the Restaurant Business

To make money in the restaurant business, restaurant owners have to have a competitive advantage. If hard work alone would do it, most restaurant owners would already be rich.

There are only two real and sustainable competitive advantages anyone can have in the restaurant business.

Restaurant owners can’t have the best chef or the best location or the best menu or the cheapest prices — at least, not for very long. Chef’s can get a better offer, road construction, building projects and population shifts turn great locations into so-so locations. Great recipes can be swiped and even improved upon. And of course, trying to have the lowest prices is not the way to go.

The only two real and lasting competitive advantages any restaurant owner can have are — Innovation and Marketing.

Ray Kroc knew the importance of innovation when he said, “McDonald’s can innovate faster than the competition can copy.

Peter Drucker (the greatest management author and guru of all times) said, “Innovation is the only lasting competitive advantage anyone can ever have in any business.”
e’s right — “Marketing” is just a sub-part of “Innovation.”

Applying unique marketing techniques is a major part of innovation because –

Marketing is the only thing that generates profit for a restaurant. Everything else is an expense.

Marketing (when done right) is the best investment any restaurant owner can ever make. In the stock market or in real estate someone may hope for a 5% or maybe even a 20% return on their investment. But in marketing, a $100 investment in promotion (ads, direct mail, press releases, etc.) could bring in $1,000 in profit and sometimes much more.

For example, changing only a few words in a headline can bring in two to 10 times more profit from the same ad. And the only cost to make the change would be the time it took the restaurant owner to learn how to write headlines. What kind of return on investment is that?

The average restaurant owner thinks his job is to “run his restaurant.” He doesn’t have time to market his restaurant — or even to learn how to market a restaurant. Maybe that’s why he’s average.