Since the 1960s, companies have been conducting SWOT analyses to evaluate new opportunities and understand how they stack up against the competition. This simple exercise has useful applications for all kinds of businesses – especially restaurants. If you’re considering opening a restaurant, expanding an existing restaurant, or implementing new marketing strategies, start by conducting a SWOT analysis for restaurants.
Not sure where to begin? Keep reading this restaurant SWOT analysis guide.
What Is a Restaurant SWOT Analysis?
A restaurant SWOT analysis is an exercise in which you analyze your restaurant’s strengths (S), weaknesses (W), opportunities (O) and threats (T). SWOT is an acronym that’s created by combining the first letter of each analysis category.
A SWOT analysis is typically visually presented in a two-by-two matrix, in which strengths and weaknesses are listed in the top row, and opportunities and threats are listed in the second row. Strengths and weaknesses are considered internal factors, while opportunities and threats are external factors.
A SWOT analysis for restaurants serves several purposes. It helps restaurateurs understand how they compare to the competition by highlighting assets they can use to their advantage. And, by encouraging them to think about and anticipate challenges, a SWOT analysis helps restaurateurs overcome them.
While a SWOT analysis is usually done as part of a restaurant’s business plan or marketing strategy, you can conduct one whenever you need to make an important decision in your business.
SWOT analyses aren’t only applicable to the restaurant industry. In fact, they’re helpful in any kind of business setting. The concept for a SWOT analysis was originally created in the 1960s by academics at Stanford University and then further developed in a Harvard Business School textbook.
How to Conduct a Restaurant SWOT Analysis
Conducting a SWOT analysis is a straightforward, collaborative exercise. Gather your management team and employees and ask them to discuss what they think are the restaurant’s strengths, weaknesses, opportunities and threats. You can even back this brainstorming session up with data by conducting focus groups with customers or sending them feedback surveys.
Here’s a closer look at what kinds of things you should be thinking about as you encounter each category of a SWOT analysis.
Strengths
What it means: Strengths are what your restaurant excels in, what it’s known for and what it’s better at than the competition. Strengths are your business’ internal assets.
What are some strengths of a restaurant?
Your restaurant’s strengths could be something like having an authentic menu, loyal customers, ocean views, rave reviews from critics, award-winning staff or a location with a lot of foot traffic or easy parking.
Weaknesses
What it means: A weakness is an area in which your business struggles and where it needs to improve. For this category, focus on internal weaknesses.
What are some weaknesses of a restaurant?
Examples of weaknesses a restaurant might have include having inexperienced staff, inefficient technology, few customers, not offering online ordering or high staff turnover.
Opportunities
What it means: Opportunities are things that your restaurant can do to improve or expand. Unlike strengths, which are internal factors, opportunities are external factors.
What are some opportunities of a restaurant?
Opportunities a restaurant might have include the ability to partner with an influencer, sponsoring a neighborhood block party for visibility or renting a space in a newly opened strip mall to expand the business.
Threats
What it means: Threats are external factors that negatively impact the business.
What are some threats of a restaurant?
The COVID-19 pandemic, labor shortages, supply chain interruptions, rising costs from vendors and customers choosing to cook at home instead of dining out are all examples of threats that restaurants may experience.
Restaurant SWOT Analysis Template
A SWOT analysis is traditionally depicted as a two-by-two matrix with strengths and weaknesses in the top row, and opportunities and threats in the second row. Download this free template to help you conduct your restaurant’s SWOT analysis.
Restaurant SWOT Analysis Examples
These restaurant SWOT analysis examples will help cement what you’ve learned about this important business exercise. While we are using examples of well-known restaurants to help you better understand this exercise, please note that we are taking some creative liberties for illustration purposes.
If you want to challenge yourself, analyze the restaurants in our examples (McDonald’s, Chipotle and Nobu) before reading our responses.
Example 1: McDonald’s SWOT Analysis
We’re starting with one of the most well-known fast food chains in the world. Here’s an example restaurant SWOT analysis of McDonald’s.
Strengths:
Global brand recognition
Locations all over the world
Affordability
Weaknesses:
Low quality
Subpar service
Customers seeking healthier options
Opportunities:
Expand delivery revenue stream during lockdown
Partner with new delivery partners / ghost kitchensIntroduce healthier menu options
Threats:
COVID-19 pandemic
Industry-wide labor shortage
Rising wholesale prices
Example 2: Chipotle SWOT Analysis
Next up, here’s what a SWOT analysis for fast casual chain Chipotle might look like.
Strengths
Synonymous with fast casual dining
Emphasizes use of “real” foods
Sophisticated loyalty and online ordering app
Weaknesses:
Opportunities:
E. Coli outbreak crisis management campaign
Impact the future of food with an accelerator program
Secret menu for loyalists
Threats:
Increasing competition from other fast casual restaurants
Labor shortage
Increasing food costs
Example 3: Nobu SWOT Analysis
Finally, here’s an example of a SWOT analysis for a fine dining restaurant. We’re examining upscale sushi concept Nobu.
Strengths:
Famous customers
Consistent quality
Elevated service
Weaknesses:
Menu prices
Staff turnover
Supply chain/food sourcing
Opportunities:
Expand to new markets through Nobu hotel brands
Introduce takeout and delivery to mitigate pandemic effects
Work with ghost kitchens to expand delivery range
Threats:
Pandemic interrupted indoor dining
Labor shortage makes it difficult to find staff
Increasing operational costs
Conduct a SWOT Analysis for Your Restaurant
Entrepreneurs have relied on SWOT analyses for almost 60 years to help guide them through important business decisions. Conduct a SWOT analysis for your restaurant whenever you come to a fork in the road. By carefully considering your business’ strengths, weaknesses, opportunities and threats, you’ll be able to make an educated decision.
1. Why Are SWOT Analyses Important in the Food Industry?
The SWOT analysis is a tool for understanding the current performance of a restaurant and how to prepare for what lies ahead. The analysis will show what a restaurant does well and what it struggles with, so a plan can be made to act accordingly. Restaurants can plan to adjust to trends, become more competitive and lean into their strengths.
2. How Do Businesses Use SWOT Analyses?
Businesses use SWOT analyses to guide decisions. The analysis will provide insight on what a business does well, what is lacking and needs to be addressed, which opportunities in an industry are ripe for seizing and which risks can be minimized.
