David vs. Goliath: Lessons from Independent Restaurants

Discussion
Jul 05, 2006
Al McClain

By Al McClain


Remember the old adage that if you were going to be a bully, you’d better be really tough and/or smart, because sooner or later you would run into someone bigger and stronger
than you? In retailing, just about everyone has a number of larger competitors, so it’s important to think creatively. Being average, or even a little better than average, isn’t
going to cut it because ties go to the chains, with their large advertising budgets and familiarity to the consumer via hundreds if not thousands of locations.



Sidebar: The National Restaurant Association says there are 925,000 restaurant locations in the U.S.; there are 12.5 million industry employees in the
U.S. (largest employer besides government); and more than 70 percent of restaurants are single-unit locations.


Well, if you aren’t the biggest retailer in your category (and maybe even if you are), you should be able to pick up a tip or two from a recent article on BusinessWeek.com discussing how independent restaurateurs can better compete. In the article, Joe Erickson, editor of RestaurantOwner.com, says the number one idea is to nurture customer relationships, by collecting customer names, special occasion dates, and food preferences that can be used for direct mail.


John Foley of The Restaurant Blog on AllBusiness.com says changing the menu frequently is important, providing an adventure for returning customers, and differentiating a business from the chains.


Here are some additional ideas from independent operators interviewed by Business Week:


From West Side Fish ‘n Chips, Huntsville, Ontario, Canada: “No Peek” envelopes given to customers at end of a meal with reward offers redeemable only when they make a repeat visit. They also do a “customer of the week” program.


From Tony Boombozz (gourmet pizza), Louisville, Kentucky: Use the freshest and highest quality ingredients you can afford – customers will notice the difference.


From Voodoo Doughnut (a 24 hour operation catering to party-goers), Portland, Oregon: Don’t pay for advertising – get TV appearances and interviews instead.


From Tortilla Press (high-end Mexican food), Collingswood, New Jersey: They host a “Farm to Fork” dinner, serving a five-course meal made with local products.


From Brewed Awakenings (coffee house), Appleton, Wisconsin: Develop personal relationships with employees, which build spirit that customers appreciate.


From The Girl and the Fig (upscale Mediterranean), Sonoma, California: Avoid “cookie-cutter” employees – encourages staff to wear what they want and give honest menu recommendations.


Moderator’s Comment: What Tip do you like best for helping independent operators compete? (The idea can be from the above list, or your own.)


Obviously, there is no idea that’s going to revolutionize the restaurant business or provide the secret formula that independents can use to beat chains.
But big chains have big R & D departments – everyone else has to use any means necessary to beg, borrow, and steal ideas. The web is a great tool, and I’d advise small retailers
of any size to devote at least 30 minutes a day just brainstorming and looking on the ‘net for the good ideas of others.


My favorite from the above list is the “No Peek” reward envelope. What a great way to add a sense of excitement and mystery to the experience! And, if the
customer occasionally gets something really neat, they’ll have a hard time not coming back for the pleasure of opening up the mystery offer. For new customers, it’s no doubt wise
to ensure they get a really great prize the first time out.
– Al McClain
– Moderator

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9 Comments on "David vs. Goliath: Lessons from Independent Restaurants"


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M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
14 years 7 months ago
So, restaurant pundits believe that familiarity – rather than anonymity – is key to success. When have you ever walked into a restaurant “where everybody knows your name” (other than New York or Boston-based sit-coms, that is)? And if so, would you want that to be a fast food restaurant? There are more pizza restaurants than any other type in the U.S., and most of them are takeaway or delivery (i.e. “fast food”). That’s customer recognition? Do they say “Hi, Mr. Pepperoni With No Green Peppers?” “Yo, XYZ Pizza Rules, Dude!” How about the Billy Goat Tavern on lower Michigan Ave. in Chicago? “Cheezborger, Cheezborger, no Pepsi, Coke!” (if you need to be reminded of this reference, many of us grieve for you, as we do for John Belushi). So many late nights and greasy waxed paper wrappings there. But they never knew my name or those of any of the other degenerates. And White Castle “sliders.” Can you eat more than Kumar? (Anyone who’s eyes are glazing over is advised to leave now.) After… Read more »
John Manor
Guest
John Manor
14 years 7 months ago

Surveying has made a critical difference in our catering and restaurant business. We survey everyday through a web based interface asking whether we met, exceed or did not meet expectations. Our response rate is terrific and we learn an enormous amount about our customers needs as well as are able to address specific complaints. We all know that an unhappy experience handled correctly improves customer loyalty.

Dan Nelson
Guest
Dan Nelson
14 years 7 months ago

It always goes back to the customer and why they choose to spend money and time based on the combination of cost vs. experience.

The key is to be distinctive and best at something very compelling to your shoppers.

Disney is a great example. Many, many people go to Disney World year after year because Disney provides a vacation experience they can not get elsewhere. Those customers find the “value” of loyalty to Disney as solid, even though ticket costs are not cheap. Disney sells a unique, differentiated shopping experience, and they work very hard at being the best of class in that offering.

The same holds true for restaurants and retailers. Know what’s most compelling and important to your customers, and work hard at being the best alternative in serving those needs.

Jeremy Sacker
Guest
Jeremy Sacker
14 years 7 months ago

Everyone’s points are valid. The key is know your customers, as it is in any retail environment. There are too many “me too” concepts and independents on the market. Friday’s, Applebee’s, Ruby Tuesday, Chili’s – can you tell them apart? Then there are the local copy cats.

Again, the key is know your customers. This may seem like an over simplification, but look at Target. Does anyone argue that their target customer is 30s to 50s mothers?

David Zahn
Guest
14 years 7 months ago

Before answering the question, we need to return to the same precepts and concepts we often rely upon – what makes your customers choose you over others? What works in one outlet may not apply elsewhere.

I would NOT want the no peek envelope if I was a customer of a fine dining establishment (too gimmicky) – but if I were searching for a nachos and wings or a beer and a burger restaurant – it might apply.

The offer should match the tone and personality of the business. So, it is less about “do these three things and success is guaranteed,” and more about learning why people shop or use you (and why they don’t).

David Livingston
Guest
14 years 7 months ago

Working with a lot of successful independent supermarket operators, I have found a consistent common denominator. One thing just about all of them do right is make people feel good about themselves when they are in the store. People will always gravitate towards those who make them feel good.

Mark Lilien
Guest
14 years 7 months ago

The most labor-intensive retail category: restaurants. The highest staff turnover retail category: restaurants. Treat your staff reasonably and you get to be choosy about whom you employ. Reduced turnover leads to less stress which leads to even less turnover. Customers like to eat at restaurants where the staff knows what they’re doing and likes to be there. Most customers don’t want to eat at places where the staff act like untrained prison labor or uncaring temps.

Race Cowgill
Guest
Race Cowgill
14 years 7 months ago
In any retail segment, It is easy to lose sight of the core elements of how the business works and execute those elements well. Our research shows that the core elements of restaurants are food taste (which is more correlated to recipes rather than to ingredient quality and freshness), food presentation, cleanliness and atmosphere, and service times. And other of our research shows that 89% of all restaurants execute these core elements at a 70% level or worse. In other words: your biggest opportunity, by far, is to execute the core elements of your business better. Forget the gimmicks. The same applies to retail in general (where 91% of all retail outlets execute at 70% or worse). But it appears that: 1) retail wearies of hearing this said over and over, and has stopped listening, 2) retail has a difficult time figuring out what they aren’t doing well and why (because the Master System controls this information), and 3) it then becomes simply more fun to focus on either minor, trendy ideas or on intricate… Read more »
Bernice Hurst
Guest
14 years 7 months ago

People eat out as a treat, a time saver, a way of being looked after rather than doing the looking after. This applies right the way along the line from fast food to fine dining. Treating customers right – and particularly feeding them right – is what matters. Gimmicks may help and I agree that the no peek envelope would have an appeal to certain people in certain places as well as other appropriate freebies but good food and good service will win every time.

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