Consistency, mediocrity, and multiple venues
What does it take to make money in hospitality?
I asked this question of a friend of mine, a veteran of the restaurant industry. He said:
Multiple venues. And then consistent mediocrity.
Consistency is clearly a must for a multiple venue owner, allowing them to double down on their efforts with more efficiency. But does consistency really have to lead to mediocrity?
Hold this question in the air as I recall one trend that can drive a person to multiply:
We all know the rules I think: use a great designer to make a stylish space that you can’t really afford, but it’s ok because you did a great job at your last place. This fit out will be subsidised by a developer who sees you as the perfect colour to their next high rise and they’ll recoup the capital costs in elevated rent down the track. Don’t worry, it’s all bound to be successful, because it was last time (was it?), and as long as you have a marketing team to keep the sex appeal flowing you’ll be right… because you were last time (weren’t you?). Or you almost were (who needs a living wage when you’ve managed to balance the books!) This next venture will bring everything into line. And yes! the doors open to shiny new customers who get a shiny new thing.
But as so many in hospitality have experienced, there’s a honeymoon period for a new place. Shiny new customers do like shiny new things, but your new venture is only shiny for so long. The first wave will move on to the next thing and whoever remains will need to build into a returning growing customer base. Not so easy if you’re resting back on mediocrity.
So there’s an argument against mediocrity! Or is there…
What happens after the honeymoon depends in part on the owner’s level of experience and in part on how many other places they already own…
1. it’s this place or nothing (small time operator)
The new restaurant’s early climb into popularity turns into a long hard slog to keep going (the ‘dip’ as Seth Godin calls it) that will either drive the business owner into early bankruptcy or carve them into heroes as they lean into the pain and drive their business towards something beautiful…
2. I can quit and consolidate if I want to (restaurant group)
The multiple business owner finds it easier to ride through the difficulties because they’ve been through it before. Plus, they’ve got buffers to the problems in the form of other restaurants that can pick up the slack. And they may even have their next shiny new thing lined up in the stalls; another place, a slightly different theme, an edge, a style, a recruitment team.
I imagine there’s something compelling about having lots of restaurants and getting to start again and again… a respite in the multiplication of shiny new things.
So, I wonder, if a business owner has just one location, which is just making enough money to cover itself, and they start another that does the same, some operational costs are saved in the process of multiplication (some staffing here, some admin costs there)… when one’s slow on weekends, the other’s busy and vice versa… is this how profits finally start to flow? and then finally, a real income? for the business owner?
This is me on a rant and then my friend chimes in again – like I said, consistent mediocrity: cutting food costs by sourcing less carefully, replicating and creating a cookie cutter approach so that operational costs are saved… paying minimums and even lower… using fake plants instead of ones that actually require water… no one will notice… that kind of thing.
My friend heads off down the lane but my questions persist…
Really? is this really the only way?
Isn’t it possible to have scale in a food business without drifting towards some gravitational centre of mediocrity? What does it take to keep the spirit up? To keep business pointing toward the most beautiful place it can be? All the small acts and decisions that aiming for ‘the best’ require of a small business owner are ever changing. How does her mind split over more than one physical location so that each place has as much investment in success as the other? Economies of scale can kick mediocrity into the future for sure, but can they just as easily kick beautiful business towards really good food, great jobs and an even better city?
And yet another part of me wonders… what kind of strength is required of an owner to NOT multiply… to place all their eggs in one basket and make it the most beautiful, most well feathered container it can be. The only basket. Strength, bravery… or lunacy?