Sushi was once exotic to the Toronto market.  Today, you can find a Japanese restaurant on almost every major block.  Within a 2 km radius from one of Toronto’s busiest intersections are more than 25 Japanese restaurants.  In this same radius are a number of Korean restaurants that also serve Japanese food.    While most of these restaurants have found a way to survive, it is evident others are trending on thin ice.

How can I Compete?

The other day a friend of mine shared his plans of opening a Japanese restaurant. He asked me for my advice on how to turn his concept into a profitable business venture.  Before getting into any full details, I asked him if he understood the market. I wanted to know was he ready to compete under tough conditions.  He understood the market was saturated with Japanese restaurants. So, I needed to find out how he was planning to differentiate from the competition.  His vision was to go big meaning big space, big menu, and fresh fish all at an affordable price.  Immediately, I had to stop him and tell him what he didn’t want to hear.  If he did exactly what he mentioned there was a great chance he would fail.  If he wanted to succeed, he had to offer something better or something different or do a combination of the two.  We chatted more and drew up a simple plan.

Differentiate from the Competition

In order to compete in a saturated market, you need to stand out from the rest.  The most common method is offering better service and better food.  Sometimes, service and food is not enough and you need to do more.  Here are seven ways of setting yourself apart.

1. Improved Service – focus on providing the most consistent and highest standard of service.  Visit the competition and take note of common service problems.  Avoid repeating these same mistakes by training your staff.  Do you have enough staff? What are your time standards for greeting a guest at the door, seating a guest or performing quality checks?
2. Higher Quality Food – if the food is good, people will come.  Focus on using fresh ingredients and keep frozen and canned foods to a minimal.  Does your menu call for premium ingredients? Will products be sourced from local farms? Organic?
3. Menu Variety – if your competition offers similar menu items, then adjust accordingly.  Offer variety, but keep it simple and do what you do best.  Avoid complex menus.   How would you describe your menu? Is there a selection of meat, seafood and vegetables? Do you offer vegetarian options?
4. Atmosphere – if you have the budget, hire a professional interior designer who has a reputation and expertise in restaurant design.  An appealing restaurant can instantly draw customers.  How can your space be different among the rest? Will it be upscale casual? Sleek and modern?
5. Star Quality Chef – a renowned chef has the ability to attract customers.  Landing an award winning chef may be the key to surviving in a highly competitive area.  A star quality chef will understand menu development, menu costing and food quality.  How many years of experience does your chef bring? What are his/her credentials? Is your chef’s name marketable?
6. Focused Offering - specializing in a particular item can build loyal customers and attract new ones.  Do you offer something special that one else has? The largest wine cellar? Premium Japanese sakes? Best lobster roll sandwich?
7. Marketing Gimmicks - sometimes a restaurant will implement a marketing strategy to create hype or exclusivity among guests who dine at their restaurant.  The goal is create buzz, to be the talk of the town.  For example, a Japanese restaurant in Toronto offers homemade soba noodles and claims to employ the only master soba maker in the city.  The restaurant only offers his creations on Sundays between certain hours.  Another restaurant in New York offers only 20 servings of homemade tofu per day to customers willing to pay the extraordinary price.

Doing business in a saturated market is risky, but it doesn’t mean it’s impossible.  Before you decide to jump into a location, ensure you understand the market surroundings.  Restaurants are among the toughest businesses to operate.  Avoiding an area with high competition is one of the best steps of surviving.  Draw up a plan and review the steps you can do to set yourself apart.

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