The only way left for the little one to get rich in the restaurant business
To make money in the restaurant business, restaurant owners must have a competitive advantage. If hard work only did it, most restaurant owners would be wealthy by now.
There are only two real and sustainable competitive advantages that anyone can have in the restaurant business.
Restaurant owners can’t have the best chef or the best location or the best menu or the cheapest prices, at least not for long. Chefs can get a better deal, road construction, construction projects, and population changes turn great locations into regular locations. Great recipes can be slipped and even improved. And of course, trying to have the lowest prices is not the way to go.
The only two real and lasting competitive advantages any restaurant owner can have are: Innovation and Marketing.
Ray Kroc knew the importance of innovation when he said: “McDonald’s can innovate faster than the competition can copy.
Peter Drucker (the greatest author and management guru of all time) said, “Innovation is the only lasting competitive advantage anyone can have in any business.”
We are right: “Marketing” is just a subpart of “Innovation”.
Applying unique marketing techniques is an important part of innovation because:
Marketing is the only thing that generates profits for a restaurant. Everything else is an expense.
Marketing (when done right) is the best investment a restaurant owner can make. In the stock market or in real estate, someone can expect a 5% or maybe even 20% return on their investment. But in marketing, a $ 100 investment in promotion (ads, direct mail, press releases, etc.) could generate $ 1,000 in profit and sometimes much more.
For example, changing just a few words in a headline can generate two to ten times more revenue from the same ad. And the only cost to make the switch would be the time it took for the restaurant owner to learn how to write headlines. What kind of return on investment is that?
The average restaurant owner thinks his job is to “run his restaurant.” You don’t have time to market your restaurant, or even to learn how to market a restaurant. Maybe that’s why it’s normal.
A restaurant owner cannot make $ 100,000 a year working $ 10 an hour. The job of a restaurant owner should be to market, innovate, and promote his restaurant.
The restaurant marketing plan for many restaurants is based on whatever the latest ad seller is promoting. When it comes to marketing, many restaurant owners just copy what the big guys are doing. That could spell disaster for almost any independent restaurant.
Most restaurant owners work long hours, but it doesn’t take long hours to market, innovate, and promote a restaurant.
Look at it this way. A restaurant owner who is proficient in innovation and marketing could trade restaurants with any restaurant owner in town. Let him have the location, the menu, the chef and the staff and within a year the restaurant owner who knows how to market and innovate will have the most profitable restaurant.
Learn to stop chasing after so-called competitive advantages that are short-lived and unsustainable. Focus on innovation and marketing and watch your restaurant profits skyrocket.
Jerry Minchey, editor
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