CHAPTER 2:

MARKET SURVEY
At the end of the class student will be able to explain:
• To determination what a market survey
• To identify the Preliminary Steps and explain which areas of analysis
• To elaborate all the Factors affecting menu planning
MARKET SURVEY

A market survey provides a detailed analysis of the customer,

the community, and the physical location of the
foodservice operation.
Food service operators must perform a market survey to acquire information about a
particular location and the type of resident who live there, so they can establish a food
service operational concept that will meet the needs of their target market.
PRELIMINARY STEPS

There are to basic steps in preparing a market survey:

a) The first step is to

establish the style and the type of
foodservice operation or concept.
b) The second step is to
determine the community’s needs
or demand for such a foodservice operation.
PRELIMINARY STEPS

The foodservice planner needs to address

many issues, such as:
 Amount of capital to be invested
 Style of menu
 Regulations for operating on a daily basis
 Type of clientele
 Architect
 Type of cuisine
 Lawyer
 Style of atmosphere
 Accountant
 Style of interior decor
 Chef
 Expense of food, labor, and overhead
 Staff
 Desired profit
AREAS OF ANALYSIS

CUSTOMER,
COMMUNITY,
PHYSICAL LOCATION OF THE FOODSERVICE OPERATION.
 CUSTOMER

The customer is one of the most important elements

of a foodservice operation. It is the customer who
ultimately determines the operation’s success or failure.
The customer(s) is also known as the market.
Key factors to consider about customers
include :
 Desired market
 Food preferences
 Market classifications
 Education
 Disposable income
 Religious orientation
 Gender
 Ethnicity
 Age
 Occupation
 Gender
 Arrival patterns
 Age
 Preferred days for dining out
 Social habits
DESIRED MARKET

 The owner must decide on the desired market/customer(S) that the

foodservice concept is to attract.
 It is important to establish the market early in the business plan so
that every aspect of this plan answer the wants and needs of the
targeted customer.
 The greater the owners’ knowledge and understanding of the customer,
the better the service provided because the operation will satisfy the
need of customers that existing establishments currently do not meet.
 The ultimate goal of any marketing plan is to provide an excellent dining
experience that satisfies the customer.
 Satisfied customers are the key to a longer and more profitable
existence.
 MARKET CLASSIFICATIONS

 People born in between 1946

and 1964 are know as (baby
boomers).
 Those are born between 1965
and 1979 are called(gen x).
 Individuals born between 1980
and 1995 are referred to as
Gen Y or millennial.
 People within each of these
generations have unique yet
common needs and desires.
DISPOSABLE INCOME

 Disposable income is the

amount of income that remains after takes and
personal bills have been paid.
 It is also called entertainment, fun, or luxury money.
 The greater the income a market has, the greater the amount of disposable income
available for dining.
 To estimate a market’s disposable income, research the demographic information of the
targeted community, and review the information under the category “Household
Income.” Disposable income typically reflects a household’s income bracket.
 Information on disposable income is helpful in forecasting the annual sales for he financial
statement of a business plan.
 GENDER

 A knowledge of the gender of patrons who will frequent

the foodservice establishment is another important
consideration when preparing is a business plan.
 Gender influences many decisions within the
business plan, including the type of layout for the
foodservice operation, the size of the chairs, the
interior design color scheme, and the type of cuisine
and portion size of food item to be served.
 These factors assist the owner in determining the marketing
and merchandising methods needed to generate sales.
AGE

As people age, their desire and dietary and

emotional needs change. Each age group---
baby boomers, gen x, gen y– has a different
point of view on dining preferences.
 The type of cuisine and food selection.
 Price.
 Portion size.
 Nutrition and nutritional requirements.
 Style of atmosphere.
SOCIAL HABITS

An understanding of how the market

socializer helps to determine the
type and style of entertainment
that should be offered.
FOOD PREFERENCES

 Knowing the food and/ or cuisines that a target market

prefers is also imperative’ in achieving success.
 By collecting menus from several foodservice
operations that have similar concepts and looking
for items listed on the majority of these menus, it is
possible to deduce that there items sell well.
 If five out of seven menus list French onion soup, it may
be a good idea to include French onion soup as one of
the hot soups.
 If beef outsells poultry, consider placing more beef
dishes on the menu. Use this same concept with all the
other categories on the menu.
EDUCATION

 People who have a higher level of education tent to be

more receptive to new ideas and to trying something
new. over their life spans, they also earn more money
and have a higher lever of disposable income to dine
out more often.
 Knowing the targeted market’s educational
background also allows for the use of more
appropriate language in designing the descriptive
copy of items on the menu.
 The staff’s level of education, however, dictates the
type and training method(s) that must be provided.
RELIGIOUS ORIENTATION

 Some religious cultures have laws that restrict the

consumption of particular food items and the method of
preparation of others.
 Knowing customers’ religious backgrounds can help to
build sales.
 If it is known that a large number of patrons are Muslims, for
example, offering a Halal Food with Halal Certificate.
ETHNICITY

o It is impractical to open an Italian specialty

restaurant in a community that is heavily populated
by of Chinese descent, as in all probability the rate
of success will not be very high.
o Recognizing a market’s ethnic background and
offering some favorite authentic national dishes is
good way to add variety to the menu.
o Chefs may also use fusion cooking- the blending of
different ethnic dishes together- to create a more
interesting menu.
 OCCUPATION

o A Knowledge of the target market’s type of employment can assist in the planning of dishes on the
menu and their portion size.
o Customers who work in occupations that require more physical activity , such as construction, will
burn more calories on the job and require heartier portion sizes.
o Guests who expend less physical effort on the job burn less calories and may prefer food items that
contain fewer calories, fats, and sugar in smaller portions.
ARRIVAL PATTERNS
o The term arrival patterns refers to the hours at which groups of customers dine
out.
o Knowing arrival patterns allows for appropriate and adequate dining room
setup and timely turnover time that allows for increased covers and greater
sales.
o A knowledge of the number of single people, couples, and parties of three or
more and the time of day at which these various group dine allows the maître
d’ to maximize dining room seating capacity.
o Tend to dine out from 4:30 p.m. to 7:00 p.m. ; large groups without children
frequent dining establishments from 7:00 to 9:00p.m; and couple often dine
between 8:00p.m and 11:00 .
o The proper arrangement of tables and chairs in dining room to accommodate
each of these group usually result in a higher turnover rate and increased sales.
 PREFERRED DAYS FOR DINING OUT

o Knowing business days are popular and which are slower helps to establish the need for
merchandising and marketing programs.
o Fridays, Saturday, and Sundays are very popular days for dining out, because people are often
paid on Thursday or Fridays and have greater disposable income and more time to go out.
o Monday is usually the slowest day of the week, because little, if any, disposable income is left
over from the weekend and time for dining out is limited.
o The key factors discussed are but a sampling of information that should be acquired on the
target market.
o The greater the understanding of the market/customer, the easier it is to satisfy customer
demands. Customers expect and an enjoyable experience when they dine at a restaurant.
Owners should go one step further and provide them with a great dining experience.
 THE COMMUNITY

The geographic region, district , city, or town from which the majority oh the foodservice
operation’s customers come is known as the community elements to study within the
community include.
 Growth rate.
 Existence of competition.
 Public services provided.
 Requirements of state board of health.
 Number families.
 Potential fro advertising.
GROWTH RATE

 If a community has a declining population, it is wise to discover the reason for the decline
and to think twice about building or operating as establishment there.
 For example, it would be mistake to build in a location where the unemployment rate is
high. High unemployment means that businesses are closing and that people are moving
elsewhere to find work.
 Other reasons not to choose a location include a high crime rate, high rents, and high
taxes.
 An investor must take into consideration the amount of time it takes to collect data and to
analyze the market survey which is approximately six months to two years.
 Existence of competition

The market survey must take into consideration two basic types of competition; direct and
indirect.
 Direct competition
Includes foodservice operations that are directly related (similar) to an operation. They
offer similar cuisine, décor, check average, capacity, and turnover rate. For example, if
the investor wants to operate a steak house, the survey should indicate how many other
steak houses there are in the community and which ones would be considered direct
competition.
 Indirect competition
Consists of foodservice operations that are not similar t that of the investor but how are
competing for the same customers. Location near indirect competition can be
beneficial. Competition analysis should be done to determine if the community can
support another operation.
 Public services provided

 To help calculate overhead expenses, the investor needs to know which public services
are covered by tax and which services will cost additional monies.
 Polices and fire protection are usually provided, but the availability and cost of other
types of services vary from one community to another.
Requirements of the state Board of health

 The Board of Health serves to protect the

public from circumstances that may place
the public’s health in danger.
 When the Board of Health inspects a
foodservice operation, it is performing a
public service for the community.
 If there is evidence of food contamination
in a restaurant, the Board of Health may
cite the operator or even shut down the
operation.
Number of families

o The number of families in a community usually indicates whether the community has
and/or growing population.
o When there are many families with children in a community, there is usually a large school
system.
o The school system can be a good source for an effective merchandising program.
Potential for advertising

 One of the key elements to a successful

advertising program is communicating on
the customers’ level.
 The amount of exposure or circulation that
each advertising method provides is
important.
 Analyze the Community’s Newspaper,
Radio Stations, Periodicals, and Television
Stations.
 THE LOCATION

 One of the first steps in choosing is to determine future needs.

 Planning ahead is vital when choosing a location.
 The needs of a foodservice operator who wants to establish a chain of operations differ
from those of an individual who want to open single operation.
 Knowing the wants and needs before looking for a location helps to eliminate much
wasted time and frustration.
 When selecting a location, an investor should first analyze the population of the state,
city, and suburban communities. Population trends may shift drastically in a city if it is
dependent on a particular industry for financial survival.
 OTHER THINGS TO CONSIDERS

Zoning
 There are three types of zones: residential, industrial, and commercial.
a)The residential zone restricts business developments for the safety of the residents who
live in the zone.
b)Industrial zones are established for large volume companies.
c)Commercial zone accommodate small volume companies.

Area characteristic
o The type of neighborhood in which an establishments is located will have a great effect
on business.
o If the neighborhoods has a high crime rate, if population is evident, or if the
neighborhood opposes development it will be difficult to succeed.
OTHER THINGS TO CONSIDERS
Sales generators
o Civic centers, theaters, and shopping malls can generate sales.

Visibility
 The visibility of a foodservice operation can reduce or increase the cost of advertising. A property that has
high visibility save on advertising cost, while one located in a city and hidden by a building requires more
advertising to let people know where it is located.

Physical characteristics
 Analyzing the land provides insight regarding the needs and the cost of development.

Size, shape, and costs

Streets and traffic information
Parking
FACTORS AFFECTING MENU PLANNING

❑ Customers satisfaction
❑ Government regulations
❑ Management decisions
Customers satisfaction

❑ Socio cultural factors

should be considered in planning menus to satisfy and give value to the customers.

❑ Nutritional influence
Provide a framework for a menu and add to customer satisfaction.

❑ Aesthetic factors
Probably the most important aspects for satisfying customers are the aesthetic factors of
taste and appearance of the menu items.
Sociocultural Factors

 Include the customs, more, mores, value, and demographic characteristics of the society
in which the organization functions.
 Sociocultural processes are important because they determine the products and services
people desire.
 Customers have food preferences that influence the popularity of menu items.
FOOD HABITS
AND  Menu planners are influenced by their own like and
dislikes of foods and food combinations rather than
PREFERENCES those of the customers.
 Food habits are the practices and associated
attitudes that predetermine what, when, why, and
how a person will eat.
 Food preferences express the degree of liking for a
food items.
Nutritional influence

 Nutritional needs of the customer should be a primary concern for planning menus for all
foodservice operations, but they are a special concern when living conditions constrain
persons to eat most of their meals in one place.
 In health facilities, colleges and universities, and schools, for example, most of the
nutritional needs of the customer are provided by the foodservice.
Aesthetic factors

 Flavor, texture, color, shape and method of preparation are other factors to consider in
planning menus.
 A balance should be maintained among flavors, such as tart and sweet, mild and highly
seasoned, light and heavy.
 Texture refers to the structure of foods and is detected by the feel of foods in the mouth.
Crisp, soft, grainy, smooth, hard, and chewy are among the descriptors of food texture,
which should be varied in a meal.
 Consistency of foods is the degree of firmness, density, or viscosity. Runny, gelatinous, and
firm describe the characteristics of consistency, as do thin, medium, and thick when
referring to sauces.
Aesthetic factors

 Color on the plate, try, or cafeteria counter has eye appeal and helps to merchandise the
food. The combination of color of foods always should be considered in selecting menu
items.
 The shape of food also can be used to create interest in a menu through the variety of
forms in which foods can be presented.
 Combination of food using different methods of preparation can add variety to the menu.
 GOVERNMENT REGULATIONS

Menu planning in some foodservice organizations will be impacted by local, state, and/or
federal regulations governing the types and quantities of food items to be served at a meal.
MANAGEMENT DECISIONS

The menu should be viewed as a managerial tool for controlling cost and production. A
number of management- related factors must be considered in its design:

1. Food cost
2. Production capability
3. Type of service.
4. Availability of food
Food cost

 Food cost is the cost of food as purchased.

 Foodservice managers in a competitive situation must be cost conscious in all areas of
operations. Because the menu is a major determinant of pricing for food items,
 The manager must be particularly aware of both raw and prepared food costs for each
menu item.
 A very important part of most food-cost accounting systems is the determination of the
food-cost percentage figure, the ratio of the cost of food sold over the ringgit received
from selling the food.
Production capability

 To produce a given menu, several resources must be considered, of

which a primary one is labor.
 The number of labor hours and the number and skill of personnel at
a given time determine the complexity of menu items.
 Production capability also is affected by the layout of the food
production facility and the availability of large and small equipment.
 The menu should be planned to balance the use and capacity of
ovens, steamers, fryer, grills, and other equipment.
 Refrigerator and freezer capacity must also be considered.
Type of service

A major influence on the food items that can be included on a menu.

A restaurant with table service will have a different menu from that of schools foodservice.
Availability of foods

 Improvement in transporting food both nationally and

internationally and in food preservation makes many
foods that were once considered seasonal available
during most of the year.
 Example: durian
Review and Discussion

a) Define market survey.

b) Give three elements about community that should be evaluated prior to building a foodservice
operation.
c) What is disposable income?