David vs. Goliath: Lessons from Independent Restaurants
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