Target the Market of Your Restaurant

Your target market is the group of consumers – in this case, diners – whom you will aim to attract. They are people who are most likely to buy what you’re selling.

The target customer of your restaurant is a specific segment of the larger dining market. Target markets are determined by a combined analysis of:

• Demographics: segments of the population as divided by shared characteristics, including age, sex, income, education, religion, race, and geographical location
• Psychographics: the classification of people according to attitudes, aspirations, and values
• Behavior: analysis of a population segment according to the behavior of potential customers, including buyer habits, spending habits, digital behavior, and hobbies

Goals of Establishing Your Target Market

Why is it so important to establish the target market for a restaurant business from the beginning? So that you can fulfill the following goals:

• Understand the demographics, psychographics, and behavior of those population segments you a) want to attract and b) will organically show interest in your restaurant
• Refine your business plan so that the execution of that plan is driven entirely by your target market
• Determine where to access your customers, how to talk to them, and which channels should be used to market to them
• Identify your differentiators as a business
• Identify your indirect and direct competitors

In business, these goals are often expressed as “the four P’s”:

1. Product: improve your product based on what customers want and need.
2. Price: set a price based on profit margins, competitor pricing, and what your customer is willing to pay.
3. Placement: decide where to set up your restaurant.
4. Promotion: determine the most effective channels for reaching your target market online and in real life.

How Your Target Market Influences Your Business Plan

Your target market influences every section of your business plan. Before we describe how to define your target market using target market examples for a restaurant, you’ll need to know a little about how your target market will influence the development of your business plan.

Here’s how your target market will come through several sections in your business plan.

Concept: The ambiance of your restaurant should be conceptualized based on the tastes of your target market. What would your target market get from your customer experience that they couldn’t get anywhere else?

Mission statement: Your mission statement should be crafted to resonate with your target market, as it appears on all marketing and internal materials.

Menu and services: Your menu and services are the reasons your target market will visit your restaurant. Your target market will determine what you offer at your establishment, and it’s important you really ask yourself the question: will my target market want what I’m offering?

Location: Your location should be chosen based on where your target market is most likely to live, work, or play.

Market trends: Your target market will determine which trends you choose to jump on and which ones you don’t.

Competition: Your target market is essential to defining your direct and indirect competition in your business plan. This is especially true for determining indirect competition, which can be less obvious. Indirect competition means you share a target market, although your restaurant concepts may differ.

Advantages, opportunities, challenges: You need to understand your target market to define how your restaurant will contribute to it. Without this firm understanding, you’re shooting in the dark.

Marketing: Brand development, voice, messaging and promotion channels can’t be defined unless you know whom you’re talking to.

Team: The people you employ should be representative of your target market.

Pro tip: check out our full guide on writing a restaurant business plan

Demographics, Psychographics and Behavior

Demographics, psychographics, and behavior are the tools you’ll need to become familiar with to define your target market in the food business.

Here’s everything you need to know about each category and some restaurant target market examples within each, so you can start to think about which ones resonate for your restaurant concept.

Demographics

Demographics include age/generation, gender, dwelling location (urban, suburban, rural), religion, and income. Some characteristics specific to demographic habits and their relation to dining are:

Age / Generation

Generation Z: Born 1995 to 2014

• Spends money on food above all else
• Prefers quick service and casual dining restaurants
• Grew up with digital technology, thus expect information at their fingertips
• If they’re a part of your target market, online prevalence on social media and online review sites is imperative

Millennials: Born 1980 to 1994

• Eats out more often than the general population, with 53% going out to eat at least once a week
• Prefers fresh, natural ingredients
• Prioritizes sustainability and ethics
• Prefers fast casual and fine dining over traditional fast food like McDonalds
• Most likely to look at a restaurant’s menu online

Generation X: Born 1964 to 1980

• Prefers organic food
• Places a lot of value on family dining
• Not as digitally savvy as Millennial and Gen Z counterparts
• Still peruse review sites and social media

Baby Boomers: Born 1946 to 1964

• Many baby boomers report being on a diet
• They spend a significant amount of money eating out
• Aren’t as tech savvy as their kids and grandkids, but they’re trying

Location

Does your target consumer primarily inhabit an urban, suburban, or rural setting? You’ll really need to know this when you’re choosing the perfect location for your restaurant. Long commutes will be a deterrent for restaurant-goers, even if your concept fits the bill.

Urban

• Combines commercial and residential dining
• Caters to professionals, friends, families, and alcohol-focused consumers
• Competition is greater – but population density is, too
• Varying income levels
• Groups of all sizes mean the need for various table settings
• More appetite for food trends and entertainment options
• Diners are more likely to look at online menus
• Diners are more likely to try a new restaurant
• Diners are more likely than suburban and rural diners to eat out
• Diners are more likely to be influenced by social media and online reviews

Suburban

• Families, Generation X, and Baby Boomer generations
• Larger groups and families
• Middle-class income levels
• More likely than urban diners to have small children
• Diners are more influenced by locally sourced food choices

Rural

• Regulars
• Families and Baby Boomer age groups
• Middle-class income levels
• Diners are less likely to use review sites
• Diners are less likely to try somewhere new
• Diners are more likely to eat out with families
• Diners are less likely to be influenced by social media and online reviews
• Diners are more influenced by locally sourced food choices

Travel destination

• Tourists
• Disposable cash
• Interest in landmarks
• Savour a luxury experience or, conversely, a quick meal

Income

How much money does your target demographic make? This will be important to determine so that you know how much to charge your customers. If your target market are mostly middle-class families, you probably shouldn’t charge $50 for an entree.

High income

• Frequently check online menus before committing to a restaurant
• More likely to dine at a restaurant they’ve never been to
• Influenced by negative online reviews

Middle income

• Likely to dine at a restaurant they’ve never been to
• Likely to eat fast food
• Likely to look at online sources before going to a new restaurant

Low income

• Less perturbed by negative reviews, but still somewhat influenced by them

Other fast facts

• People with more education are more likely to go to full service restaurants.
• Men are more likely than women to go to both fast food and full service restaurants.
• People who worked more hours are more likely to go to both fast food and full service restaurants.
• Smokers are more likely to go to fast food rather than full service restaurants.

Psychographics

If demographics are the “who” of your customer target market, psychographics are the “why” they buy. Psychographics represent your target market’s consumer personality type and personal preferences, including values, interests, and attitudes about the world.

Psychographics can range from someone who likes healthy food and a lively atmosphere to someone who prefers comfort food and the energy associated with a big sports game.

Behavior and habits

Behavior and habits are the “what” people actually do based on their psychographics, including activities and buying habits.

Outdoor communities, for example, have different lifestyles and behavioral rituals – say going for a morning five mile run – than retirement communities who may insist on watching the news at 6:00. Similarly, working parents who dine with kids will have different needs than singles who are ready to mingle.

Defining Your Restaurant Customer Profile

A customer profile is a description of a customer or set of customers that includes demographic, geographic, and psychographic characteristics, as well as buying patterns, creditworthiness, and purchase history.

Since you’re still in the early stages of developing your restaurant, you’re actually in a fantastic position to put the horse before the cart and not the other way around.

Here’s how to define your customer profile.

Step 1: Visit the competition to gather preliminary intelligence.

Before you start writing your customer profile, you’ll need to do some reconnaissance work to find out who’s dining at similar restaurants.

Make a list of local competitors in the neighborhood in which your business will be located. Start by going in for a breakfast, lunch, dinner, or even a drink.

Fill out the following criteria.

Download the competitive analysis template

Download Now

Menu

• General tone of the menu: formal, informal, young, straight to the point
• Price range for appetizers and mains

Bar

• General age range of customers
• Ratio of men vs. women
• Style of dress: formal, casual, work attire, trendy, relaxed, workout wear
• Group dynamics: family, friends, partners, business, solo
• What people are ordering
• Atmosphere: lively, subdued
• Music: elevator music, background music, live music, acoustic

Dining room

• General age range of customers
• Ratio of men vs. women
• Style of dress: formal, casual, work attire, trendy, relaxed, workout wear
• Group dynamics: family, friends, partners, business, solo
• What people are ordering
• Atmosphere: lively, subdued
• Music: elevator music, background music, live music, acoustic

Surrounding area

• Residential or commercial
• Landmarks: Mall, financial district, shopping district, other bars and restaurants, surrounding shops

Once you’ve gone through this process for at least three competitors, look for trends in your findings. Is the atmosphere consistently relaxed? Are diners consistently wearing suits or workout gear? Is the music new age electronic, acoustic, or old classics?

Patterns will give you an idea of the target customers who are naturally drawn to your restaurant’s concept.

Step 2: Organize your preliminary intelligence into basic customer profiles.

From your notes, drill down on your observations using the following criteria. This will give you a starting point for a more complete profile of your ideal or typical customer.

Repeat this process for every general consumer demographic you observed in your preliminary intelligence.

Demographics

• Age
• Gender
• Location

Psychographics

• Music
• Ambiance

Behaviors

• Dining with
• Dress type
• Order
• Price point

Here’s an example:

Customer type 1 at Bistro Competitor X

Demographics

• Age: 18–25
• Gender: Both, predominantly female
• Location: Urban

Psychographics

• Music: Acoustic singer songwriters
• Ambiance: Relaxed, lunchtime

Behaviors

• Dining with: Friends, partners
• Dress type: Casual, trendy
• Order: Soup, salad, coffee
• Price point: $10-15 per entree

Notes: Likely students. Seemed to linger and enjoy their meal.

Customer type 2 at Bistro Competitor X:

Demographics

• Age: 40+
• Gender: Both, predominantly male
• Location: Urban

Psychographics

• Music: Acoustic singer songwriters
• Ambiance: Relaxed, lunchtime

Behaviors

• Dining with: colleagues
• Dress type: formal work wear
• Order: sandwich and fries, burger
• Price point: $15-–$18 for an entree

Notes: Took meals to go. Seemed to be on a lunch break from work.

Step 3: Look at census data.

Now that you have basic demographic information on your competition, your next task is to gather census information on your desired neighborhood. Census material will confirm the assumptions you’ve made so far about your target profile.

Where to find demographic information

U.S. Census

US Census Business Builder: Small business edition

Canadian Census

Census Profile, 2016 Census

View demographic information by:

• Population and dwellings
• Gender
• Age characteristics
• Household and dwelling characteristics
• Marital status
• Family characteristics
• Household type
• Language
• Income
• Immigration status

Step 4: Gather psychographic and behavioral data.

Once you’ve gathered your demographic data, here’s where you go a little deeper with gathering psychographic and behavioral data. Ensure your target market data covers the following points:

Psychographic

• Their concerns: career, the environment, work-life balance
• Their motivations: money, status, art, family, personal growth
• Their sources of fulfillment: career, being a parent, family, friends
• Their values: religion, political leanings, family values, social values

Behavioral

• What they do in their spare time
• How they make their purchases (online, in-person, on the phone)
• How often they use the internet and social media
• Whether they plan or act impulsively
• Whether they look at restaurant review sites like Google, Yelp or OpenTable
• Their preferred social media platforms
• How much they rely on recommendations from friends
• What draws them to a specific restaurant
• What repels them
• Who they dine with most frequently
• How often they dine out

Ways to Gather Psychographic and Behavioural Information

Gather consumer research online.

A few sources to help you understand your market are:

Canada

Restaurants Canada

Restaurants Canada’s research section offers reports and benchmarks that you can use to learn more about Canadian diners. Resources include trend reports, forecasts, information on restaurant industry by province, and market reports. Some reports are available to Restaurants Canada members for free, while non-members have to pay a fee. Other studies are free for everyone.

U.S.

National Restaurant Association (NRA)

The National Restaurant Association has a library rich with consumer data. Some reports are available to NRA members for free, while non-members have to pay a fee. Other information is free for everyone.

Host a focus group.

You can use focus groups to get direct feedback on your concept and more information about the wants and needs of consumers.

Focus groups enable you to conduct an intimate Q&A session to determine the appetite for your concept and learn more about your restaurant target market.

Consider having two focus groups: one with your target market and another “control” group. (A control group is a random sample of the larger population. A control group can shed light on how your target market differs from the general population.)

Here’s how to conduct a focus group.

Before the focus group

1. Choose a focus for your questions. What specific information are you looking to gather? In this case, your focus could be learning more about your target market’s dining behaviors and values.
2. Select a location for the focus group. It should be comfortable and relaxed. Keep in mind that you’ll have to record the conversation for your reference later. The space should be quiet enough for recording.
3. Prepare your questions. Stick to your script and purpose of the focus group. Don’t use the focus group as a PR activity.
4. Use ‘yes’ and ‘no’ questions sparingly. Use open-ended questions that will require a thoughtful response from participants.
5. Use a funnel approach. Start with general, broad sweeping questions. Then narrow your questions to get more specific answers.
6. Ask positive questions before negative questions.
7. Limit yourself to 10-12 questions. An acceptable timeframe for a focus group is between one and a half to two hours.
8. Recruit participants. Participants should be as objective as possible. To find objective participants, place an ad on social media or in publications like a local newspaper. If that’s not in the budget, you can also get friends to ask their network. That way you get an unbiased third parties to take part. Focus groups are usually made up of five to ten participants.
9. Incentives are welcome: Feel free to offer incentives like gift cards or loot bags.

During the focus group

1. Collect demographic information. Ask participants to fill out a confidential demographic form in advance of the focus group. Include fields for:
   • Age
   • Gender
   • City
   • Neighborhood of residence
   • Marital status
   • Children
   • Profession
   • Income bracket
2. Hand out a release form. Outline the purpose of the study. Confirm that the participant understands they will be recorded. Describe how the research will be used.
3. Introductions and icebreakers. Introduce yourself, review the purpose of the focus group, and ask participants to introduce themselves.
4. Make participants comfortable. Consider providing participants with water and snacks. Provide time for a bathroom break.
5. Ask your questions. As you go through your questions, your job is also to keep participants on track. Reroute them if they get off course and prompt them for further details if their answers are short-winded. Be curious, wear a smile and make eye contact.
6. Analyze your recording and findings. Using your questions as a guideline, record your participants answers, preferences and behaviors. Identify trends in their responses.

Create a survey.

Surveys allow you to gather anonymous feedback from more people with less time and commitment than a focus group. But keep in mind it’s harder to control the distribution of your survey.

The survey’s participants might vary from your target market. You will have to manually filter responses according to your restaurant target market vs. general population.

Here’s how to conduct a survey.

1. Choose a focus: What specific information are you looking to gather? In this case, your focus is to learn more about your target market’s dining behaviors and values.
2. Draft your survey questions.
3. Collect demographic information: Begin your survey by collecting demographic information. When you’re conducting your analysis, this will help you sort your target market’s answers from general survey responses.
4. Use close-ended questions: On a survey, open-ended questions can exhaust respondents. Respondents can answer close-ended questions faster and from their gut. When it comes time to analyze your survey results, close-ended questions are quantitative. Quantitative responses will lead you to general conclusions, faster. Close-ended questions are framed using scales:

Likert Scale

Best used for: Measuring behavior and feelings

• Strongly Agree – Agree – Undecided / Neutral – Disagree – Strongly Disagree
• Always – Often – Sometimes – Seldom – Never
• Extremely – Very – Moderately – Slightly – Not at all
• Excellent – Above Average – Average – Below Average – Very Poor

Example:

Question: Before visiting a restaurant, I look at their website online.

Answer: Always – Often – Sometimes – Seldom – Never

Nominal scale

Best used for: demographic information, like age and income

• Age: 1-9, 10-21, 22-29, 30-44, 45-54, 55-64, 65+
• Income: $15,000 – $29,999, $30,000 to $59,999, $60,000 to $79,999

Example:

Question: What is your age?

Answer: Under 21– 22 to 29 – 30 to 44 – 65+

Dichotomous scales

Best used for: Precise answers and data measuring

• Yes or No
• True or False
• Fair or Unfair
• Agree or Disagree

Example:

Question: I am interested in trying a new cuisine.

Answer: True or False

Multiple choice

Best used for: Questions that could have more than one answer

Example:

Question: Which of the following proteins do you like?

Answer: Beef – Chicken – Fish – Tofu – Other (Please specify)

Single choice questions

Best used for: Questions that ask respondents to determine their favorite choice

Example:

Question: What protein do you select most often?

Answer: Beef – Chicken – Fish – Tofu – Other (Please specify)

When creating survey questions, avoid the following errors:

• Leading questions: Do your best to create objective questions. Don’t ask, “Would you dine at an amazing restaurant if they played terrible country music?” Instead ask, “What music would deter you from dining at a restaurant? Choose the answer that most applies. Rock – Country – Indie – Classical – Top 40 – Oldies – Reggae – Rap – Other (please specify)”
• Double-barrelled questions: Double-barrelled questions force respondents to answer two questions at once. For example: “Would you order takeout from a restaurant that offered Indian cuisine and was only open until 9:00pm?”

Create the survey.

Create digital surveys using one of the following tools:

• SurveyMonkey
• Zoomerang
• AYTM (Ask Your Target Market)

Test your survey.

Always test your survey before you distribute it to your restaurant target market. Your survey should take no longer than seven to eight minutes to complete.

To test your survey, send it out to five members of your network. Ask them to review the survey questions for clarity, spelling, and general flow. Once they’ve completed the survey, download their responses so you can see how the survey tool organizes and presents the results. You might find you need to adjust formatting or response types if the information isn’t organized in a logical way.

Distribute your survey.

You can buy targeted respondents from any one of the survey tools listed above. If you’re on a budget, distribute the survey to your network. Then ask that network to distribute the survey to their network, and so on.

Analyze responses and apply them to profiles.

While the general population’s information is still valuable, pay close attention to your target market’s answers. As you identify psychographic and behavioral information trending within your target market, you can add these insights into your target market profiles.

Step 5: Create buyer personas.

Finally, you will craft a buyer persona. Your buyer persona is an archetype of your target market based on the information you’ve gathered. This is where you create a character using statements that are based on the demographic, psychographic, and behavioral data you’ve gathered. You should be able to envision who this person is, just as a novelist does when they are writing about their characters.

Here’s an example of a buyer persona:

Meet Maria.

Maria’s demographics

Maria is a 28-year-old female who frequents casual dining restaurants. She is married or seriously dating and earns an income of $60,000, renting a condo on the outskirts of the city.

Maria’s psychographics

She lives an active, outdoor lifestyle, enjoys healthy food and is self-employed. She is motivated by health, personal growth, and is fulfilled by her friendships. She like a casual atmosphere where she can feel comfortable showing up in running shoes and yoga pants.

Maria’s behavior

She does much of her shopping online, and while she doesn’t look at reviews, she always looks at the menu online before going to a restaurant. She dines out three times a week and is drawn to a restaurant where she can enjoy healthy food with her partner or friends and based on recommendations from friends. She’s repelled by negative health scores, but not by negative reviews from friends.

Step 6: Revisit your target markets after you’ve drafted your business plan.

So you’ve put in the work to get a general sense for those consumers who occupy your target market, created profiles, and written your business plan.

The next step is to revisit your buyer personas after you’ve written your business plan. Do they still hold up? Ask yourself the following questions:

• Do I understand what drives my customer’s buying behavior?
• Does my concept fit into my customer’s buying behavior? Do I need to make adjustments?
• What can I do to further adapt my concept to meet their needs?

You’ll likely end up making adjustments to your customer profile and your business plan when considering these factors. At this point in developing your restaurant, your business plan is a living, breathing document, and your work here will further inform the proposal you wish to cement later.

Conclusion

Now that you know the customer you’re going after and the market you want to break into, you can begin making the decisions that will bring your concept to life and get people in the door.

Of course, you’ll need to conduct further analysis once you’ve started making decisions. For example, once you’ve chosen a location, you’ll have to get a sense of the local market. Following these steps will ensure that you’re creating a solid foundation for your business increase your odds of success from the very beginning.