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Running Your Business:
A Breakfast Burrito Doesn't Cut It - Why Local Flavor Is Not Sufficient To Compete With The "Formulas"
By John Hendrie

I t has always been about the Experience and the ability to differentiate, and that is why the "formula" restaurants have the edge. We may bemoan the homogenization, the lackluster fašade and ambiance, and the uninspired product and service, but the formulas have consistency, a known and familiar product, and usually an absence of surprises - the experience anticipated will usually be met. Such is the reality and the challenge to independents.

For the local pizza parlors, delis and doughnut shops, "formulas" will simply dominate, for you deal with a product that cannot be readily differentiated - a doughnut is really a doughnut (unless you have the allure of Krispy Kreme, which sadly ran into other problems) and a cup of java is really just that (unless you are a Starbucks, where it is about the experience, not the coffee). For these local establishments, initial, intense community loyalty wearies and fades over time, and convenience and familiarity prevail, leading to that take-out window.

The middle market restaurants, casual dining, at least have an opportunity for a decent battle, for the table top, menu, and environment add varied dimensions, and the "formulas" simply cannot match the diversity and, therefore, they stick with known cuisines and types - steak, sushi, Italian, Mexican, etc. So, this is the opportunity to shine and profit for the independent. But, as we know, the "formulas" have certain advantages. Beyond purchasing clout and marketing dollars, they have guidelines (the FORMULA), which dictate everything from design, to food preparation, to presentation and service. They work with norms, standards, and guidelines, for their success spells no deviation from the norm and no surprises. The FORMULA controls how they look, what they say, what they do and how they do it. As an aside, this approach is used exceptionally well in the Hotel segment with Marriott as a long standing example.

So, this becomes the challenge for the independent restaurateur in this segment of the business - how to best posture their restaurant, promote their style, indicate to the public that they reflect high standards, and that the guest experience will be unique - and, demonstrate consistency. Along a typical highway this is difficult with the mix of "formula" restaurants. Price can be a determinant. Your cuisine may offer that competitive slant, if you are only Indian Restaurant along that miracle mile. Sometimes, entertainment (an added expense) may create the traffic. Malls give the "formula" the advantage, and they then compete amongst themselves (whew). But, in your typical Destination area or downtown circuit, independents have a real opportunity to excel, if you can get that prospective patron through the door.

Local color and local ownership is fine, yet how do you sell to that wary public your "signature" establishment. There are no fine dining "formula" or chain restaurants, because they herald a top chef, top preparation and delight, a professional cadre of food service personnel and, frequently, the legendary personality of the owner. The consumer, who can afford this luxury, listens to the "buzz" and responds, for they want to be part of the experience and the lore. As we know, these types of dining establishments often are only a spark, a short flame, for the extraordinary is very hard to maintain and represents a small percentage of the industry. It is high risk, high return. But, the reputation grows and even moves on to other venues and markets. The middle market of restaurants wants this same type of "buzz" from the pyramid top and some means and statement of consistency gleaned from the "formulas" in order to make their case. The marketing dollars are tight, though.

There are no magic answers. Your marketing has to be a mix. You want to promote your uniqueness, your passion, your signature dishes, your emphasis on high standards - all components which make for that memorable yet consistent dining experience. Your pride is on the line, not to mention your livelihood. Your mix should include a means to share what your patrons have said, some means to indicate attention to cleanliness, safety, service, and environment, and other promotional vehicles to showcase your brilliance. The competition is fierce - other independents, the "formulas", a wary and sometimes complacent public. The restaurant industry is not kind, given the track record of successes and failures. But, once you know the landscape locally, you can compete with advantage, recognizing that your particular Brand must be consistent, no matter what, or you will not survive.

John Hendrie John Hendrie is CEO of Hospitality Performance, Inc., a full-service hospitality consulting company. With a strong background in Hospitality, Human Resources, Organizational Effectiveness, and Communications, John has devoted his career to establishing Standards of Excellence across varied businesses.

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