Defining Your Market Relevancy
In This Chapter
- Why being relevant is key to success
- Why competition is less important than relevancy
- How to research demographics and trends
- Knowing how your concept reflects current trends
- Determining your restaurant’s target market
A successful restaurant starts with a great concept, but simply having a great concept isn’t enough. It must be relevant to your market, which can be intensely local. A great restaurateur is constantly learning lessons and making discoveries about markets.
In this chapter, we’ll talk about doing market research, defining your target market, and understanding your target market’s dining habits in order to develop a concept that meets the market’s needs.
Relevance is a mantra, the key word for sustainable success. Relating to your market and reflecting the modern lifestyle is critical in creating a lasting relationship with the consumer.
The internet has flattened the world. These days, consumers immerse themselves in food, chefs, cooking, and the latest restaurants. Chefs are like rock stars. Closer to home, farmers are our rock stars. Farm-to-table, organic, and sustainable are some of the local trends. We all have our short list of dining discoveries we love to turn our friends on to. What are the places you tell your friends about? What are the places you go back to again and again?
Those places reflect current dining trends. Maybe they serve made-from-scratch pizza fired in a seasoned wood-burning oven, or fish tacos with spicy mango salsa, or craft beer with a pub menu replete with house-ground, hand-formed hamburgers and raw and vegan offerings.
Competition
People love to tell you that 90 percent of all new restaurants fail. Actually, 30 percent of restaurants fail in their first year. Failure is often attributed to competition, but other restaurants aren’t always the cause of a new restaurant’s failure.
SMART MOVE
An important part of your boots-on-the-ground market research is gathering information on how much restaurants in your area are charging. You should know the upper threshold for prices in your location.
Don’t worry about your competition. That’s not to say you shouldn’t know your competition. But it’s far more important to think about whether your restaurant concept is relevant to the contemporary marketplace and its consumers than to wonder and fret about what the other guy is doing.
Relevancy Is Local
Understanding your market is key to your success. Jody lives in Greenwich, Connecticut. What’s relevant to Greenwich? You’ve got a world-class audience, people with Manhattan cachet. They’re smart and well-traveled, but they’re not flashy. What do they want? A lot of them want the friendly welcoming atmosphere of the local country club on Thursday nights and hearty food like a good prime rib. The club makes its members feel like members. It makes them feel at home.
The people who go out to restaurants want the same thing the people who go to country clubs want. They want to be made to feel welcome.
For example, Jody helped start one of the most successful new restaurants in Greenwich, named Gabriele’s. It’s a high-end Italian steakhouse that’s packed every night. The key to the place is Tony, who greets everyone at the door and makes them feel important. On his night off, however, there’s a built-in 30 percent deflation to the experience of dining there.
The key to success is to make the customer feel welcome from the time they step inside your restaurant.
Learning from Mistakes
The biggest lesson Jody ever learned about market relevance was also from one of his biggest mistakes. A famous Latina singer and her husband started a flashy and fun club/restaurant in South Beach, Miami. It harkened back to the Ricky Ricardo era of the big band music in Cuba. It was a great concept, and a lively place. Jody partnered with her to create more of these clubs elsewhere. The business venture was a failure. Why? Because it turned out what works in South Beach doesn’t work in Fort Lauderdale.
These clubs failed because the idea wasn’t relevant to Fort Lauderdale’s market. The customers in Fort Lauderdale came from places like New Jersey, not Havana. They weren’t interested in heavy Cuban food. They didn’t have a history of eating Cuban food, and didn’t understand the culture beyond the veneer of mojitos, Cuban sandwiches, and hand-rolled cigars, so they weren’t likely to eat it regularly.
POTENTIAL PITFALL
Latin food has become increasingly popular; however, the contemporary diner is unlikely to want to eat completely authentic Latin food. For example, few diners want to order Mexican menudo made with tripe (cow’s stomach) or the barbecue skewers of chicken hearts that are popular in Brazil. Contemporary American diners prefer steak.
On paper, the concept of a fun Cuban club/restaurant seemed like a “can’t miss” restaurant. But relevancy is everything. The brand was relevant in Miami—the epicenter of Cubans in America. However, just 25 minutes away in Fort Lauderdale, the concept wasn’t relevant at all.
Matching Genre to Market
Restaurateurs who have successfully mined the Cuban theme, such as Jeffrey Chodorow with his Asia de Cuba restaurants, riffed on the concept of a contemporary South Beach nightclub atmosphere, combined with modern Latin cuisine. Dinner is theatre, and drinks such as Brazilian caipringias (sugar-cane rum muddled with fresh limes and syrup) and mojitos filled with fresh mint transport urban professionals in a cold city to a warm tropical climate.
A Modern Latin menu can include ceviches with Asian influences, such as shrimp in ginger-coconut-lime broth. The trend of health-consciousness can be incorporated with Rick Bayless, of Chicago’s Topolobamba, Mexican-inspired sautéed kale and black bean tacos topped with toasted pepitas—pumpkin seeds. Even classic French pairings such as foie gras and apples could be Latinized with tropical fruit.
Chef Doug Rodriguez, considered the father of Nuevo Latino Cuisine, who opened Patria in New York City in 1994, is Cuban-American. He opened Alma de Cuba in downtown Philadelphia with restaurateur Stephen Starr in 2001.
The famous dessert is a cake in the shape of a cigar, complete with paper wrapper, and a matchbook made of some sort of sugar concoction. The waiter lights one of the faux matches, and the scent of browning sugar wafts over the table. Tableside displays of fire are traditional in French cuisine. Think Crêpes Suzette. This is how a restaurant surprises and delights guests.
These are examples of how contemporary restaurants transport customers to some imaginary place, a warm climate where the drinks are refreshing, the staff is welcoming, and glamour is in the air. People come to a restaurant to enjoy life.
More Lessons
Understanding local traditions is important to being relevant to the market. When Jody contemporized a tired and Americanized genre, Chinese, he opened eco-friendly organic Chinese restaurants in two markets, in Westchester, New York, and Greenwich, Connecticut. These markets turned out to be very different from one another, and offer lessons for the beginning restaurateur. Ten miles isn’t far geographically, but it can be a world apart, culturally.
His goal was to bring a bright, fresh approach to a genre that was dwindling because of the American audience’s awareness of wellness and health. In Greenwich, the clean, all-white, contemporary design and health-conscious menu got an initial burst of curious customers. But it didn’t last.
The lesson: The locals, though well-traveled, didn’t have a tradition of or passion for Chinese food.
In Westchester, however, the genre resonated with the consumer. There was a tradition and passion for Chinese food. When a restaurant updates the food and environment of a beloved genre, it creates energy.
On Fridays and Saturdays, and somewhat on Thursdays, people look for experiential dining. The restaurant’s design and the organic menu executed by Hong Kong chefs provided a new experience that enhanced the cuisine. The restaurant was busy Thursdays, Fridays, and Saturdays.
However, contemporizing a genre can sometimes cause a disconnect with the consumer. Westchester consumers were used to engaging with Chinese food in a specific way. Sunday was the big day and evening for Chinese food. The old-school Chinese restaurants, with their red banquettes and bastardized food, are informal places, and Sunday is often about casual dining, wearing your sweats to the restaurant and then going home to watch a movie. This contemporary Chinese restaurant wasn’t a sweat-pants kind of place.
The lesson: As you explore how you will contemporize a food genre, think about how consumers are used to experiencing it; when do they eat it, how often and is it casual or fine dining?
Drinking habits are another area to explore. Because Jody was appealing to the health-consciousness of his Greenwich consumers, he included fresh-brewed teas, and beer and wine. In Purchase, New York, the restaurant had a full bar. He quickly learned that most Purchase customers didn’t drink. Whether there should have been a full bar and special cocktails in Greenwich became a matter of much debate with his managers. That’s how it goes in the restaurant business—everyone’s got a lot of opinions.
The lesson: Understand your target audience’s drinking traditions.
SMART MOVE
Avoid neighborhoods that are too quiet, where the majority of potential diners are over the age of 60. In places like that, everyone has dinner at 7:30, and your restaurant’s a ghost town at 9. That doesn’t work. A restaurant needs turnover from the moment it opens to the time it closes.
The lessons of these two nearly identical restaurants show how intensely local markets can be, and how important it is to really understand your target market, their dining and drinking habits, and traditions. Jody decided not to change the Greenwich restaurant’s drinks program because the drinks were not the issue. The food concept did not engage the consumer in that market. He closed the Greenwich restaurant and began targeting new markets and locations for the concept.
Takeout
Many people would rather not cook on Mondays, likely due to the bustle of the weekend before. For many, Chinese represents takeout, but you need to know your market to know what sort of takeout restaurant works in the area.
For example, Jody’s Chinese restaurant offered takeout in Greenwich. However, delivering to the mansions of back-country Greenwich turned out to be a nightmare. Far away from the restaurant’s location, these mansions were off winding roads and locked behind enormous iron gates. Deliverers would have to buzz and wait, then go through the hoopla of opening the gates, which were guarded by a giant growling dog. Then the delivery guy would be afraid to get out of the car.
Jody turned to serving the corporate community, where takeout turned out to be a better bet with standing orders of dinner for up to 60 people every week.
Finding a night to close to save labor costs one night a week can be a challenge in a Chinese restaurant. It’s really hard to choose. Sunday is the biggest Chinese night. Monday’s a big takeout night. Tuesday and Wednesday, it’s an alternative to a full-on dining experience.
The market has many nuances. You must know your market and its nuances when choosing what type and where your restaurant will be located.
Adapting to the Market
In addition to recognizing the market’s nuances, you also have to be open-minded and flexible, without diluting your concept. Your plan must be flexible enough to contour to the terrain of the market, which will have peculiarities you might not have anticipated.
POTENTIAL PITFALL
Service is a problem in secondary markets. Finding a reliable and professional staff is difficult. Limiting service by having less formal contact with guests or by having counter service is a model for getting a powerful food concept across to this market. You won’t be undermined by bad service and turn-over by limiting your service. The concept hasn’t changed but the delivery model has, making it more stable. Restaurants can manage customer expectations–customers will stand in line at places where the service is grumpy and hurried, but the pizza rocks.
When adapting your concept to the market, start by looking for high-visibility and small-footprint spaces, with smaller square footage and lower rent, such as those near train stations. Locate your takeout restaurant where highly educated, affluent people are willing to pay more for the higher-quality takeout.
Note, you should always start with developing your concept, then think about the market relevancy. Then, and only then, can you start thinking about your location, and fit the location to your restaurant’s concept. Don’t start with the location. (We’ll talk about location in depth in Chapter 6.)
Market Research
This is your industry. You must know the trends. This doesn’t mean we want you to fit yourself into trends, because what you really want to do is find a way to express your own unique vision.
Understand your market. Know the region’s history, and understand its prevailing trends, what has worked, and what hasn’t. Know about the various parts of your town or city and what’s important to its citizens. How long have local politicians been heralding the revival of the riverfront? Has the commercial-residential vision of the local developers brought more young professionals to Main Street?
To do demographic research, we suggest you visit the town. Go sit at an outdoor café and watch the people. Walk the streets, and look at cars. Are they Toyotas or BMWs? Look at the stores. Are there recognizable brands or are the stores independent? Are people walking on the streets? Are they shopping? Are they carrying coffee? Do they have disposable income?
Check out which restaurants are busy and which ones aren’t. When you go into a restaurant, sit near the waiters’ station where you can overhear conversation. You can pick up plenty of information about the local restaurant scene by listening to waiters. Also, talk to the bartender and ask about the restaurant. You may find out that brunch business is really busy with lines out the door and that Mondays are dead. The staff tells the truth, while owners will paint a falsely optimistic portrait.
SMART MOVE
Start building a profile of the people in your target market. Keep doing your espionage. Look at who is dining out. Who are the regulars? How many nights do they go out? Are they families, friends, or singles? Gather enough information to understand who they are, what they do, and where they do it.
Official Story
You can get plenty of demographic information from your town’s website. Most towns have departments of economic development that create town profiles available on their websites. Keep in mind, however, that the data is usually two to three years out of date. Town profiles usually include:
- Population
- Projected population growth
- Median age
- Breakdown into age distributions
- Major employers
- What towns residents commute to
- What towns workers commute from
Keep in mind, there isn’t a perfect way to process this information. Knowing that the median age of the population is 41 and the median household income is $74,728; that 70 percent of the population is white, 24 percent is Hispanic, and 6 percent is African American doesn’t tell you what the dining scene is. You need to narrow it more by focusing on what segment of the dining market you’re targeting. You need to revisit your concept.
Say your concept is New England seafood. There are a whole bunch of questions you need to ask yourself about the genre of New England seafood. You’ll also need to do some research to answer these questions about your restaurant concept. Do not fear—there’s a wealth of information out there on restaurant trends, from restaurant trade associations, consulting firms, organizations like the Small Business Association, and yes, even blogs.
To determine how relevant your concept is, ask yourself the following questions. (Insert your concept for the seafood concept.)
- How popular is seafood?
- Has it grown in popularity?
- What are the dining trends in seafood restaurants?
- How do those trends reflect contemporary lifestyles?
- How has seafood fit into the local lifestyle, and how has that changed or remained the same?
- When you think of how New England seafood has changed, can you place those changes as part of a larger movement?
As you build the answers to these questions, you will begin to understand your target market and whether your concept is something diners want.
Market Bandwidth
Next we’ll look at the seafood restaurants in your area. Look at the market bandwidth—the range of offerings in terms of price and sensibility. The list of local seafood places will range from a shack overlooking the harbor that fries frozen clam bellies to the mid-level casual seafood house chain at the mall to the expensive high-end place people go to celebrate anniversaries and graduations. You will plot the local seafood restaurants and see where your restaurant falls into the bandwidth.
Jody knew his organic Chinese restaurant was speaking to the contemporary market because so many people in town stole the components and opened their own “healthy Chinese” restaurants.
They thought all the organic restaurant did was tout fresh, high-quality ingredients. Owners would steal the menu and then hire a designer who puts up reclaimed wood and fancy light fixtures with Edison bulbs. It’s a contemporary look, but it doesn’t speak to the changing culture of the genre. They chose to copy our menu without paying attention to how to execute the concept. They didn’t succeed because they couldn’t execute the idea. They couldn’t manage all the minutia of the business.
Creating a restaurant concept that’s relevant to the market is a craft. People ask, “Are you afraid someone will steal your concept?” We each have our own technique. Five people can play the same song on the guitar and none will ever sound the same. It’s better to follow your natural style than to follow someone else’s version.
The Least You Need to Know
- A great concept can thrive in one market but fail in another.
- Conduct market research by walking around your city or town, eating in restaurants, and watching people and their consuming habits.
- Understand how your food genre has or has not adapted to contemporary dining trends.
- Don’t worry about competition; it’s less important than market relevancy.
- Other restaurateurs may try to steal your concept, but your execution of the details of running your business will help you succeed.