Starting a new restaurant is risky. Despite that, some restaurant owners are still able to pull it off.
Do you know what makes a restaurant stands a better chance of succeeding? What factors set it apart from others?
The answer is to have a good grasp of your restaurant’s target market. The target market of a restaurant influences everything from food concepts to marketing. Nail it down before anything else.
In this guide, you are going to learn about different restaurant target markets. When you have this knowledge, the plan you have for your upcoming restaurant becomes clearer.
- 1 By Age / Generation
- 2 By Location
- 3 By Income Level
- 4 By Family or Marital Status
- 5 Conclusion
By Age / Generation
Our preference for the different types of restaurant changes as we age. Take yourself as an example. Are your current favorite restaurants the ones that you loved going to 10 years ago?
Thus, looking at the age of your customers is a good place to start when it comes to pinpointing the target audience for your upcoming restaurant.
Age 20 and Younger / Generation Z
Generation Z (Gen Z) or tweens are teenagers aged 20 years old or younger. So far, we do not know much about their spending behavior when it comes to food and restaurants.
In Spring 2014, Piper Jaffray, an investment bank and asset management firm, surveyed teenagers with an average age of 16.4 years old. It found that Generation Z loves to spend on food more than anything else.
The study also discovered that a significant percentage of teenagers that fall into this category prefer quick service and casual dining restaurants. Some of their favorite restaurant brands include Starbucks, McDonald’s and Chipotle.
This generation arrived in the age of broadband and smartphones. As digital natives, they want their information fast. They will use technology such as food review apps and social networks to help them decide which restaurant to go to.
In order to reach these tweens, your restaurant will need to embrace digital channels that are popular among them. They are also more than likely to appreciate a quick response to their queries and feedback over the Internet.
Age 21 to 35 / Generation Y
Generation Y (Gen Y) or millennials are individuals born around 1980 to 1995.
Contrary to what we think, individuals within this age group are more likely to visit an expensive and upscale restaurant than those that fall under another age group. The Generational Consumer Trend Report produced by Technomic, a research and consulting company in the food industry, highlighted this difference.
Furthermore, they belong to the foodie generation. They share photos of what they are eating on social networks like Instagram, Facebook, and Twitter. They also make decisions on where to dine next based on photos or recommendations posted by their friends or peers.
Provide a great ambiance or at least have a section of the interior that is worth sharing. Do the same with the food presentation. Both of these will help your restaurant establish a strong position in the hearts of millennials. Ask yourself. Will someone brag about dining at your restaurant?
Millennials are all about having delightful dining experiences. They are also aware of what they should eat in order to stay healthy. High quality, natural and nutritional food gets Gen Y’s attention because there is an abundance of healthy eating information on the Internet these days.
Age 36 to Age 55 / Generation X
Generation X (Gen X), also commonly known as the baby boomers are individuals born around 1960 to 1980.
In the same Generational Consumer Trend Report by Technomic, Gen Xs are found to care a lot about the use of fresh ingredients. Furthermore, the report suggests restaurant owners to highlight the use of local fresh produce as ingredients in their menu in order to attract baby boomers.
Individuals from this generation tend to prefer healthy food as they become older.
Even though they have the strongest spending power among all the generations, most of them are somewhat conservative when it comes to food. They prefer the classics instead of fancy meals or food items with uncommon names.
Gen Xs place much value on family time. With this in mind, you should have large tables to accommodate families of 3 to 5 persons.
On the technology side of things, even though Gen Xs are not as savvy as tweens and millennials, they still know how to get on the Internet and search for restaurant reviews. Thus, it is necessary for your upcoming restaurant to have an informational restaurant website and positive reviews on food review sites like Yelp.
Age 55 and Above / Seniors
For this article, we are grouping seniors as individuals who are 55 years old and above.
According to the U.S. Administration on Aging, the number of persons at the age of 60 and older is going to reach 22.2% by Year 2020. This shows how big the seniors market can be for a restaurant.
Senior citizens can be an excellent target market because they have as much, if not more money than other generations on this list. Many of them are retirees, and they are at the point in life where they can sit back and enjoy cashing in on retirement plans or pension schemes.
In this U.S News article written by Emily Brandon, an average American senior dines in a restaurant 51 times a year. This is about once every week. The same news article, which reports on the findings from a survey by the Cornell University Center for Hospitality Research, also indicated that most seniors tend to prefer casual dining restaurants.
Although seniors may have a slower pace, they are still open to trying new menu items and new styles of cooking.
Many restaurants targeting seniors offer senior discounts and early bird discounts. The latter is perfect for these older adults. They no longer need to work and because of this, they have no problem coming to your restaurant earlier than the typical lunch or dinner hour. Having these discounts allows you to fill your restaurant up during non-peak hours.
Setting up your restaurant at the right location is crucial to its success.
At the same time, the location determines the type of patrons that you are going to get.
Residential or housing areas are where you find houses, apartments or condominiums.
You can expect families to be the primary demographic for residential areas. Therefore, your restaurant needs to have enough space for groups of 4 or more. Providing child-friendly and senior-friendly facilities makes your restaurant more attractive too.
The peak sessions for restaurants and food outlets located in a residential area are usually dinners and weekends.
The important thing to note is that not all residential areas are dense and highly populated. A housing area with sparse population may not be sufficient to sustain the operations of your restaurant.
Commercial areas are locations where you would expect to see offices and business facilities.
The typical restaurant patrons within a business area are office workers and business executives. You can expect most of your customers to visit during lunch hours.
Take the income level of these office workers into consideration when you are pricing the items on your menu.
For the restaurant’s interior, there needs to be a variety of table sizes because executives visit restaurants in groups of different sizes. A table for two or three is enough to accommodate a meeting over lunch while a table to fit 6 to 10 people is great for an office celebration.
Above all else, office workers expect fast service because they only have one or two hours for lunch.
However, you should not compromise on service quality. Those who are hosting a meeting over lunch do not want to embarrass themselves by bringing their peers to a restaurant offering sloppy services.
Holiday Spots and Recreational Areas
If you are planning to set up your restaurant at a holiday spot or a recreational area, then you should be expecting tourists, families, and groups of friends during holidays as well as weekends.
These patrons appreciate restaurants with spacious walkways or at least a space where they can place their bags, and for those who are on a holiday with a baby, a stroller.
People who are on a vacation are more likely to go to places where they can grab a quick meal.
You can consider offering a dining experience that relates to the tourist spot nearby. For example, if your restaurant is on top of a hill or a tower, mesmerize your patrons with a dazzling view.
Mama Panda Kitchen, a restaurant inside the Singapore Zoo, is another good example. As they are situated right beside the giant panda viewing area, they offer cute-looking panda steamed buns for customers and of course, it is a hit among patrons.
Collaboration is essential when you want to bring more tourists to your restaurant. Consider the following marketing initiatives:
- Get listed on travel websites and directories.
- Invite travel bloggers to your place when they are visiting the holiday spot near your restaurant.
- Cut a deal with travel agencies, nearby hotels, hostels, and even with the tourist attraction itself. Ask if they could recommend your restaurant to visitors.
By Income Level
Income level is another important element to focus on when you are trying to identify the primary target audience of your restaurant.
The Influence of Income Consumer Trend Report published by Technomic in 2012 highlighted that 50% of affluent or high-income consumers use a food service more than twice a week. Only 28% of their middle-class counterparts do the same.
The number of middle-class individuals is undoubtedly more than the affluent so the figures above do not imply that all restaurateurs need to target affluent consumers in order to be successful.
New restaurateurs who understand the income group served by his or her restaurant is going to see success.
High Income Group
It is no surprise that high-income earners are more likely to have their meals at fine dining restaurants.
These individuals or families are after exceptional dining environments that serve food prepared with high quality ingredients by experienced chefs. You will get their attention if you place an incredible amount of attention on food preparation, dining experience and service.
Diners from this market segment also expect nothing but the best in class. This applies to your flatware, ingredients, waiters and more importantly, the team managing your kitchen.
Low and Middle Income
There is a general presumption that individuals and families from the low to middle-income group are all about eating at home and dining at cheap restaurants.
The above may not always be true. This group of people does not mind paying for food if they feel that it is worth the price. Drop the food decoration and premium ingredients because this group of patrons is less picky about them.
Bundles and seasonal promotions are great to capture this particular target market because they are more sensitive to price.
Although they do not expect the best of everything, do not compromise on your level of service. Else, they might not come back. With so many people on social media, an unpleasant dining experience will spread quickly, and this will ruin the reputation of your new restaurant.
By Family or Marital Status
Family or marital status is not as important as some of the target market elements mentioned in this guide. That being said, knowing whether your target customers are single, married or married with children does have its benefits.
The Consumer Expenditure Survey Anthology released by the Bureau of Labor Statistics in 2011 found that singles spend significantly more than married couples on food and specifically, food away from home.
The study also includes a table showing the per-capita outlays of both singles and married couples. It shows that the per capita outlay of singles on food away from home becomes higher when they get older.
The marital status of your target market influences your restaurant layout too. As illustrated earlier, a family with children requires a bigger table. On the other hand, singles may be more inclined towards going to restaurants with trendy interiors.
Food concepts and selection, location, marketing, as well as other aspects of your new restaurant, depends on which target market that you picked.
We hope this guide gives you a clear picture of all the target markets your new restaurant can go after.
Which target market are you going to choose and why? Take some time to think about it and share your thoughts with us in the comment section.
Please let us know too if you have any questions about choosing the right restaurant target market.