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Market Analysis Summary

The market can be divided into two market segments, families and individuals. Families will comprise the majority of dinner time business with individuals making up the majority of lunch time business.

Kona-Q will be operating within the fast-casual niche of the restaurant industry. They will be competing against other segments within the industry such as fast food as well as more traditional sit down restaurants.

4.1 Target Market Segment Strategy

Kona-Q will be focusing on families and individuals for several specific reasons. Most dinner service is for families.

As more households become two income families, the adults have less time to prepare meals. Going out to dinner eliminates the need to prepare a meal and offers time to catch up with each other.

The lunch business is driven by individuals. Many go out to lunch to get out of the work setting. Others have business meetings at lunch. This creates a large market of potential customers that is especially attractive.

4.2 Market Segmentation

The market has been segmented into two distinct groups.

Families: forecasted to contribute 67% of the dinner time revenue.

  • Have 2.4 children
  • >$50K in household income
  • 67% have an undergraduate degree
  • 26% have graduate level coursework
  • Go out to eat 1.6 times a week
  • Dinners out are used as a meal replacement since neither parent has time to cook a meal at home
  • Sophisticated families that live within three miles of the site

Individuals: comprise 69% of the lunch time revenue.

  • Ages 19-47
  • Individual income average is $36,000
  • 72% of the individuals over 23 have an undergraduate education
  • Eat out 2.3 times a week
  • Young professionals that live near the location
  • Shoppers who patronize the nearby high rent stores
Healthy restaurant business plan, market analysis summary chart image

Market Analysis
2003 2004 2005 2006 2007
Potential Customers Growth CAGR
Families 9% 26,585 28,978 31,586 34,429 37,528 9.00%
Individuals 8% 33,654 36,346 39,254 42,394 45,786 8.00%
Total 8.45% 60,239 65,324 70,840 76,823 83,314 8.45%

4.3 Service Business Analysis

Kona-Q operates within the large restaurant industry. While the industry has its upswings and downturns, the variance is less than the economy itself. People need to eat, they can eat in and save money, but the convenience of dining out creates a significant incentive. This is not to suggest that restaurants are recession proof, they are less affected by the general state of the economy.

Within the restaurant industry there are several different segments:

  • Fast food: McDonalds, Burger King
  • Pizza: delivery and dine in
  • Buffets: all you can eat
  • Lounges: combining food and alcohol
  • Fine dining: typically at the highest price point
  • Fast-casual: combination of fast service and sit down dining

Kona-Q operates within the relatively new fast-casual segment. This segment has grown in response to the increased need for quality food, in a sit down environment, but with fast service. This is a recognition that many of the customers are dining out because they do not have the time to cook themselves.

4.3.1 Competition and Buying Patterns

Kona-Q faces competition from a variety of competitors:

  • Fast food: Offers the convenience of fast service. The food product is not competitive, but people are often willing to sacrifice quality for convenience.
  • Take out: Take away service allows a customer to enjoy already prepared food in their home.
  • Sit down dining: For customers that have the time to have a leisurely meal. Food service takes longer and the menu options are more extensive.
  • Sandwich shops: Considered to be part of the fast food segment, they are a direct competitor of Kona-Q as their food product is more healthy than the fried alternatives of fast food. This competition comes primarily during lunch hours.
  • Grocery markets: Serving prepared foods.

Customer buying patterns typically revolve around several different factors:

  • Location: The restaurant is located near to work or home.
  • Convenience: People eat out as it is quicker than preparing a meal themselves. Factors of convenience relative to sit down restaurants are the time it takes to be seated, served, and the hours of operation.
  • Quality: The menu items must meet minimum levels of quality for people to be willing to spend money on the food, particularly when there are so many different options available.