Beating The McCompetition
How to buy, run and make money from a small restaurant
If you're a small business, a café or a coffee house and suddenly one of the chains opens up across the road - what do you do? The first reaction for many small business owners is to – Panic!
So, can a small business, a café or a coffee house compete with the chains?
On the positive side, you must be in a good area if they consider it viable to open up near you.
Is the Secret Location, Location, Location?
The chains choose highly visible sites, in prime locations, which often carry massive rents. To manage these costs they are open longer hours than a sole trader can often manage. This in turn requires more staff and because they are all staff run they carry high wage bills. An independent operator could make better margins than the chains.
The chains have a corporate style, image and service, which they replicate, throughout their sites so you always know what you will get. They are popular because of they have an attractive concept, consistency and prime locations - they have a winning formula
McDonald's
The McDonald businesses started back in the 40's. They concentrated on quality, service, cleanliness and value. Their marketing strategy was aimed directly at young children who ensured that the whole family came along also. When MacDonald became a corporation, it replicated its service and delivery standards throughout the world. The rest is history.
They are popular because of their concept and locations – they have a winning formula
However, it's worth considering that the tide turns and no business can afford to be complacent. McDonalds are now experiencing some downturns in trade. This has driven them to experiment with new ideas and new food lines. They are targeting a wider adult audience, introducing healthier eating options and turning some restaurants into waiter/waitress service in an effort to meet the modern customer's expectations.
What these majors know, and the rest of us are just finding out, is that success comes from location AND a good concept. The secret to location is low overheads or to maximise the usage of the business.
• Chains operate in high-cost areas but manage to cover their overheads by opening longer hours than a sole trader could manage.
• Chains offer consistency but the sales and popularity of chains are based on the whole package of customer service, surroundings and familiarity.
• Chains equip their premises to make it easy for staff to run and work in.
• They have bulk purchasing power, which gives them higher margins.
Huge advertising budgets have made them brand leaders. The advantage for the independent operator is that as demand for these products increases people become more discerning.
It is essential to learn from the majors and find the 'angle' where you can be better and be more acceptable on a local basis. This is where you can compete and compete well, albeit on a much smaller scale.
There is always room for the independent operator.
There are many successful small businesses trading only yards from a major and making profit margins from food and drink, which the big operators would dearly love to achieve.
Your individuality could be a big asset.
About the Author
Janet Fraser, is co-author of the ebook, “The Risk-Free Guide to Buying a Business: How to Increase Sales and Make Money’ www.first-time.co.uk
How to buy, run and make money from a small restaurant, bistro, café, coffee shop, fish and chip shop, sandwich bar or takeaway
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