That competitive advantage... management’s secret weapon - by Dennis Serpone

A good manager can take a mediocre restaurant and make it a screaming success. Conversely, a poor management team can lead a successful restaurant into the doldrums of survivability.

In high school it was being taller, prettier, or having a nice car.

In the world of business, success is tied directly to being perceived as having that special reason that attracts customers. At the macro-level it could be the location of a shopping mall closest to a major population center, and right off an interstate highway. The Burlington Mall was one of the first examples of retail development success and it set the standard for future retail centers. At the micro-level, having a competitive advantage is crucial. The success of business, any business, depends on how the consumer sees you. In general terms, a business owner who is fighting for consumer attention has to focus on ‘how does my customer see me’…’why will he give me his business rather than go to one of my competitors’? A perfect example is the competition between the three major cell giants…Verizon, T-Mobile, and Consumer Cellular.

This is especially true in the food and beverage industry. With every facet of this industry over-developed, a business owner has to differentiate himself from his competitors. When a family is reviewing the myriad of choices available for dinner, why does he choose one restaurant over another? Is it a convenient location and accessibility, is it food quality and pricing, is it atmosphere and service, or more likely it’s a combination of all of those factors triggering a cerebral decision.

With lunch having dried up for so many dinner houses, they now don’t bother opening till 4:00 PM, and with restaurants that used to be busy till 9:00 or 10:00 PM each night, accepting the fact that ‘busy’ is ending at 9:00 PM, there has never been a more important need to have a ‘competitive advantage’.

Our team was recently engaged to review the operations of a well-established restaurant/pub in the Boston market that is doing $80,000 per week with an experienced management team, but losing money. After an extensive review of their financials, menu, and marketing it was determined that the reason they were doing that volume is because they were providing excellent food at giveaway prices…volume at the cost of profit. In essence, that was their unintentional ‘competitive advantage’.

To turn this sinking ship around, our advice was obviously subtle, but impactful menu changes. But more importantly, our advice addressed creating a reason for customers to stay beyond 8:00 or 9:00 PM and attracting new customers with entertainment. Integrating various programs of music and comedy has added an additional $20,000/week of additional volume and creating intentional ‘competitive advantage’.

The bottom line, which so many restaurateurs don’t focus on, being in the food and beverage business is not just about filling your restaurant and providing food for your customers and accenting it with a positive experience, it’s about making a profit. Strong and experienced management ability of an owner or a ‘purchased’ manager, with systems properly implemented, restaurateurs and their families should enjoy the benefit of unseemly high profits unattainable in many salaried positions. Many successful restaurateurs began their careers working in the kitchen or entertaining their customers as a bartender. But the common denominator is usually the management skills of their managers…it’s called on-the- job training.

With the life blood of our economy tied directly to the millions of independently owned small businesses, as restaurant specialist we recognize that, beyond location and accessibility, success of a business is tied directly to the quality of management and its competitive advantage.

Even with experienced management, businesses sometimes reach reaches a brick wall. In our 46 years of brokerage and consulting, we’re very proud of the consulting engagements that have resulted in either saving companies or bringing them through troubled times.

Whether it’s the success of the National Restaurant Exchange or the success of a popular restaurant you’ll mostly likely tied to its quality of management.

Dennis Serpone is founder of the National Restaurant Exchange, Wakefield, Mass