Restaurant market research is crucial for restaurant startups. The path from concept to profitable reality is often more winding than expected. While established restaurants can analyze existing customer data, restaurant startups face a unique challenge: identifying and attracting their ideal customers before serving their first meal. This guide explores how new restaurants can navigate this critical challenge during their crucial first years.
Starting with a Blank Canvas
The freedom of starting fresh comes with its own complexities. Without existing customer data to analyze, restaurant startup must make educated predictions about their restaurant target market. This blank canvas also offers unique advantages—the ability to design every aspect of your restaurant around your intended audience from day one.
Consider Dishoom, which opened its first restaurant in Covent Garden in 2010. When cousins Shamil and Kavi Thakrar began planning their restaurant, they faced a particularly challenging question: how to stand out in London’s already saturated Indian restaurant market. Instead of following the traditional curry house model, they identified a unique opportunity: recreating the experience of Bombay’s historic Irani cafés, establishments that once served as democratic spaces where people from all walks of life would gather.
Pre-Opening Restaurant Market Research on a Startup Budget
While established restaurants can invest in sophisticated restaurant market research tools, restaurant startups need to be more creative and capital-efficient. Dishoom’s approach demonstrates how thoughtful restaurant market research doesn’t always demand deep pockets.
Before opening their first location, the Thakrars spent considerable time understanding how Londoners viewed Indian dining. They discovered that while many loved Indian food, the market was largely split between high-end fine dining establishments and traditional curry houses, with little in between. More importantly, they noticed that younger urban professionals were seeking dining experiences that offered both authentic food and a compelling story.
Understanding Your Financial Constraints
For restaurant startups, identifying your restaurant target market isn’t just about demographics—it’s about finding customers whose expectations align with your financial realities. Dishoom made a crucial early decision: rather than competing directly with either high-end or budget Indian restaurants, they would create a new category altogether—all-day dining that combined casual comfort with theatrical touches.
This positioning allowed them to command premium-casual prices while maintaining broad appeal. Their breakfast offering, including their now-famous bacon naan roll, helped spread fixed costs across more trading hours while attracting a diverse customer base.
Testing Your Concept Before Opening
Modern restaurant startups have advantages their predecessors lacked. Before their full launch, Dishoom tested various elements of their concept through small-scale events and pop-ups. These trials revealed that customers were particularly drawn to the storytelling aspects of their concept—the detailed backstory of each location and the cultural history woven into the menu and décor.
Building Your Opening Strategy Around Your Restaurant Target Market
Your grand opening isn’t just about getting people through the door—it’s about attracting the right people who will become regular customers. Dishoom’s initial marketing focused not on traditional advertising but on building genuine connections with local food writers, bloggers, and influencers who appreciated their attention to detail and authenticity.
They also made the bold decision not to take reservations for dinner (except for larger groups), creating a buzz through their queue system that became part of the experience. While risky, this strategy aligned perfectly with their restaurant target market’s appreciation for democratic dining spaces where everyone waits their turn, just like in the original Irani cafés.
Understanding Market Segmentation: Beyond Demographics
Market segmentation in the restaurant industry goes far deeper than simple demographics. Dishoom’s success wasn’t just about targeting a specific age group or income level—it was about understanding the intersecting layers of their potential customers’ identities, behaviors, and motivations. For restaurant startups, effective segmentation can mean the difference between a packed house and empty tables.
The Modern British Diner
Today’s UK dining market is remarkably complex. The same customer might seek a quick £5 lunch on Tuesday, splurge on a £50 dinner on Friday, and want a leisurely £25 weekend brunch. Understanding these shifting behaviors is crucial for new restaurants. Consider these key segmentation approaches:
Demographic Segmentation: The Starting Point
While demographics alone don’t tell the whole story, they provide an essential foundation:
Income and Price Sensitivity
- Budget-conscious diners (£15-25 per head)
- Mid-market diners (£25-45 per head)
- Premium diners (£45+ per head)
However, as Dishoom discovered, the same customers often move between these categories depending on the occasion. Their pricing strategy—keeping breakfast dishes under £12 while dinner small plates ranged from £8 to £16—allowed them to capture different segments throughout the day.
Psychographic Segmentation: Understanding Motivations
Modern British diners often define themselves more by their attitudes and interests than their income brackets:
Food Adventurers
- Actively seek new cuisines and flavors
- Value authenticity and storytelling
- Share dining experiences on social media
- Influenced by food media and critics
Health-Conscious Diners
- Prioritize nutritional information
- Seek dietary-specific options (vegan, gluten-free)
- Value ingredient sourcing and transparency
- Willing to pay premium for “clean” eating
Experience Seekers
- Value ambiance and setting
- Interested in the story behind the food
- Looking for shareable moments
- Prioritize service and atmosphere
Behavioral Segmentation: When and Why They Dine
Understanding dining patterns and motivations helps shape your service model:
Occasion-Based Segments
- Quick lunch crowds (30-minute turnaround)
- Business meeting diners (longer stays, higher spend)
- Special occasion celebrants (evening, weekends)
- Social gatherings (groups, sharing plates)
Frequency-Based Segments
- Regular weekday diners (value consistency)
- Weekend social diners (value atmosphere)
- Special occasion only (value uniqueness)
- Tourist/one-time visitors (value experience)
Geographic Segmentation: Location Matters
In the UK market, geographic considerations go beyond simple location:
Urban Considerations
- City centre business districts (lunch trade)
- Residential areas (evening and weekend focus)
- Tourist zones (all-day trading, experience focus)
- University areas (price sensitivity, late hours)
Regional Variations
- London vs. regional cities spending patterns
- Local cuisine preferences and competition
- Tourist vs. local population mix
- Transport links and accessibility
Digital Behavior Segmentation
In today’s market, understanding digital behavior is crucial:
Digital Engagement Levels
- Social media sharers (Instagram-worthy presentation)
- Online reviewers (service consistency crucial)
- Digital booking preferences (app vs. phone vs. walk-in)
- Delivery service users (packaging, travel-friendly menu)
Practical Application for Restaurant Startups
When applying segmentation to your restaurant startup, consider these strategies:
- Primary and Secondary Segments
Rather than trying to serve everyone, identify your primary segment for initial focus, with clear secondary segments for growth. Dishoom primarily targeted experience-seeking young professionals but remained accessible to special occasion diners and tourists. - Segment Compatibility
Ensure your chosen segments don’t conflict. A restaurant can’t effectively be both a quick-service lunch spot and a lingering dinner destination unless the concepts are clearly separated, as Dishoom managed with their distinct breakfast and dinner services. - Segment Value Assessment
Evaluate each segment’s potential:
- Average spend per visit
- Visit frequency
- Group size patterns
- Peak time preferences
- Marketing responsiveness
- Testing and Validation
Before full launch, test your segment assumptions:
- Run pop-up events targeted at specific segments
- Conduct focused social media campaigns
- Gather feedback from segment representatives
- Test pricing and menu items with target groups
Evolving with Your Segments
Remember that market segments aren’t static. Regular review of your segmentation strategy is crucial:
- Monitor segment behavior changes
- Track segment profitability
- Identify emerging sub-segments
- Adjust offerings to match evolving preferences
In the end, successful segmentation isn’t about creating rigid categories—it’s about understanding the fluid nature of modern dining behavior and creating a concept flexible enough to capture value across compatible segments while maintaining a clear, focused identity.
Your segmentation strategy should inform everything from menu design to service style, marketing approach to operating hours. It’s not just about knowing who your customers are—it’s about understanding how to serve them in a way that creates lasting value for both your customers and your business.
The Reality of Market Evolution
Even with careful planning, your restaurant target market may shift during your first year. Dishoom discovered that their concept attracted a broader audience than initially expected. Their breakfast service, originally conceived as a way to maximize restaurant utilization, became a significant draw for business meetings and leisure diners alike. Rather than resist this evolution, they embraced it, expanding their breakfast menu while maintaining their core concept.
Making Decisions with Limited Data
Unlike established restaurants that can analyze years of sales data, restaurant startups must make crucial decisions based on limited information. This requires a balance of research, intuition, and quick adaptation:
- Start with clear hypotheses about your restaurant target market
- Test these hypotheses through low-cost experiments
- Create feedback loops to quickly gather customer insights
- Be prepared to adjust your concept within your core vision
Looking Ahead: Planning for Growth
While immediate survival is crucial, successful restaurant startups also plan for market evolution. Dishoom’s experience shows how a well-defined initial restaurant target market can provide a foundation for growth. Their focus on creating an authentic, inclusive dining experience attracted an audience that helped them expand from one location to multiple sites across London and other major UK cities.
Consider how your target market might change as your restaurant establishes itself:
- What natural extensions of your concept might appeal to adjacent markets?
- Will your initial market help you attract a broader audience?
- How might local developments affect your customer base?
Technology Choices for Restaurant Startups
Dishoom’s technology choices reflected their restaurant target market’s expectations while considering budget constraints. They invested in a robust booking system for large groups while maintaining their no-reservations policy for smaller parties. Their queue management system, initially a source of concern, became a defining feature that built anticipation and community among waiting guests.
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