Friday, 19 October 2012

Running a business 101

I once read that the average life expectancy of a new restaurant is six weeks. I'm not surprised - I've seen some shockingly misconceived places pop up over the last few years.

Although I have absolutely zero experience at running a business, I think I'd do a much better job than some in coming up with a concept for a restaurant, cafe or food shop than many that I've seen open in the last few years. I am the ultimate armchair dragon - peeking in as I walk past and gasping with despair to friends afterwards. Never intervening.

But I do know a little bit about audiences, markets, insights and communications. And it is this process that seems too often to have been skipped over when a restaurant fails to succeed. There's a few mistakes that have really struck me:

Mis-reading your target demographic
I've seen this in a number of areas which have had a recent increase in middle class, disposable incomed populations. The pattern is such: a few pioneer cafes and restaurants open, they attract unprecedented demand, a few others join them and do well, and potential business owners step in to capitalise on the newly articulated market.

A recent example I've spotted is Twilight on Lower Clapton Road. LCR has seen some interesting new places open, including, most recently Dreyfus Cafe and Blue Tit hairdressers. They are both spacious, light and so so modern. Twilight looked like it could have been the makings of a Turkish Ocakbasi restaurant - grills, mezze etc. Instead it is selling paninis, bakes potatoes and fresh juices - all quite high margin products and priced highly for the area. The video on their website shows the decor and the menu, and you can't help but feel it's not hitting the market they thought they were targeting.

I could be proven wrong - and I'd like to be. I want local businesses to succeed. And they could be targeting a different demographic. But it feels like it could be a missed opportunity to bring something more interesting and with a bit more love to the area.

Entering a crowded market without a strong enough offer
Pasta Rustica on Newington Green Road opened in autumn 2011, with a slightly swanky interior - all leather seats and exposed brick. But specialising in pasta dishes, some pizza and then a random selection of steaks and grills. Just up the road was Trattoria Sapori - a great Italian cafe/resto with some of the best pizzas in the area, and a small selection of fancy pasta dishes.

Focusing on pasta is a risky move - my suspicion is that many wouldn't eat pasta out, knowing that you can make a nice pasta dish pretty easily at home, and that it's cheap meal. In a recession people won't want to eat food that is so clearly high margin.

Last time I cycled past Pasta Rustica, it was closed: boarded up, signs removed. It lasted less than a year.  I can't help but feel that if they'd done a better analysis of the local market, identified a gap and come up with a stronger, more distinct offer it might have had more success.

Not getting the communications right
Cynically, brand is important. It has to speak to the target market. Names like Pasta Rustica sound a little bit cheesy, and the look of a place matters too. But in competitive markets, where people can eat at one of many places vying for their businesses, you can't assume that people are just going to come to you because they've walked past or proactively googled your webpage. You need to get on their radar, get them interested, excited even.

Dreyfus Cafe did a great job of getting people excited in advance. They gave a story of their refurbishment of the premises on the Yeah! Hackney forum, built up anticipation. They launched a Twitter and Facebook page and tapped in to other local social media sites with lots of followers. And were overwhelmed with customers when they opened. They knew the channels their target market used and made sure that they were on people's radars.

But it all starts with understanding the demographic you are targeting, what they are willing to pay, how they get their information, what they go for. The age of social media means it is easier and cheaper to at least reach these people and get them excited.

That all sounds a bit commercial and marketing-speake, but it's the reality of the world we live in. If we want local businesses to do well we need to help them be savvier. So here's my offer: I'm no expert in running a business, but if you are thinking of opening a new food premises in E5 I would be more than happy to chat to you about your plan and share my thoughts! Please do get in touch - I want you to do well.


  1. This comment has been removed by the author.

  2. Well said, Robbie! The key to doing good business all boils down to fully comprehending the demands of your demographics and formulating a scheme to fulfill it. Thanks for sharing your input about that. I hope business aspirants will find your tips helpful. Good day!

    Brian Carter @ Restaurant Business Broker