What killed this restaurant?

Seoul Korea Day 6

Stephen Hayes asks about a local 4-star eatery going out of business, So sorry to read of the close of this 4-star restaurant. Friends and I had lunch there days before lock-up. Food was always excellent and at surprisingly reasonable prices. Big question for every business owner – “How to keep pace in a world where degenerating tastes and standards bring ‘the best’ to their knees while mediocrity thrives and prospers?”

To answer this question, we have to go back to the basics and the 4P marketing mix. Consumer tastes and standards are only one piece of the puzzle. For any business, it comes down to:

Product: This is what Mr. Hayes alludes to in his comment. Despite having a 4-star product, the eatery went out of business. Their product might have been perfectly fine, but…

Price: Price is not only what a business needs to earn to cover costs and create a margin, price is also (and more importantly) set by the consumer based on the value provided. If I don’t perceive 4-star value in what you deliver, I will not pay 4-star prices for it. Conversely, if I perceive top-dollar value, I will pay top-dollar price.

Based on his post, however, it sounds like the restaurant in question didn’t have significant problems with product or price. That leaves two more Ps in the marketing mix:

Place: Location matters – and not just in real life for a local business. Local businesses need to have strong local presence online. Place isn’t just physical space! In the case of the restaurant, does their website integrate with systems like Open Table? Did their Facebook Page provide necessary information (simple things like when you’re open matter a great deal)? Were they registered with Google Places and set up there?

Promotion: This is likely where the restaurant, as many local businesses do, fell down the most. A quick look in the Wayback Machine at the restaurant Mr. Hayes mentions in his original comment on Facebook shows a website that hadn’t been significantly updated since 2006 with a design that looks positively 1996. Poorly optimized for local, a quick peek at Spyfu shows that there was no investment of any kind in online advertising. No Facebook presence at all. No blog, no Twitter account, no Groupon deals, nothing that indicates that the restaurant wanted to be found in the modern era. The old website had a mailing list form signup powered by Microsoft Frontpage, which in all likelihood meant they hadn’t emailed their list in quite some time, and certainly not regularly.

The reality is that degenerating tastes and standards probably were not responsible for the demise of the local restaurant at all. Much more likely and important are the first words of Mr. Hayes’ comment – how to keep pace. The restaurant did not keep pace with the world, as evidenced through its digital memorials.

Here’s a key point, an important point that local business owners neglect at their deep peril: you are not competing with other local businesses. You are competing with the entire world, with everything and everyone who is vying for the attention of your customer base. You must keep pace and be findable in the new marketing world, or you risk losing your audience – not just to competitors locally, but to every other distraction and diversion available to them.

The local business experience that you deliver to your audience begins the moment someone types, “restaurants near me” into their Internet connected device.


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  • http://welldonechef.com/ Jason Sandeman

    Great post Chris – I have to comment on this quote right here though:
    “How to keep pace in a world where degenerating tastes and standards
    bring ‘the best’ to their knees while mediocrity thrives and prospers?”That is a nice way to load the question, because it puts the responsibility for the problems on the consumer, not the business. (I am talking of the “degenerating tastes: and the “standards.”)Bottom line is, the standards are dictated by the clientelle. The biggest mistake any owner, (or chef for that matter,) can be directly linked to the diconnect with the clientelle base.You can see this in the wildly popular show “Kitchen Nightmares.” In almost every case, the restaurant is failing because the owners (or chefs) just don’t get what their clientelle’s needs are. Instead, they go about what “their standards” are, and fail every time.Worse, instead of understanding that THEY are the ones failing, the owners are quick to blame the people keeping them in business.I suggest there is another P in the marketing mix – and that is “People.” When you understand what people actually want, and give it to them, they will pay for it when the other “P’s” in the mix are there. Gordon Ramsey does this expertly. In most cases he finds what the clientelle actually wants, or what is missing in the area FIRST. Then he applies his standards to the equation, and then prices accordingly. If clientelle demand a cheap product, then he gives it to them, but something that is at a level with his high standards.He takes responsibility for giving the people what they want, and NEVER decries the clientelle’s “degenerating tastes,” or “standards.”

    • http://www.ChristopherSPenn.com Christopher S. Penn

      Thanks for the insights from a practicing culinary expert, Jason!

  • http://twitter.com/Support1K Support1000

    Chris, this is one ove very few posts of yours that bother me.

    Did you speak with the owner(s) to confirm that lack of promotion lead to their demise? Maybe it was cashflow, employees stealing, an owner’s gambling problem, sabotage by someone who wanted out of the restaurant business, a perfect storm of bad luck with equipment breakdowns or sloppy bookkeeping that finally caught up with them.

    I get your perspective about poor promotion. Excellent points. However, there’s some fact(s) about what went wrong. To spend so much effort on the weakness of their internet presence may be a complete and counterproductie distraction from what REALLY was afoot.

    To say anything responsibly about this restaurant means asking a lot of questions first.

    • http://www.ChristopherSPenn.com Christopher S. Penn

      I think you’re dead on – unfortunately, all I had to work with was the original post and article on Facebook. That was actually the gist of what I was trying to say as well – there are more variables at work than we can currently see.

      I intentionally restricted the scope of my exploration to the marketing side of things because that’s what I’m good at and can speak credibly about. There are TONS more ways for a small business to fail, but I don’t consider myself credible on those areas of operation.

  • http://twitter.com/Oz_DragonCookie Oz du Soleil

    ·       Chris, this is one ove very few posts of yours that bother me.

    Did you
    speak with the owner(s) to confirm that lack of promotion lead to their demise?
    Maybe it was cashflow, employees stealing, an owner’s gambling problem,
    sabotage by someone who wanted out of the restaurant business, a perfect storm
    of bad luck with equipment breakdowns or sloppy bookkeeping that finally caught
    up with them.

    I get
    your perspective about poor promotion. Excellent points. However,
    there’s some fact(s) about what went wrong. To spend so much effort on the
    weakness of their internet presence may be a complete and counterproductie
    distraction from what REALLY was afoot.

    To say
    anything responsibly about this restaurant means asking a lot of questions
    first.