 10-20 USDmax • 21-35 USD • 36-60 USD etc. • Italian • Fast food • Sushi etc. • daily • 1 a week • 1 a month • From time to time (a few times a year)
  65. 65. 65 We recommend choosing 2 criteria to create sensible segmentation. Below an example of such an attempt – we took the frequency of visit and the spending per 1 visit to divide the whole market into understandable pieces Casual dating Wealthy nomads Stay at home Fast food freaks Frequency of visits Spending per 1 visit
  66. 66. 66 After you have looked at the market it makes sense to pick 1 segment that will become your primary target. For them you will be building the restaurant, so you should know their preferences and needs Casual dating Wealthy nomads Stay at home Fast food freaks Frequency of visits Spending per 1 visit
  67. 67. 67 Age: After choosing the segment describe your ideal customer from this segment Expectation to design: Frequency of dining out Average Spending Couples age 25-35 with higher salaries Cozy, with little resemblance to chains 1 time every 2 months 100 USD / visit Expectation to location: Interesting, unique Expected CAC 200 USD Time spend in the restaurant on a 1 single visit They spend a lot – on average 1.5 h per visit Prices sensitivity Small
  68. 68. 68 Check the whole the on-line course where you can get all additional resources including Excels How to open a restaurant? Click to check my course $95 $50
  69. 69. 69 How to analyze targeted customer segment -introduction?
  70. 70. 70 You cannot build everything for everybody so you should rather try to be something for somebody – in this case specific segment. Therefore, you have to answer some questions Who you concentrate on? What is their socio and demographic profile? What is important to them How do they communicate? What is their consumption level? What they like and dislike in the concept?
  71. 71. 71 The last group of on-line tools puts at your disposal numerous solutions giving you in-depth knowledge of your competitors and markets Targeted customer segment Off-line interviews On-line interviews Marketplaces with recommendations Facebook Audience Insights Analyze profiles of your customers on social media Ready made reports on customer segments Food Bloggers
  72. 72. 72 Off-line interviews for understanding the customer for known concept
  73. 73. 73 Where you can find respondents? • You can follow people you do not know; If they follow you back you can write to the • Do not spam these people, have some interaction with them before you ask the for interview • You can easily get in touch directly or through comments on posts • You can also join groups and invite them to participate in the tests or interview Family, Friends, Neighbours Where Type of Restaurants Comments Twitter Facebook • Limited number of respondents; • Small differences in demographics; • The answers may be subjective; • On the other hand, you can count on friends for honest answers • All • All • B2B catering • All Customer in the concept you are exploring • All • You can get fast and easy information from first hand from customers present in the specific concept • They can show you on the spot what they like and what they dislike Recommendation sites • You can approach people giving positive and negative comments • The group is a bit biased – they are usually more active and more critical than average customer • All
  74. 74. 74 There are a few rules of interviewing to keep in mind: • Minimum of 15 respondents • Talking face to face • Do not record - take notes • Prepare script of the interview with ready questions Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya • Take a photo of the respondent and the food they have ordered
  75. 75. 75 People say what they think the other person wants to hear, so use the 4 measures to prevent "guiding the witness" (push polling) Do not show your emotions Ask specific questions Dwell on a subject Watch for signals • Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in reverse, so that he has to disagree with you to show that he cares about the problem • When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to questions about the protection of the environment • Look neutral, do not send signals, and do not suggest any point of view • We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100 EUR • The more specific questions, the more realistic answer • Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your friends are doing it" – reflects his approach • Ask 5 times the question "why" • You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous ticks and indicates a sense of discomfort • Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you can surprise and confirm or deny something important, what has been said earlier in an interview Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  76. 76. 76 Off-line interviews when creating new concept
  77. 77. 77 As a part of the market research you have to define what characteristics should have in your MVP. Off-line interviews are perfect for this purpose Find a problem worth SOLVING Find a solution that someone will WANT TO PAY for This will determine the features and functionalities of the MVP
  78. 78. 78 Conducting face-to-face interviews is very important because it allows you to find or confirm the existence of the problem
  79. 79. 79 There are a few rules of interviewing to keep in mind: • Minimum of 15 respondents • Talking face to face • Neutral place • Do not record - take notes • Prepare script of the interview with ready questions Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  80. 80. 80 While interviewing have in mind the following advices: Set the stage Identify the segment Introduce the problem Test the problem Verify the solution Ask for something • Highlight the aim of the meeting • Explain what you will talk about and what you will ask him to do • Check which segment he/she belongs to • Collect the demographic data and specify the segment to which belongs the respondent • Explain the problem • Explain how you came across the problem and why you believe it is important • Sometimes not to lead the witness speak generally about problems in the respondent field or skip this stage entirely /move it to the end of the interview • Ask the respondent to rank problems from the most important to the least important • Ask about other related issues / problems they think are worth mentioning • Try to understand respondent ‘s point of view • Discuss problems in the order of importance and how the respondent solves them what solution he is using • If he does not show interest this it means that there is a discrepancy between your business model and the reality • Ask for another meeting to discuss the solution (in the future this may be one of the first customers) once you have something that shows • Ask for several contacts to his friends to also perform a conversation with them Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  81. 81. 81 Pay attention to the signs saying that your idea is a good one: YES Money Did they already try to solve the problem? How interested is he? Nonverbal communication  The responder wants to pay for your solution right away  The respondent tried himself to solve this problem  The respondent has a strong interest and passion in talking about the problem  The respondent is animated and leaning forward (positive body language) Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  82. 82. 82 Disturbing signs that may show that the idea is not entirely good: NO Focus Did they already try to solve the problem? How interested is he? Nonverbal communication  Respondent is not focused on the conversation and the topic; seems distracted  Respondent did not undertake any attempts to solve the problem  The respondent talks a lot about everything but not about the problem  The respondent is slouching in his chair of his shoulders are slumped; shows a lack of any interest (negative boy language Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  83. 83. 83 Use interviews to answer 3 important questions: Is the problem serious? Does the problem affect a large number of people? How the problem has been solved so far? or or
  84. 84. 84 You need to assess all interviews according to standardized scores Design assessment criteria Define responses Assign points  4-10 criteria  3-4 closed replies  Fore example. use scoring system form 0 to 10 points per answer  Come up with at least 4 criteria for scoring respondent's behavior during the meeting  Come up with 3 types of answers, to which you can assign your observations, for example: • Yes • More or less, • No,  or • Yes, by itself, • Yes, at my request, • No  Assign scores to answers for example: • Yes-10 points , • More or less-5 points, • No-0 points  Set the threshold for judging whether it makes sense to solve the problem or not – should be around 75% of Maximal Total Score # options Description Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  85. 85. 85 If the total score is below set threshold then you should reconsider what to do next Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya Is the total score above the threshold? YES Proceed with market research NO Abandon the idea Look for a subset of interviewee for which the total score was much higher
  86. 86. 86 Below you can find some examples of evaluation criteria allowing you to check what is the attitude of the respondent to the problem  Did the respondent sort by importance the problems presented by you?  Has the respondent been undertaking any active steps to solve his problem?  Was the respondent focused during the interview and engaged in the conversation?  Did the respondent agree to another meeting related to the presentation solution?  Did the respondent refer you to other people with whom you could talk? Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  87. 87. 87 Using the top-down and bottom-up analysis you can calculate for how many people the problem is interesting enough so they can spend some money on the solution TOP-DOWN ANALYSIS OF AVERAGE RESTAURANT REVENUES • The total amount spend by people in the USA on eating in restaurants • The percentage of the amount spend in NY • The number of restaurants • The calculation of revenues per one restaurant BOTTOM-UP ANALYSIS OF AVERAGE RESTAURANT REVENUES • The average number of tables in a restaurant • The percentage of reservation of tables and average price per table • Multiplying the number of days in the year (including seasonal effects)
  88. 88. 88 Suppose you want to design a new solution that helps people lose weight…
  89. 89. 89 …then you should check whether people are trying solve the problem and if yes how do they do it?
  90. 90. 90 The fundamental question to yourself: Do I want to deal with this problem over the next 5 years?
  91. 91. 91 People say what they think the other person wants to hear, so use the 4 measures to prevent "guiding the witness" (push polling) Do not show your emotions Ask specific questions Dwell on a subject Watch for signals • Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in reverse, so that he has to disagree with you to show that he cares about the problem • When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to questions about the protection of the environment • Look neutral, do not send signals, and do not suggest any point of view • We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100 EUR • The more specific questions, the more realistic answer • Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your friends are doing it" – reflects his approach • Ask 5 times the question "why" • You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous ticks and indicates a sense of discomfort • Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you can surprise and confirm or deny something important, what has been said earlier in an interview Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
  92. 92. 92 Where you can find respondents? • You can watch someone that does not necessarily have to reply with the same; • Do not spam these people, only when they mentioned about an interesting question you can speak to them; • It allows you to reach a large demographic data; • You do not have to have their in your contacts; • There are specific groups you can join. They focus on specific topics • All contacts are mutual • By searching you can specify the size of the market, i.e. restaurants, because they have own pages • You can also join groups and invite them to participate in the tests or interview Family, Friends, Neighbours Where Type of business Comments Twitter Linkedin Facebook • Limited number of respondents; • Small differences in demographics; • The answers may be subjective; • On the other hand, you can count on friends for honest answers • Mobile application • Site media • Retail • B2C Products • B2C Services • UGC • SaaS • SaaS • Site media • B2B Services • B2B Products • B2B • Mobile application • SaaS • Site media • all
  93. 93. 93 On-line interviews
  94. 94. 94 You can use a specific tools to conduct fast on-line interviews Tools Source of respondents Sample size • Facebook groups, fanpage and facebook / instagram ads • Twitter • Specific to the branch. For restaurants could be food blogs, recommendation sites, • 50-100 with at least 50% being your targeted customer segment
  95. 95. 95 Facebook Audience Insight
  96. 96. 96 Facebook Audience Insight is a module available to Advertisors but can be also used for market research
  97. 97. 97 Customer profile on facebook
  98. 98. 98 You can learn a lot by looking at your potential customers profiles  Try to figure out what language use your target group, how do they communicate and with whom (family, friends from school, friends sharing their passion etc.)  Visual language (photos, images) are as important Language and the way they express themselves Description Where to look for it?  You can check what people are interested in and what kind of communication from brands /companies they react toLikes Activity  Comments  Staff put on the timeline  Photos  Pages liked  Liked posts  You can understand better what do they do in real life  Comments  Staff put on the timeline  Photos  Events
  99. 99. 99 Ready-made reports on customer segments
  100. 100. 100 Who produces ready-made reports? On-demand marketplaces Market research agencies Others  On-demand marketplaces on the basis of their transaction provide some statistics especially on seasonality, average tickets, preferences  Behavior of customers observed by on-demand marketplace may differ from the customer behavior at restaurants  Some market research agencies produce on regular basis reports on consumers and the overall competitive landscape  Part of reports are usually available for free  Media site devoted to restaurants / cooking  Franchising association  Consulting companies helping restaurants  Consulting companies helping franchisors and franchisee
  101. 101. 101 Testing the concept of a restaurant with MVP
  102. 102. 102 What it is MVP?
  103. 103. 103 What is MVP? The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort (Eric Ries)
  104. 104. 104 What is MVP?
  105. 105. 105 Characteristics of MVP Has to be much cheaper than the end-product You can do it much faster than the end-product It consists of ONLY the most important features (from the perspective of customers) You can easily modify it as you get feedback from customers Enables you to test most of the hypothesis comprising your business model (especially the risky ones)
  106. 106. 106 You can gamble and open at once the restaurant of your dreams yet it will be prohibitively expensive and painstakingly long……. Cost: 80-1000 K Lead time: 3-12 months
  107. 107. 107 … or you can try the Food Truck as the MVP…. Cost : 10-100 K Lead time: 1-2 months  You test the whole concept  You can test many locations  You can test menu  You create brand awareness and future demand  Pricing can also be tested
  108. 108. 108 … the role of Mr Sandwich who goes from one office to another and sells sandwiches enables you to test many aspects as well Cost : 1-2 K Lead time: 1 months  You can test many locations  You can test menu  You create brand awareness and future demand  Pricing can also be tested (for limited range of products)
  109. 109. 109 … another great MVP is catering – especially if your menu is wider and more diversified Cost: 2-10 K Lead time: 1-2 months  You can test many locations  You can test menu  You create brand awareness and future demand  Pricing can also be tested
  110. 110. 110 If you dislike the fuss of going around you can have as MVP dinners at your place – first for friends and after some time the acquaintances Cost: 1-4 K Lead time: 1-2 months  You can test menu  You create brand awareness and future demand  Pricing can also be tested (with some small tricks)
  111. 111. 111 …. Or if you want to test also the look and fell of the restaurant just rent an apartment near the targeted location and with small changes create mini restaurants Cost: 5-10 K Lead time: 1-2 months  You can test the whole concept  Only 1 location can be tested  You can test menu  You create brand awareness and future demand  Pricing can also be tested
  112. 112. 112 ….when you wonder what MVP you should choose compare them in terms of time and money needed and also…. 540 55 2 6 3 8 Restaurant Food Truck Mr. Sandwich Catering Diner at your place Rented apartment Average investment needed In thousands of PLN 8 2 1 2 2 2 Restaurant Food Truck Mr. Sandwich Catering Diner at your place Rented apartment Average time needed to create Product/MVP In months
  113. 113. 113 ….and also have a look what and to what extent you can test with specific MVP – concentrate on those features which are the most risky  Restaurant  Food Truck  Mr. Sandwich  Catering  Diner at your place  Rented apartment Concept Location Menu Brand awarenessPricing Look and feel
  114. 114. 114 Restaurant model in Excel
  115. 115. 115 When you want to set up a restaurant you have to not only face the monthly recurring costs but also invest a huge amount of money into the place
  116. 116. 116 Have a look what you will spend your money on long before opening of the restaurant Purchase of the place Furniture Design Kitchen equipemt Domestic Appliances Computer, cash till, POS Uniforms for employees
  117. 117. 117 There are plenty of monthly costs that have to be paid every month Food and drinksUtilities (water, electricity, gas, waste) Stock Rental of the place Services i.e. book-keeping Cleaning costs Personel
  118. 118. 118 Remember that apart from current costs you usually froze a lot of cash in the stock
  119. 119. 119 Let’s have a look at the simple model  Number of meals per day  Number of days Restaurant # of transactions Revenues Gross Margin Net Margin Operating Profit  ATV - average  Cost of marketing  Franchising Fee  Other Variable costs  Fixed Costs  % Gross Margin  % Food ratio
  120. 120. 120 In the part about the using store checks for location analysis we were Passing by Engaged / stopping Leaving Taking away In store
  121. 121. 121 Before we go to Excel let’s talk about the logic we used to build the e-commerce Excel model  Conversion rate to consumption at the restaurant  Conversion rate into takeaways Visits # of transactions Revenues Gross Margin Net Margin Operating Profit  ATV for both subgroups  Cost of marketing  Franchising Fee  Other Variable costs  Fixed Costs  % Gross Margin  % Food ratio
  122. 122. 122 Check the whole the on-line course where you can get all additional resources including Excels How to open a restaurant? Click to check my course $95 $50
  123. 123. 123 KPIs for restaurants
  124. 124. 124 There are some Daily Capacity % utilization % of Take-Aways Average Transaction Value (ATV) % of Ordered via on-demand marketplaces # of daily customers % of Loyal Customers % Conversion rate % Gross Margin Inventory in days of sales Sales Density Margin Density
  125. 125. 125 Check my extensive presentation on productivity hacks to see how you can me 10x more productive Management consultant productivity hacks How to be lazy and still get things done presentation
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