Restaurant ExperienceRestuarant Concept

How Independent Restaurants Can Compete with Large Chains

Independent restaurants entering the industry may think twice when considering the large chains they compete against. After all, these restaurants have the advantage when it comes to supply chains, pricing, brand awareness, capital, and resources. 

A survey by NEXT, however, may bring good news and confidence for independent restaurants. According to an April 2022 survey by NEXT Insurance, 64% of diners have chosen to support local restaurants versus chains since the pandemic. In addition, about 54% of respondents had a favorite restaurant close in the midst of the pandemic, and 94% are planning to try a new local restaurant.

With every challenge comes blessings, and, for independent operators, those gifts came in the form of guests who wanted to support local restaurants during an unprecedented tragedy.  

The Draw of the Independently-Owned Restaurant

As always, independently-owned restaurants benefit from a local presence and, more often than not, find that the community supports those that establish themselves as a strong influence. They help the town during hardships and, in turn, receive the community’s support on an ongoing basis. Your establishment is the one they go to for family birthday parties after the local high school team wins the big game, and when a family’s health crisis looks for assistance.

The survey found varying reasons that people tend to support local eateries. These included preferring the food, wanting to support local businesses, enjoying the atmosphere, and better service. Additional reasons include locally-sourced ingredients and knowing the owners and workers. 

When asked why they choose specific restaurants, their answers ranged from food quality and interesting flavors to quality of staff and convenience. According to the NPD Group and Restaurant Dive, independent restaurant locations represent about 53% of the restaurant industry. This group saw a 1% increase in 2021, amounting to almost 2,900 units.

There are many ways that independent restaurants compete with big chains. Let’s look at the top considerations. 

Dynamic Menus and Flavor Profiles

Large restaurant chains succeed because they’ve developed a standardized menu that guests can count on across all locations. They know when they walk into an Applebee’s, they can get a special on handcrafted burgers and boneless wings along with craft beef for the big game. 

Local, independent restaurants have the opportunity to stand out with unique, locally-sourced menu items that change based on availability and the seasons. Smaller eateries can experiment with unconventional flavor profiles and more easily adapt and change their menus that guests remember and tell their friends about. You can also pursue niche vendors and local suppliers that can keep you in the loop of locals’ trending tastes. Even better, start a local trend at your restaurant. 

A Hole in the Wall

While this may not sound like a reputation you want to pursue, numerous TV shows have been built around finding the best “hole-in-the-wall” restaurant in towns and cities. In fact, “Best hole in the wall restaurant near me” is a common Google and Yelp search. 

For example, according to Yelp, one of the best laid-back restaurants in Chicago is Pinched on the River, a restaurant with a beignet bar featuring Mediterranean food and an eclectic menu. While not always the case, most hole-in-the-wall restaurants are small, obscure, and off the main street. However, what they lack in curb appeal, they make up for in outstanding and unique food. 

When setting up your marketing plan and restaurant strategies, consider the chains near you and how you can use your advantages to draw in the local crowd. 

The Personal Touch

One of the aspects customers love best about independent restaurants is the opportunity to get to know the owners, their families, and the staff in a personable manner. If appropriate, consider decorating your establishment with old town pictures or gatherings of groups of friends. Depending on your concept, you may include family artifacts on the wall or simply decorate the restaurant with an inviting and unique approach. This is one of your biggest advantages over chains—the personable, one-of-a-kind experience. Personal touches include staff that remembers customers’ names and chefs or owners who stop by their tables. 


How does an independent restaurant differ from a chain?

One parent company owns all the business units in a chain restaurant. Independent owners operate individual restaurants. Two top upscale restaurant chains include Nobu, founded by Nobu Matsuhisa, Robert De Niro, and Meir Teper, and The Capital Grille. The Capital Grille was founded by Ned Grace in 1990 as an upscale steakhouse in Providence and was acquired by Darden Restaurants in 2007. 

What are the advantages and disadvantages of an independent restaurant?

Owning an independent restaurant gives you full reign over the establishment, including the menu, branding, and experience. The disadvantage is comparable. You have complete control over your restaurant and also full responsibility.   

  • Subscribe to our latest insights


Are you capital raise ready?