What Is Market Share Analysis?

Market share analysis is part of market analysis and indicates how well a restaurant or bar (or other type of business) is doing in the marketplace compared to its competitors. According to the Harvard Business Review, Market Share is a key to profitability.

Why Is Market Share Analysis Important For Existing Restaurants & Bars?

Inc.com states that understanding the competition is a crucial business activity for any entrepreneur or business executive. To grow your business you need to gain market share by drawing customers and purchases away from competing restaurants and bars. By just looking at your sales numbers you are only viewing a piece of the puzzle. While you may be happy that your sales are increasing, you may find that by looking at the entire market your competitors sales are increasing faster than yours. This is a red flag that should be taken as a serious problem for your business. Once you have this knowledge you will be able to dig deeper into why you are gaining or losing market share and then be able to craft a plan on how to move forward.

Why Is Market Share Analysis Important For Planning a New Restaurant or Bar?

By understanding the total size of the market that you plan on entering you will be better able to estimate your sales numbers. Do your research and find out what percent of the market each of your competitors has. Use logic, industry statistics and common sense to determine how much of the market you can realistically gain as the new kid on the block. Once you have this knowledge you can create a financial model that will help you determine if the market area around your proposed location can support your restaurant, and more importantly if you will meet your financial goals.

How Can I Find My Competitors Sales?

If you plan on opening up in Texas, a service like OnTapReport.com provides all the information you need. For those of you outside of Texas you can still use information from OnTapReport.com to get an understanding of what typical sales for Restaurants and Bars may be like in your area.

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