Depending upon the type of restaurant you are planning, competition can be a boost or bust.

It’s no accident the major burger chains gather in the same areas; one moves in, does well, and all the rest move in after them. You see, the first in has already done the demographic analysis of the area and knows it’s a good risk. The others piggyback without the cost of the traffic analysis, household densities, incomes, ages, mobility, eating habits . . .

On the other hand, you may have notices that in many plazas, the restaurants have leases that restrict competition. They do not want the hassle of competing or sharing the traffic.

An analysis of competition in an area you are considering can give you vital information to lessen you risk. You may be able to produce a far superior product, but if the competition is surviving because its cheque average is $10, you probably won’t compete with a $15-20 cheque average, regardless of the quality.

Menu timing may also be a consideration. The neighbourhood competition on average gets people in and served in 32 seconds (Tim Horton’s), but your superior cup of coffee takes 90 seconds to brew (and you can’t charge three times as much to achieve the same profit margin).

In other words, look at it carefully.  You have to be sure people will choose your establishment over the others.