How to Conduct Market Research for Restaurant or Small Local Business on a Budget: Using Data

Before you invest time and money, you need to answer one critical question: Is there enough demand for what I am offering? In other words, are there enough potential customers in your area who will actually buy from you?

With a few simple steps from your chair, you can gather valuable insights to determine whether your business idea is viable. Here is how:

Step 1 — Understand Demand and Competition with Digital Tools

Before choosing a location, you need to know what people are searching for, where competitors are located, and whether there is enough demand for your offering. Digital tools make this process easier.

Analyse Search Trends & Local Demand

Google and Facebook provides valuable insights into what people in your target area are looking for:

• Google Trends → Use it to check seasonality and long-term interest.

• Example: If you’re opening an ice cream shop, search for “ice cream near me” in your area. A spike in summer and flatline in winter warns you to plan for seasonal revenue dips.

• Critical insight: Trends can lie. High search volume for “vegan food” doesn’t mean people will buy your $15 vegan wraps. Pair this with competitor analysis.

• Tips: You can use Glimpse , a Chrome plugin to enhance your Google Trends report.

• Google Keyword Planner + Test Ads → Focus on local intent keywords like “[Your City] + brunch spots” or “best coffee near me.”

• Red flag: If local searches are low but competitors are crowded, the market may be oversaturated.

You can also use Facebook Ads Manager to analyse your target audience.

• Use the audience insights tool to see how many people in your area engage with topics like “craft beer,” “organic skincare,” or “yoga classes.”

• Example: A vegan café idea might show 5,000 people interested in “plant-based diets” within 10km. But if 10 vegan restaurants already exist, demand may be split too thin.

• Limitation: Facebook data reflects interests, not purchasing intent. Someone who follows “luxury travel” might not spend $20 on artisanal toast.

Step 2 — Use the 15-Minute City Framework to Choose Your Location

The 15-minute city model is a urban planning framework, emphasising proximity and accessibility to essential services within a short walk or bike ride. This model helps you avoid “hidden deserts” — areas that look busy but lack your target audience.

Key Questions to Answer

• Proximity: Are schools, offices, or transit hubs within a 15-minute walk?

• Tool: Use 15mincity.ai to visualise amenities around your location.

• Example: A lunch spot near offices but no grocery stores could thrive. A bakery in a residential area with 3 existing bakeries? Risky.

• Diversity: Does the area attract a mix of people (workers, families, students)?

• Critical insight: A “balanced” area reduces reliance on one customer group.

Once you have analysed the accessibility, the next step is evaluating competitor presence in your 15-minute city zone:

• Are there too many similar businesses? → If so, differentiation will be key.

• Are there very few competitors? → This could signal low demand — or an opportunity to serve an unmet need.

Step 3 — Observe Foot Traffic and Customer Flow

Foot traffic is the lifeblood of local businesses. If you’re opening a restaurant, café, or retail store, you need to know how many people pass by daily — and where they go. A mix of on-the-ground observation and digital tools can help you analyse potential customer flow.

Google Business Profile: Reverse-Engineer Competitor Traffic

• Search for similar businesses in your target area and check their “Popular Times” graphs.

• Example: If a nearby café is packed weekdays 8–10 AM but dead on weekends, consider a weekend brunch menu to fill the gap.

• Red flag: If all competitors have empty “Popular Times” graphs, the area may lack foot traffic.

Observe Competitors Like a Detective

What to track:

• Peak hours (stand outside for 1–2 hours, multiple days).

• Customer demographics (office workers vs. families).

• What people carry out (e.g., to-go cups vs. full meals).

• Critical insight: If a competitor’s customers all leave with coffee but no pastries, there’s room for a bakery next door.

Step 4 — Estimate Demand Realistically

Why this matters: Optimistic math (“If I capture 1% of the market…”) leads to disaster.

The Formula for Realistic Estimates

Total addressable market (TAM):

• Use Facebook Ads data for audience size (e.g., 10,000 people interested in “craft coffee” within 5km).

Serviceable obtainable market (SOM):

• Apply a 10% rule of thumb: Even in hot markets, capturing >10% of TAM is rare for new businesses.

• Example: 10,000 coffee lovers x 10% = 1,000 potential customers.

Revenue per customer:

• Track competitor pricing. If the average coffee spend is $5, and customers visit 3x/week:

• 5x3visits x 1,000customers=15,000/week.

Notes: If your SOM revenue can’t cover rent + staff + food costs, pivot or find a better location.

Key Takeaways

• Data beats opinions. A “vibrant neighbourhood” means nothing if foot traffic data shows 10 pedestrians per hour.

• Look for gaps, not trends. Copying the latest fad (e.g., bubble tea shops) in a saturated market is risky. Instead, focus on solving a specific problem (e.g., ‘No healthy lunch spots near downtown offices’). Read about why solving problems should come before defining buyer personas.

• Validate continuously. Markets shift — revisit your data every 6 months.

Final Thought

Market research is not about finding a “green light” — it is about uncovering actionable risks. If the data shows weak demand but you are still passionate, pivot your idea to fill a gap (e.g., a vegan meal prep service instead of a café).

Your goal is to turn uncertainty into calculated bets, not leaps of faith.