Before I began my first job at Citibank, N.A. in Jakarta in the late 1990s, I received an advice, “When you start at a new company, always accept invitations to grab a drink or meal with your teammates after work — even if you don’t feel like it. These offers will stop eventually, and you’ll miss out if you don’t establish connections early.” So, at the end of my first week, I accepted an invitation to dinner at TGI Friday’s, despite my preference to keep my own company.
I mention this because of the recent news that TGI Friday’s filed for Chapter 11 bankruptcy protection in Dallas, Texas, on November 2nd. The widespread post-COVID cost of living crisis in many countries has created a challenging environment where only the fittest and the nimblest food and dining establishments can survive. It’s not just in the US. In my home ground in Adelaide, a beloved café chain called Cibo Espresso has been absorbed and will soon be rebranded under the Gloria Jeans brand. Beyond these large chains, there are countless small cafés and restaurants that simply could not survive both during and after the pandemic.
Maintaining a cafe or restaurant business is akin to managing a brand: you want to keep the customers coming in, especially the loyal ones. You likely feel the pressure to keep your offerings exciting with new specials from time to time – whilst at the same time you have to keep some old-time favourites. For a small business, it’s probably not an easy things to juggle. Those working in hospitality would probably know a lot more compared to my outsider’s assessment. After all, I am merely a customer who enjoys good food and good coffee! However, at some level, I think we can also apply some learning from brand and product portfolio management – as well as from the Laws of Growth.
Keep Your Core: That’s what you’re known for
There are times where I go to the neighbourhood café to order a favourite item: something that I associate with that particular establishment. Then the server told me that the item had been taken off the menu despite other diners also wanting to order the same dish. I get it that for the business owner and the chef, producing the same thing over and over can be tiresome. However, for the many visitors to the café or the restaurant, the popular menu item is what brings them to visit.
Another example is the much-missed lunch items at a nearby hotel near my office. Despite being a five-star hotel, they used to offer one curry dish and one pasta option for the many office workers in the CBD, bringing foot traffic to the hotel. A revamp changed all of that as they no longer offered the two lunch items.
These ‘staple’ products are akin to the core SKUs in a product portfolio – drawing light buyers to the brand. There’s a reason why McDonald’s still offers Big Mac and other burgers, despite widening the product offering by serving salad, coffee, and pastries, and for KFCs to stick to fried chicken despite also selling coffee in their stores in Indonesia.
It’s what people associate the chain with that bring them to the establishment.
Customers are forgetful and distracted: Remind them. Again.
Marketing is often neglected in hospitality business.
Surely if the food, the service, or the coffee is good, people would continue to come. Yes, for sure — but when there is increased competition that entice the frequent diners away, the business probably would benefit from attracting the many more infrequent diners. It’s great for me to sometimes see advertising posts on Instagram from establishments that I visited once or twice – reminding me to consider them again whenever I’m up for a coffee, a nice meal, or an ice cream. This is despite me not following their Instagram account! There are so many places where I had a great meal which I simply forgot afterwards, despite my wife and I making a mental note that we should return in the future. At the office, whenever I go out to lunch with my regular lunch-buddy, we often forget to consider a lunch option that’s just a five-minute walk away and resort to the usual spots.
Life has so many other important things to manage and consider, and a wide-reaching advertising as a reminder would help many people to keep the brand fresh in their mind.
Appeasing heavy buyers can be a costly endeavour
Rather than advertising and reminding potential diners and customers, many cafés and restaurants put pressures upon themselves to keep the frequent diners by offering daily specials. These frequent rotations likely take away the efficiency that the café or restaurant has mastered over time. This is what happened to a café near the office — they had two daily specials along with the many sandwiches and salad offering. The daily specials were also seriously good! For a small business, this probably takes a lot of logistical and financial planning. I presumed it was for this reason and increased competition that brought them down, even before COVID decimated many other establishments. The parallel can be found in product portfolio management — it is a costly endeavour to churn out new products for the sake of creating excitements that are likely to be noticed by heavy brand buyers and heavy category buyers. For the light buyers, the core offerings are likely to be enough!
There are other initiatives to appease heavy buyers that are probably very costly — like having a loyalty scheme for frequent diners. Those who regularly come to the establishment would still come anyway, even without the loyalty scheme. Wouldn’t the money be better used to build mental availability of the business to anybody who are still indecisive on where to go for lunch, dinner, or coffee?
… and finally,
For cynics, marketing is still often seen as a ploy to get people to unnecessarily spend more. Many may be unaware that it is an important ingredient in business survival and growth – a lifeline for small businesses like cafés, pubs, and restaurants. The Laws of Growth don’t just apply to the big end of town – but also applicable to small brands and small businesses. Get more people to know you and make it easy for them to buy your products!