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How to Determine Your Bar’s Potential Market

It may seem like a no-brainer to pattern your bar after the other ten that are on the same street, but it’s not a given. What if you could do much better by opening the only falafel-and-margarita bar in town? Okay, maybe that won’t work, but what will?

What type of bar clientele do you want?

Decide who you want your customers to be and make sure your concept is likely to appeal to them. Figure out what demographic group(s) you’re likely to attract. The term demographics describes characteristics or traits shared by a group. A demographic group includes people within a specific age range or income level, or who share other distinguishing traits like gender or marital status.

Over time, build a profile of your desired patrons and tweak your concept, as appropriate, to appeal to this group. Figure out where they eat and drink. Discover what motivates their decision to choose one place over another. Find out what kind of entertainment choices they opt for.

How to use competitive analysis for bars

Many businesses adopt some form of a competitive analysis process, a process that compares them to their competition. Sometimes they look at specific parts of their business, say, comparing their respective happy-hour offerings.

Or maybe they compare their overall concepts. Whatever the case, you need to develop a tool to help you see what’s going on objectively. The following is an example of how to set up your own competitive analysis.

Use the criteria we’ve chosen, or adapt it to your own concept to do an objective study of the competition. Study each of your competitors and create an easy-to-read spreadsheet so you can quickly compare them.

Criteria Ray’s Rec Room The Library, a Campus Bar
Hours of operation 11 a.m. to 2 a.m.; closed Sunday Noon to 4 a.m.; closed Sunday
Beers on tap 8 2 (light and regular)
Beers in bottle 6 2 (light and regular)
Food menu Pub grub, with great wings and burgers Cheese fries, burritos, and garlic cheeseburgers
Cocktail menu 6 signature cocktails, specializing in martinis None
Wine list 8 total by the glass, 4 red, 4 white None
Location Close to downtown, across from the stadium Across from the student union
Targeted demographic Affluent, regulars Students
Entertainment Flair bartenders Garage bands on weekends, jukebox, pool, “Pacman”
Happy hour None 6–9 p.m. Thursdays, $1 32-oz. pitchers
Promotions None Free cover with student ID
Special draw None Close to campus

Scratch that niche: How to identify an opportunity

After you get all your information together about the bars in your area, you need to focus your plan (including your business plan and marketing plan) on capitalizing on your strengths and exploiting the competition’s weaknesses.

Here are some ideas to get you started on identifying your niche (what you offer that your competitors don’t):

  • Look for anything missing that you may be able to provide. In the example, both bars are closed on Sunday. Maybe you decide this town needs a sports bar where people can watch their favorite teams play on Sunday.

  • Think about things that are missing for some groups of customers but present for others. For example, a 30-something who wants to play pool on a Friday night has no options based on the info. So you may want to consider creating a bar with pool tables, darts, and shuffleboard designed for that particular demographic group.

  • Pay attention to the breadth of the offerings. Although both bars in our example serve beer, neither bar has a huge variety. Maybe that could be your thing. Set up 40 (or more) tap handles of local faves, and you’re in business.

  • Consider just how you’re going to be different or better. Carefully consider your market differentiation. If you think you’re going to open a bar just like the place down the street and the customers will come to you because of your bright smile, you may want to rethink your concept. What makes you special?

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