Magic in Retail: The Restaurant Business

Two things drive the restaurant business.
The first is Word of Mouth. The second is reviews in newspapers, magazines, and broadcast media.
In the case of new restaurants, the speed of getting up to speed is critical, because a new restaurant is
living off its investment, which can be rapidly depleted if enough covers don't materialize quickly.
In the case of a long-established restaurant, it is absolutely necessary to fill the leaky bucket – loyal customers are constantly being lost to relocation, boredom, even death. Attrition is inevitable. Obviously, it takes a lot of new, first-time customers to replace a single regular. And word of mouth and restaurant reviews are less likely for an established restaurant. A new restaurant is news. An old one is old news.
The Greek philosopher Heraclitus said it is impossible to step into the same stream twice. Nowhere is this more true than in the restaurant business. Thus, it becomes necessary to recruit new customers to your restaurant by creating news, creating awareness, and communicating the restaurant's uniqueness, its menu, and its very existence. It's been said that the three most important things in retail are location, location, location.
If a restaurant is in an out-of-the-way location, it becomes even more imperative to actively promote it.
The best promotion involves a narrative. After all, the function of a restaurant is far more than providing a nutritious, tasty meal. A restaurant is an experience; it is as much entertainment as food. This is especially true if the restaurant is on the expensive side. It then becomes a "special" place for special events. The risk is that there are not enough special events per customer. No restaurant can survive, much less prosper, on special event business.
This creates the need for a much broader customer base, which, in turn, can result in a much broader loyal repeat customer base.
The other problem for a restaurant is if it appears not to be popular. This can devolve into a self-fulfilling prophecy. Something must be wrong with an almost empty restaurant, the customer reasons.
This was the case with Cafe Between the Bread, a really fine Manhattan, New York City restaurant in what had been an extremely desirable location within a block of City Center and Carnegie Hall.
The disaster occurred when Carnegie Hall was closed down for extensive renovations (which were to take 18 months) and City Center closed down for a couple months. Customers dried up.
Suddenly, the restaurant was all-but-forgotten. Staff outnumbered customers by five to one. Clearly, this situation could not be allowed to continue. Fine restaurants have excellent staff, and very perishable foodstuffs. I was referred to the owner.
After a thorough briefing, I took my wife to the restaurant for dinner. We were the only customers in the place. It was eerie. But in a way, it was very romantic. Candles on the table, and we had the whole place to ourselves, with captain and waiters falling over themselves to cater to our whims. For the owner, it was a lot less romantic.
One rule of life is, when fate sends you lemons, make lemon souffle.
We created two full-page ads positioning the place as the most romantic restaurant in New York City. Great food, great wine, great service, and a truly romantic ambience.
The phones started ringing, and on the day the first ad ran, the restaurant was booked solid. By the second ad, some customers began to complain. The place was too crowded to be romantic!
The Manhattan Ocean Club had a completely different problem. It was owned by the most successful restauranteur on the planet: the owner of Smith & Wollensky, the Post House, and several other big moneymakers. The Manhattan Ocean Club had been in the same location for several years, it was two blocks from Broadway, and a block from the Essex House and St. Moritz. It was across the street from a very popular restaurant frequented by many execs of CBS, which was right down the block.
The restaurant's problem was, ironically, its name. I'd passed it hundreds of times, and thought it was a littoral society, a club for seafarers, sailors, shell collectors, or fishermen. I was truly surprised when the owner told me it was a restaurant. And a really fine one.
I advised this extremely knowledgeable restauranteur to add the word "restaurant" to his marquee.
And we ran a full-page ad in the NY Times Magazine section. The headline read: The Manhattan Ocean Club is a misnomer. That got their attention. The restaurant filled up in no time. And stayed filled, because it was a great restaurant. Elegant, beautiful, lots of fresh flowers, great seafood, fantastic desserts, superb staff.
All it needed was appropriate identification. Who'd of thunk it!

The Role of Stealth Marketing in Closing the Sale. Now it can be told.

Money talks.  Which is why, all things being equal, big companies win more than their fair share of business.

Nixdorf Computer was the largest computer company in Germany (now Siemens Nixdorf) and one of the largest in Europe, where it had made huge inroads into a number of industries, especially retail.  Nixdorf computer systems could be found in department stores, hotels, automotive companies, heavy industry, &c.

In the U.S., Nixdorf USA was a Johnny-come-lately, and had to prove itself in direct competition with much larger, older, and well-established competitors, several of which were household names here in the states. 

Nixdorf's greatest strength was in retail, here as well as across the pond.

So, it was only natural that after a lot of hard work, it found itself in the final round of competition for the Nordstrom's computer system, including smart terminals at every cash register in every store.

The two other contenders were household names, and outspent Nixdorf USA ten to twenty to one in advertising and public relations.

Now, toe to toe with these giants, the Nixdorf people were confident that they offered by far the best system – hardware, software, communications, and the best service.

They were well aware that customer service was embedded in the DNA of the family-owned Nordstrom's operation.  Other department store chains might compete on the basis of price, product, location, or snob appeal.  For Nordstrom's, it was service.  Customer service had built the company, and a reputation for customer service kept it in business.

A good retail computer system can improve inventory control, reduce shrinkage (a euphemism for theft) put the right items in the right store, and reduce the necessity for markdowns.  But perhaps most of all, it can improve and personalize customer service.

The problem is, service, like competence, is notoriously difficult to quantify.  Everyone claims it, and everyone provides it.  More or less.

The Nixdorf IT department had taken the bidding process to the final level.  Now the decision on this multi-million-dollar installation would be made behind closed doors, by members of the Nordstrom family.

There was a condition, and a deal-breaker caveat.  Under no circumstances might a vendor approach any member of the family with a sales pitch, under pain of disqualification and forfeiture.

The Nixdorf team had  no way of knowing whether one of the competition had an "in" with the family; in fact, it was not deemed unlikely.  So matters stood, and the final decision was only a few weeks away.

With an air of resignation, the director of sales asked me if there were anything at all that could be done to stealthily influence the decision of seven people in a closed room.  

Well, we could put up an outdoor billboard outside the flagship store (we had done that once before, successfully, in another bidding situation with another company in a different field) but that would be too obvious in this case, and might disqualify us.  Direct mail was obviously out of the question.

If we'd had a huge ad budget, we could have blanketed a hundred major markets plus the Wall Street Journal, with advertising, and make a giant splash.  But we could only dream of such a budget.

Then, an idea occurred to me.  We didn't need to reach 100 major markets.  Our decision makers were ensconced in an office in Seattle, Washington.  For under ten thousand dollars, we could buy a full page, two color ad in both the Seattle Times and the Seattle Post-Intelligencer on the same day.  And blanket our audience of seven.

Handled properly, and with luck, the ad might appear to be part of a nationwide campaign.  But what to say?  The obvious topic, was, of course, service.

So, a week later, the ad appeared in both papers, under the headline:

NIXDORF SERVICE IS RELENTLESS

EVEN IN THE FACE OF A 7.9  RICHTER EARTHQUAKE.

The ad told the story of how a Nixdorf computer system, which had been installed for the Montgomery Ward chain, had been at the epicenter of a California earthquake, and how the Nixdorf quick-response service team had rushed to the site – even before checking on their own homes – and got the entire system up and running within 48 hours.

When the sales director was invited to the inner sanctum of the Nordstrom corporate offices to be informed that he had won the business, he was gratified to see his ad posted on the conference room wall.

Sufficient time has passed, that there's no harm in telling the story now.  But the lesson is clear.  Anyone can look like the biggest kid on the block for five minutes.  Provided you concentrate your dollars, co-ordinate your efforts, and tell a relevant, powerful story truthfully and straightforwardly.

Sometimes, even the best man can win.