Maintain your customer base by offering better service

In my suburban neighborhood of Los Angeles, I have a reasonably wide choice of restaurants that I visit with some frequency. Most of the time, these range from “casual”, to “semi-fine dining”. Some of these are the larger, more familiar chains and some are restaurants with a single location.

As the economy worsens, and competition for customers increases, restaurants are taking different approaches to survive and hopefully maintain their profit margin. Let me review what I have found, and how it’s changed my dining choices.

Large chains

The large chains appear to focus on cutting cost by increasing the choices of “cheap” food and in some cases reducing the portion sizes while keeping prices the same or even slightly increasing them. Staff turnover also appears to have increased, maybe another effect of cost cutting.

These are actions that make sense from a business point of view, but overall, as a guest, it creates a less appealing restaurant experience.

Single location restaurants

While the strategies of the large chains are all pretty similar (as can be expected from companies run by professional mangers) single location restaurants have employed extremely variant tactics.

One group goes to the extreme in cost cutting - much lower quality food and significant price increases - at the same time.

The other group focus on creating a better overall restaurant experience; the food quality is maintained, the number of staff and the service level are both increased. Prices are not decreased. Examples of service increases may be that the manager may greet you in person, or you may get a free appetizer or dessert, or maybe when you order take-out you get a free drink while you wait.

It is quite easy from the above to figure out how the different strategies these restaurants have adopted have driven my behavior. The single location restaurants who both increase price and decrease quality have lost me as a customer forever. And this, sadly, includes some of my all time favorites.

So, now let’s look at what’s ends up driving my dining decision-making. On one hand I have large chains who provide a “reasonable” restaurant experience for a “reasonable’ price; compared with a segment of single location restaurants that offer an “excellent” experience for a little more money. In this scenario, the dynamic of “value for money” has changed to favor the single location restaurants even though they are somewhat more expensive then the large chains.


OK, so why has this story made it into my pricing blog? Well, it is here to show you that there are always different options, even in this economy. There will alway be a portion of buyers who make their purchase decisions based on low price and brand - and in this example will continue to visit the large chains. But, likewise, there will always be a portion of buyers who will be wiling to pay somewhat more for something better, in this case better service, higher quality food, and overall, a much better dining experience.

The trick for your company, of course, is to know what services and what quality improvements you can employ cost-efficiently that will add value to your offering, that will maintain your customers while attracting new ones at the same time… in this economy.

With not so hungry regards,

Per Sjofors
Founder/CEO
Atenga Inc
818 887 4970
per@atenga.com