Restaurant Intelligence 101 - Location, Location, Location!
New York, Nov.2nd, 2005 -- I have just had a delightful meal at a restaurant outside of New York that will be out of business within a year. The food was superb, the service exceptional and the decor more than satisfactory. The problem was that the owners had bought an existing restaurant and spent a fortune upgrading everything without asking the right questions.
The first question that should have been asked was about traffic that stopped, and not just went whistling by. The road was a heavily traveled commuter route along back roads where only the brave would dare stop to turn off during rush hour. Or to be more accurate rush hours. For until late in the evening the tired went by, rushing home.
The second question should have been "Why has this restaurant been sold so many times during the last 10 years?" but instead the new buyers focused on getting such a good property "For a Steal". Or as he put it again, and again "The same building in the city would have been worth many times more."
But the building wasn't in the city, and people had to drive to get there.
The car park was ample, but the wait to get back into traffic a right royal pain. Of course the traffic manners of New York and New Jersey drivers are renowned and a full tank of gas is suggested.
The owner had visited the local Chamber of Commerce who immediately congratulated him on his excellent choice of location, and signed him up for annual membership. How wonderful to welcome him to the community, and could he consider hosting an Chamber After Hours? So pleased was he at the affirmation of his business prowess that he didn't offend them by asking rude questions, like what happened to this restaurant to make it so cheap? He would not have got a straight answer anyway, their job is to sell membership subscriptions, not be honest brokers.
He had consulted a Chef friend who was adamant that the reason the restaurant had to be sold was that nobody these days wanted that kind of menu. Wrong soups, wrong entrees, wrong deserts. His restaurant was booming as the local community embraced his excellent culinary choices. It was overlooked that the restaurant in question was over four times the size of his mid town bistro. But Chefs focus on food, that is why they are Chefs.
During our discussion on Competitive Intelligence he realized that the same fundamentals apply whether you believe CIA is the Culinary Institute of America, or the Central Intelligence Agency. That came as a huge surprise for he would have never thought of regarding his expensive investment the same as a computer chip, or military missile.
But the principles are the same. How effective are they? What is the cost, value, downside, risk, potential in having them. Will they operate as I want them to, within my capabilities? Has the opposition got bigger and better plans for my area? Sun Tsu The Art of War applies to opening a restaurant just as much as it applies to invading Iraq. Get it wrong and you will suffer for many years before you can get out.
The number of people wanting to start their own restaurants, bed and breakfasts and even Tikki Bars on the beach, to get away from the rat race is growing exponentially. With over $3 Trillion of inherited wealth burning a hole in their pockets, the Boomers are off on a spending spree. A recent study by Cornell has shown that a restaurant has only marginally more risk of failure than any other business, and so more and more people will be attracted to the industry.
It is essential that they ask the right questions, and do some simple intelligence work to see beyond the obvious. And remember the old retail rule, Location, Location, Location!