How the TAM-SAM-SOM Framework Can Help You Scale in the F&B and QSR Sectors

In today’s competitive business landscape, having a clear understanding of your market potential is critical to scaling successfully. This is especially true in the Food & Beverage (F&B) and Quick Service Restaurant (QSR) sectors, where customer preferences, competition, and operational costs are key drivers of growth. The TAM-SAM-SOM framework is a strategic tool that helps businesses evaluate their market size and plan their growth trajectory effectively.

In this article, we will explore the TAM-SAM-SOM framework, how it can be used specifically within the F&B and QSR sectors, and share real-world examples of companies that have successfully leveraged this concept, including my own experience launching a multinational restaurant brand in challenging markets, as well as during my entrepreneurial journey with Auli Services Private Limited, which brought the urban café experience to remote areas of India.

Introduction to the TAM-SAM-SOM Framework

The TAM-SAM-SOM framework breaks down a business’s market potential into three key segments:

• TAM (Total Addressable Market): This is the total market demand for a product or service if your business had no limitations in terms of competition or geography. It’s a high-level view of the total opportunity.
• SAM (Serviceable Available Market): This is the portion of the TAM that your product or service can address, given your business’s geographic or operational constraints.
• SOM (Serviceable Obtainable Market): This is the realistic share of the SAM that your business can capture in the short to medium term, taking into account competition, marketing reach, and resources.

This framework helps businesses make informed decisions about where to focus their resources and how to scale strategically. By understanding each level of market potential, companies can optimize their expansion plans, marketing efforts, and investment strategies.

Using TAM-SAM-SOM in the F&B and QSR Sectors

The F&B and QSR sectors face unique challenges due to high operational costs, shifting consumer preferences, and the need for rapid scalability. The TAM-SAM-SOM framework can be a powerful tool to evaluate opportunities, focus on the right market segments, and drive efficient growth.

TAM in F&B/QSR: The TAM for an F&B or QSR business would be the entire potential market for your food product or service. For example, if you’re launching a fast-food chain, your TAM would include all potential customers in the country who eat out regularly, across all demographics and regions.

SAM in F&B/QSR: Your SAM would narrow this down to the customers your restaurant can realistically serve based on factors like geography, menu offerings, and customer preferences. For instance, if you’re operating in metropolitan areas, your SAM might focus on urban diners who prefer quick-service food options.

SOM in F&B/QSR: Finally, your SOM would be the specific share of the market you can realistically capture within a given timeframe, taking into account your competition and marketing reach. For example, if you’re opening a health-focused café in a particular city, your SOM would focus on health-conscious consumers who are actively seeking nutritious and quick dining options.

Examples of F&B and QSR Companies Using TAM-SAM-SOM

Several F&B and QSR companies have successfully applied this framework to scale their operations:

Starbucks: Starbucks initially identified its TAM as the entire coffee-drinking population globally. Its SAM, however, was coffee drinkers in urban areas who were willing to pay a premium for high-quality coffee in a convenient, welcoming environment. The SOM was the share it could realistically capture through targeted store expansions in high-traffic locations and its focus on customer experience. This strategic approach allowed Starbucks to grow exponentially, becoming a global leader in the coffee industry.

Domino’s: Domino’s focused on its SOM by using data analytics to optimize delivery routes and improve customer service. While its TAM included all pizza consumers globally, the company honed in on its SAM by focusing on markets where its delivery model was most effective. By refining its SOM, Domino’s expanded to become one of the top pizza brands worldwide.

Examples from Outside the F&B/QSR Industry

The TAM-SAM-SOM framework is also widely used outside the F&B sector:

Amazon: Amazon’s TAM was originally defined as the global retail market. Its SAM narrowed this down to consumers who were willing to buy goods online. The SOM was its share of the e-commerce market, which Amazon expanded by offering faster shipping, an unmatched product variety, and a user-friendly experience.

Tesla: Tesla’s TAM includes the entire global automobile market. The SAM was narrowed down to electric vehicle (EV) enthusiasts and consumers interested in sustainable energy solutions. The SOM focused on premium car buyers, which helped Tesla gain market share by targeting the luxury EV segment.

Personal Experience: Launching Multinational Brands in Challenging Markets

From my personal experience, I’ve used the TAM-SAM-SOM framework to successfully launch multinational restaurants in challenging markets like Kurdistan, where the political and economic environment posed significant risks. By identifying the TAM the total market for international dining options and refining the SAM to focus on urban centers with an appetite for new cuisines, we could identify specific areas with a viable SOM that would support a successful launch.

Additionally, during the COVID-19 pandemic, I embarked on a journey of entrepreneurship and along with my Co - Founder we launched Auli Services Private Limited, a company that runs Auli Cafés in remote areas of Uttarakhand. Our goal was to provide the same high-quality café experience that people enjoy in urban India, but in a remote setting, giving locals and tourists access to premium products. Through extensive research, We identified the TAM as the entire café-going audience in India, but refined our SAM to focus on untapped regions in rural India where café culture was absent. By focusing on our SOM, we became the first café brand to emerge from a remote region and later expand into urban India, reversing the typical urban-to-rural growth trajectory.

In another project, I launched a Sushi Cloud Kitchen Concept in Kuwait, offering a niche product at half the price point of traditional dine-in sushi restaurants. The TAM included all potential sushi consumers in Kuwait, but we honed our SAM by focusing on delivery-first customers who wanted high-quality sushi at an affordable price. By understanding our SOM, we targeted young, tech-savvy professionals who preferred delivery over dine-in experiences, ensuring success with a highly focused marketing and operational approach.

Conclusion

The TAM-SAM-SOM framework is an invaluable tool for scaling businesses, especially in the fast-paced and competitive F&B and QSR sectors. By clearly defining your market potential, understanding the serviceable portions, and realistically estimating your market share, businesses can make informed, strategic decisions that drive growth efficiently.

Whether you’re a startup, an established brand, or looking to enter new markets, using this framework can help ensure that your resources are focused on the areas with the greatest potential for success. My personal experience in applying this framework has shown me its power in transforming not just the strategy, but the trajectory of a business.

This approach enables businesses to navigate complex environments, like launching in remote regions or introducing niche products, and find sustainable paths to growth.

Disclaimer:

The information presented in this article is intended for informational purposes only. The views expressed are based on the author’s research and experience in the Food & Beverage industry. While efforts have been made to ensure accuracy, the author and publisher are not responsible for any errors, omissions, or any outcomes related to the application of this information. All brand names and trademarks mentioned are the property of their respective owners. This article does not constitute professional or legal advice. Readers should consult appropriate professionals for specific advice tailored to their situation.