Over the last couple of months we have spent a great deal of time looking at and reviewing the independent foodservice market.
It is vast with well over 150,000 outlets, ranging from kebab and fish and chip shops to caf eacute;s and coffee bars, leisure centres and pubs, clubs and bars., each offering a tailored offer to satisfy their customers’ needs.
Talking to the owners of some of these establishments one becomes immensely impressed with the hard work and dedication they put into their businesses, looking for that unique angle to get them more customers or greater loyalty from their existing customers.
They suffer immensely from legislation that makes employing more people difficult and costly, red tape from HM Revenue amp; Customs and the Department of Health along with the constant threat of the bigger more sophisticated operations opening close by and taking their trade.
They are extremely aware of the cost of goods, almost everyone remarked about the cost of eggs soaring and many could tell you the price of Coke both GB label and the various European Coke labels currently available in the marketplace.
In addition they were acutely aware of what price they could ask their customers to pay, and it was obvious that this heightened interest on cost price was being driven largely by wholesalers who were treating them through promotions in the same way that the multiples treat their shoppers.
Someone once said that ‘Price is the first tactic of the incompetent’. Their view was that because price is so easily copied by competitors its shelf life as a tactic to enable a strategic advantage is extremely limited. This is all true but the halo effect of sharp prices for promoted lines is being seen by customers as always being competitive.
However, one savvy caf eacute; owner noted that when he went to his local cash and carry he had to employ an extra person and, therefore, the savings for that visit needed to be significant versus the delivered option to make it worth his while. We can all be busy fools saving a few pennies when the bigger prize is ensuring customer satisfaction and loyalty that offers a sustained business.
We often look at the provision of goods and services to our customers on the basis of what we can do rather than what they want. It may be that if some wholesalers looked through the other end of the telescope they may find a new business model that fits a wider group of customers rather than simply out-pricing their competition and wasting good margin on promotions that are shifting huge volumes but attracting little profit.
A great example of this is in a local small town where there was a very small fruit and veg shop that focused on local and organic produce, Prices were higher than the local Somerfield and Co-op but the emphasis on quality was there to be seen and consequently there were queues outside the door on most days.
When the Co-op bought Somerfield, one of the stores was closed down by the Co-operative Group, and the owner of the fruit and veg shop bought the closed store, and opened not just a much larger fruit and veg shop but included a caf eacute; area that in the evening converts into quite a good restaurant. The products sold in the caf eacute; and restaurant are all made from ingredients sold in the fruit and veg section enabling customers to sample the quality while paying for the privilege.
Not only are there queues now for the fruit and veg shop but it’s difficult to get a table at the restaurant on a weekend evening. A real example of an entrepreneurial businessman seeing the world from the viewpoint of his customers.