How to Be Different
Happy new Year!
I've translated the schnitzel article and uploaded a pdf file for nicer printing here.
"I'm selling this schnitzel like my competitors do." Were they human beings, this is exactly how most of our restaurants would sound like.
I have used the example with the schnitzel in order to demonstrate one of Michael Porter's models used in marketing and strategy.
Business people know Michael Porter as the guy with the five forces.
Michael Porter assumes one has business which makes money by selling schnitzels and concludes that there are only three ways in which one can own a viable schnitzel business:
1. No other competitor is able to make the exact schnitzel we are able to make. Hence we are profitable;
2. We have the lowest cost per schnitzel. Hence we are profitable;
3. We only serve schnitzels which are profitable.
The first approach reckons that a company consequently succeeds to get closer and closer to the perfect product - or at least the perfection sought by the majority of consumers. But true craftsmanship comes when no other competing company can get closer to this achievements.
Everyone evolves at the same pace, constantly selling a better and better schnitzel. This is, I guess, the origin for many of the problems faced by Romanian foodservice companies. In other words, the Romanian foodservice scene is full of decent, easy to copy products.
You might say that only your restaurant sells schnitzels with sesam in their crust but Mr. Porter will tell you that any competitor is able to serve sesam schnitzel as of tomorrow.
Worth emphasizing here, is the idea of sustainable competitive advantage. Not every difference compared to the rest of the market can bring you profit. Here are some ideas capable of really differentiating your product: a secret ingredient - unique to your recipe, a special way of producing the schnitzel - ensuring unique taste or form and - why not - a little bit of both. The important thing here is that our schnitzel is not resembling the one across the road.
And, since we speak of schnitzels, the best example here would be the stake served on hot stones at the "Little Switzerland" for years now. Firstly, it is a unique and fun way of producing the food - other stakes are not that playful. Secondly, it comes with a set of sauces and side dishes which go great together and the meat marinated in a secret sauce. Not beating around the bushes any longer, the swiss stake is cooked exactly after Porter's recipe.
Ok, let us ask the key question: How can your restaurant differentiate, should you not serve a single product such as the one the swiss Hausmann does?
The second choice could also be called "the low cost schnitzel". I chose however to talk about it in terms of profits, because I wanted to shift your thoughts away from cheap airline tickets and discuss a sound business model seriously.
In order to be different, a company can bring a unique product to the market, trying to differentiate it from other competitors. A company also can look inside itself for new procedures and ingredients which are able to lower the costs without affecting the core product.
These companies live out the following philosophy: "A schnitzel is a schnitzel even if we fry it in hemp oil."
If I tell you now that McDonald's seems to employ this strategy, you would argue that their brand is highly promoted and that promotion is their source of successful differentiation. However, if we look at how McDonald's does business, we will see that the founders had the passion for consistently finding cheaper ways of getting things done. McDonald's prints their worldwide packaging in the same place and changes design very rarely. The menu is strictly supervised in what regards the number of items offered. This means that the company does not spend money on stocking up fish fingers which are only sold ten servings per week. The standards are so well established that everyone can build a happy meal after only one day of training and this means that anyone can work at McDonald's, hence the wages can be kept low.
The third way deals with finding a profitable niche or with selectively minimizing costs. I would prefer not to get into these details because people talk that entering the third way almost always gets companies stuck in the middle.
And I think that this is precisely where Romanian restaurants are: stuck in the middle. We have schnitzels resembling one another like two drops of water and we're trying to sell them. It's clear that we need to pick one way or the other. This would bring us all something good.
I've translated the schnitzel article and uploaded a pdf file for nicer printing here.
How to Be Different
"I'm selling this schnitzel like my competitors do." Were they human beings, this is exactly how most of our restaurants would sound like.
I have used the example with the schnitzel in order to demonstrate one of Michael Porter's models used in marketing and strategy.
Business people know Michael Porter as the guy with the five forces.
Michael Porter assumes one has business which makes money by selling schnitzels and concludes that there are only three ways in which one can own a viable schnitzel business:
1. No other competitor is able to make the exact schnitzel we are able to make. Hence we are profitable;
2. We have the lowest cost per schnitzel. Hence we are profitable;
3. We only serve schnitzels which are profitable.
The unequaled Schnitzel
The first approach reckons that a company consequently succeeds to get closer and closer to the perfect product - or at least the perfection sought by the majority of consumers. But true craftsmanship comes when no other competing company can get closer to this achievements.
Everyone evolves at the same pace, constantly selling a better and better schnitzel. This is, I guess, the origin for many of the problems faced by Romanian foodservice companies. In other words, the Romanian foodservice scene is full of decent, easy to copy products.
You might say that only your restaurant sells schnitzels with sesam in their crust but Mr. Porter will tell you that any competitor is able to serve sesam schnitzel as of tomorrow.
Worth emphasizing here, is the idea of sustainable competitive advantage. Not every difference compared to the rest of the market can bring you profit. Here are some ideas capable of really differentiating your product: a secret ingredient - unique to your recipe, a special way of producing the schnitzel - ensuring unique taste or form and - why not - a little bit of both. The important thing here is that our schnitzel is not resembling the one across the road.
And, since we speak of schnitzels, the best example here would be the stake served on hot stones at the "Little Switzerland" for years now. Firstly, it is a unique and fun way of producing the food - other stakes are not that playful. Secondly, it comes with a set of sauces and side dishes which go great together and the meat marinated in a secret sauce. Not beating around the bushes any longer, the swiss stake is cooked exactly after Porter's recipe.
Ok, let us ask the key question: How can your restaurant differentiate, should you not serve a single product such as the one the swiss Hausmann does?
Probably the Most Profitable Schnitzel
The second choice could also be called "the low cost schnitzel". I chose however to talk about it in terms of profits, because I wanted to shift your thoughts away from cheap airline tickets and discuss a sound business model seriously.
In order to be different, a company can bring a unique product to the market, trying to differentiate it from other competitors. A company also can look inside itself for new procedures and ingredients which are able to lower the costs without affecting the core product.
These companies live out the following philosophy: "A schnitzel is a schnitzel even if we fry it in hemp oil."
If I tell you now that McDonald's seems to employ this strategy, you would argue that their brand is highly promoted and that promotion is their source of successful differentiation. However, if we look at how McDonald's does business, we will see that the founders had the passion for consistently finding cheaper ways of getting things done. McDonald's prints their worldwide packaging in the same place and changes design very rarely. The menu is strictly supervised in what regards the number of items offered. This means that the company does not spend money on stocking up fish fingers which are only sold ten servings per week. The standards are so well established that everyone can build a happy meal after only one day of training and this means that anyone can work at McDonald's, hence the wages can be kept low.
Lost in Transition
The third way deals with finding a profitable niche or with selectively minimizing costs. I would prefer not to get into these details because people talk that entering the third way almost always gets companies stuck in the middle.
And I think that this is precisely where Romanian restaurants are: stuck in the middle. We have schnitzels resembling one another like two drops of water and we're trying to sell them. It's clear that we need to pick one way or the other. This would bring us all something good.
Labels: articles, management, marketing, promo
