Competitive Set

Definition:

A Competitive Set, often referred to as a “comp set,” is a group of restaurants or businesses that are considered direct competitors to a particular restaurant or chain.

These competitors are typically selected based on similarities in factors such as location, target market, pricing, menu offerings, and service style.

By analyzing the competitive set, it allows restaurants to benchmark their performance against key competitors.

Additionally, it helps identify market trends and develop strategies to gain a competitive edge.

Why It Matters:

1. Market Positioning:

   Understanding your competitive set helps you position your restaurant more effectively in the market. By identifying how competitors operate, you can differentiate your offerings and target your ideal customer base more precisely.

2. Benchmarking:

   The competitive set is a critical tool for benchmarking key performance indicators (KPIs) such as sales, pricing, customer satisfaction, and online reviews. By comparing your performance against that of your comp set, you can identify areas where you excel and areas that need improvement.

3. Strategic Planning:

   Analyzing the competitive set provides valuable insights into market trends, customer preferences, and potential opportunities or threats. This information can guide strategic decisions, such as menu development, pricing strategies, and marketing campaigns.

4. Operational Improvement:

   By studying the practices and performance of your comp set, you can identify best practices and operational efficiencies that can be applied to your own business to improve service quality, customer satisfaction, and profitability.

How to Define a Competitive Set:

• Similar Concept:

  Choose restaurants that offer a similar dining concept, such as casual dining, fine dining, fast casual, quick service etc.

• Geographic Proximity:

  Include competitors within the same geographic area or region, as these businesses are likely to compete for the same customer base.

• Target Audience:

  Select restaurants that target a similar demographic, such as families, young professionals, or tourists.

• Price Range:

  Consider competitors with similar pricing, as customers often compare options within the same price bracket.

• Menu Offerings:

  Include restaurants with comparable menu offerings, such as similar cuisine types or signature dishes.

Example in Action:

A mid-range Italian restaurant defines its competitive set by selecting three other Italian restaurants within a 5-mile radius that offer a similar menu and price range.

The restaurant regularly monitors these competitors’ customer reviews, menu changes, and promotional activities.

By analyzing this data, the restaurant identifies an opportunity to introduce a new lunch special that differentiates it from its comp set, attracting more weekday customers and boosting sales.

Additional Resources & Related Terms

• Benchmarking:

  Comparing your restaurant’s performance metrics with those of competitors or industry standards to identify areas for improvement.

• Key performance indicators (KPIs)Key Performance Indicators (KPIs) are measurable values that help businesses, including restaurants, track their progress toward specific goals.

Conclusion:

Defining and analyzing a Competitive Set is essential for restaurants looking to understand their market position and improve their performance.

By closely monitoring key competitors, restaurants can benchmark their success, identify opportunities for differentiation, and make informed decisions to enhance their competitive advantage in the marketplace.