If you're a hipster foodie...you might be bad for business...

Posted by Keith Jolie on Friday, June 7, 2013 Under: local business
A few weeks ago there was a segment on CBC that discussed the evolving restaurant scene in Toronto. The discussion was very focused on the so called "new reality" of restaurants in the city and how they are forced to turn over their clientele in order to stay alive.  There was a lot of talk about a new kind of restaurant patron, and how some "older" patrons just don't get it.  I'll admit...I don't get it either, but only from the perspective of building a sustainable business model.

I am by no means a food and beverage expert, and I'll admit I didn't hear most of the piece, however I am perplexed by the recent emergence of restaurants that feel that churning clientele is a successful strategy.   While "how do we do it?.....Volume!!!" Might work for McDonald's or a low margin furniture warehouse, fine dining is an experience, and that's what customers pay for...but more importantly, the second bottle of wine, the espresso, and a last cocktail to round out the night, might (unless booze prices suddenly dropped when I wasn't looking..) represent the most profitable part of a guest's visit.  So hearing a restaurateur bemoan the state of the industry and the low profit margins they face is perplexing to me.

This CBC conversation reminded me of a time when I was asked to manage a branch office for the IT training company I worked for in 2003.  The branch had been experiencing a number of challenges; revenue being chief among them.   When I arrived I found an inordinate amount of time was being spent "selling" low value, high volume services.  While sales reps felt satisfied having filled training events and doing so quickly, the revenue was low and the profit was lower.
Part of the solution was to stop selling those products entirely, accepting the orders when they occurred but not actively promoting them.  Instead we chose to refocus our efforts entirely on higher profit, higher ticket items.  The revenue from one sale of the more technical offering was 10 to 15 times as much as what was being sold before I arrived.  More importantly the events targeted a clientele that had a bigger budget and who were more strategically positioned in their respective organizations.

The second thing I focused on was ensuring that we were providing the best possible experience for our clients.  I spoke to our "receptionist" and explained that he was now our "Manager of Customer Experience".  I empowered him to make the decisions, and to change processes that would ensure that customers left our facility very satisfied. 
By doing these things, we hit profitability very quickly dramatically increased revenue and established a larger more diverse client base.

It seems to me that some restaurateurs are catering to an audience that are easy to acquire, but that may not be best for their business.  When a new restaurant opens there are those that quickly flood their doors so that they are able to say that they've eaten there ( for the sake of argument, let's call them "hipsters" ) This crowd however is also very fickle and quick to move on after eating to spend the more profitable part of their evening at the latest night spot.  They eat (low margin) meals and then go elsewhere to have a drink or a coffee.  

Cycling through these customers seems important, because they are arriving in great numbers but each meal they eat only provides a small return to the business.  The biggest problem this type of client presents is that when the next new restaurant  opens or when the first questionable (and unnecessarily verbose) review hits Yelp they will be lining up somewhere else.

Here are two quick take-aways for any business:
 
Easy come easy go...
The easier it is to attain a client, the easier it is to lose them.  A customer that is easily acquired also rarely is the one with the largest budget or influence. 

It's all about the experience
For restaurants and indeed any business, providing a highly enjoyable experience will be remembered by your customers and they will be eager to repeat the experience.  You have lots of competitors, but very few that provide an exceptional (buying) experience.  Furthermore, an extraordinary experience will enhance the perception of the product or service being provided.

Future business (and this applies to any industry) is more likely to come from the customer that enjoys an exceptional experience.    

By Keith Jolie

In : local business 


Tags: "customer experience" "the best customers" 
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