A recent Forbes article listed some of the most profitable businesses in America and, to my surprise, many of them were restaurants. In fact, two of restaurants noted had four year growth rates of over 120%. The four year growth rate is important, because it includes the recession, meaning that these restaurants are growing even during hard economic times.
How is a business that provides a non-essential service (eating out) doing well in a time when people are being more conservative with their spending? Because rather than competing with other restaurants, they are redefining their competitive position, anticipating trends, and finding new and growing niches.
We can all learn a lot from these restaurants and apply the successful strategies they are using to our own businesses.
Stop competing on price – There are many ways to compete, yet most companies tend to compete on price. However, the more you compete on price, the lower your margins. This means you need high volume to make up for it. If your intent is to be a competitor of price, then fine. Just realize you have many more options.
The restaurant Buffalo Wild Wings (BW3) decided to compete in areas other than price and are experiencing a 121% growth rate because of it. If you go to the restaurant’s website, you’ll see a very atypical site complete with avatars and animated graphics. It even challenges visitors to play some computer games. It’s fun and sells the experience of patronizing the restaurant to their targeted demographic. This restaurant chain realized that people flock to places that deliver an experience so that’s their competitive advantage, not price.
In addition to competing on price, you can also compete on time, reputation, values, technology, image, experience, service, design, innovation, quality, information, knowledge, consultative value, loyalty, and process. To get away from competing on price ask yourself, “Do I have a strategy for every one of those different ways of competing?”
Most companies compete in only one or two areas and have a detailed strategy for both. But few compete in all areas. Therefore, to gain an advantage, detail how you are different in each area so you can go beyond competing and accelerate growth.
Anticipate trends – No matter how long you’ve been in business, you need to get outside your shell, look around, and check out what’s changing in your industry. But you don’t want to simply react to changes, as that keeps you behind the curve. Instead, you want to anticipate the changes that are coming and be in front of them. After all, the ones who are anticipating the best are the ones who are growing the most.
Chipolte Mexican Grill anticipated a key trend and is now experiencing a growth rate of 123%. Chipolte saw what the popular fast food Mexican food chains, such as Taco Bell, were doing and realized the menu options were not attracting the health conscious Baby Boomer market. So instead of being just another fast food joint, they decided to cater to the underserved Baby Boomer niche and offer fast yet healthy Mexican fare.
Therefore, consider how you can differentiate yourself by catering to an underserved niche. How do you find that niche? Look at the hard trends going on around you. Based on what you know about your marketplace, what trends can you see growing?
Play to the demographics – Take note of your most loyal customers and then determine the certainties of that demographic. For example, if you primarily have younger customers, things like speed, efficiency, trendiness, and WiFi are key things that matter to them. Perhaps this crowd would even prefer to get information about products using QR codes or via texting.
To attract more of this younger crowd, consider using social media tools. For example, Kogi Truck is a traveling Los Angeles landmark that serves up Korean-Mexican tacos. They have rapidly grown to needing five food trucks and plan to add more. They attribute their success to the fact that they have 70,000 followers on Twitter and tweet where each truck is during the day.
If you have an older clientele of Baby Boomers, then you have different certainties to consider. As people age, their eyesight becomes a problem, so they need bigger font on marketing materials. Comfort is key for aging Baby Boomers, so your furniture must be soft and inviting. Relationships are more important to this crowd, so you need highly trained staff who can give extra attention. These are just a few examples of how looking at the certainties of your demographic and then catering to those needs can increase your customer base.
One thing is certain: Competition in the specialty products business will intensify. So take a lesson from another industry and do what these successful restaurants have done. Stand out by innovating, anticipating, and serving your market’s present and future needs. When you follow this proven strategy, you’ll have the upper hand that leads to long term profits.
Daniel Burrus is considered one of the world’s leading technology forecasters and business strategists, and is the founder and CEO ofBurrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients better understand how technological, social and business forces are converging to create enormous, untapped opportunities. He is the author of six books, including the national bestseller “Flash Foresight: How To See the Invisible and Do the Impossible” as well as the highly acclaimed Technotrends.