RESTAURANTS MUST CREATE VALUE BEFORE SELLING PRICES

RESTAURANTS MUST CREATE VALUE BEFORE SELLING PRICES

Why should people spend their hard earned money in your restaurant? How many chefs and restaurateurs have ever stopped to seriously ask this question? Build it and they will come may work in “Field of Dreams” but has little merit when contemplating the build out of a restaurant.

It is never wise to assume that just because you can cook others will flock to purchase what you make. There is so much more involved when one is trying to establish a viable business with staying power. Your intent should always be to create a restaurant that will still be earning money 20 years down the road. To do this requires that the chef/entrepreneur have answers to that first question: “why should people spend their hard earned money in your restaurant?”

The answer to the question of the day revolves around the value that you are able to create. Will the meal be worth the money spent? Before you rent or buy a piece of property, before you determine the ambience of the dining room, before you layout your kitchen and purchase any equipment, before the menu is planned, before you hire a single employee and certainly before you establish your pricing structure, this question must be answered.

Interestingly enough, there is little difference between a low priced, quick service restaurant and a fine dining establishment with extensive wine selections when it comes to determining value. Value is not exclusively reflected in how much is charged, it is totally drawn from the perception of worth. Let’s take on two current examples that I find most interesting: Danny Meyer’s Shake Shack and Café Boulud.

For those not familiar with the concept, Danny Meyer – New York City Restaurateur extraordinaire and owner of such landmarks as Gramercy Tavern and the Union Square Café, opened a burger, hot dog, fries and milk shake joint a few years back – probably more on a whim than anything else. The concept was simple: make great burgers, hot dogs, fries and shakes like they use to be and see what happens. This was built in stark contrast to his empire of exceptional fine dining operations in the city so it drew a lot of interest and questions. The result was a to-go concept that was instantly and insanely successful. This was in 2004 – now Shake Shack can be found in 11 locations in NYC, six other states, the District of Columbia and four other countries.

Danny Meyer’s Shake Shack Food Philosophy is simple and to the point:

“Good Ingredients
100% all-natural Angus beef, vegetarian fed, humanely raised and source verified. No hormones or antibiotics – EVER. We pride ourselves on sourcing incredible ingredients from like-minded artisanal producers.”

He goes further to describe what I would refer to as their real “value statement”:

“We stand for something good in everything we do, which also means thoughtful and sustainable design of every Shack, community support through donations and programming, and hand-picked music played in each Shack (because a burger tastes a little better with good tunes).”

In other words: to support Shake Shack is to support your community. This is a bond that allows the restaurant to be a member of the community family and an integral part of each resident’s life. This is a powerful value statement that trumps selling price.

A personal experience with this concept that stands out was a business trip to NYC with a colleague when we decided we had to try out Shake Shack (this was after dinner the previous evening at Café Boulud – quite a change of pace). We arrived at the location on 8th avenue only to find a line about ½ block long. The restaurant was full and they were only letting a few people in at a time to control the crowds. Directly across the street was a McDonald’s that was completely empty. After about 30 minutes we were allowed in and ordered our burgers and fries. The smell was intoxicating (It was reminiscent of burgers on your grill during the month of July), the staff was friendly, the music was spot on for the environment, people were laughing, and the kitchen was full tilt. Our burgers were fresh and sufficiently greasy like they should be, the buns were toasted, the fries were crisp and we stood in a corner (no place to sit) and thoroughly enjoyed the “experience” of Danny’s Shake Shack. Wow!

I have no recollection of the price of that meal, just the “value” received. The previous nights dinner at Café Boulud was extraordinary. Unlike Shake Shack, this was impeccable dining with world class service, a simple but elegant dining room, breathtaking food flavors and presentations and a tour of the kitchen afterwards with Chef Gavin Kaysen that was awe inspiring. Once again, I have no recollection of the price (likely multiple times more expensive than Shake Shack) but only have fond memories of the “experience” still after nearly two years.

Value is not price, but price becomes relevant more and more as the value experience is diminished. Why would people spend their hard earned money in Shake Shack? They would and do because the product, the service, the community involvement, the food philosophy and the name are synonymous with value. Why would people spend their hard earned money at Café Boulud? They would and do because this is an exceptional example of every detail being viewed as important by the owner, the chef and the dining room attendants. In both cases, the experience continues long after the exchange of money for product and service.

Restaurants can create value by looking at those things that are important to consumers and those things that are lacking in the marketplace. It may be product, service, attention to detail, food sourcing, commitment to community, presentation or entertainment. Whatever value statement you make, please ensure that it does not solely focus on price. Without value, price becomes of consummate importance to consumers. With exceptional value, price will be the first thing forgotten. Ask the question and find the answers: “why should people spend their hard earned money in this restaurant”. What is your VALUE STATEMENT?

For more information about Shake Shack, visit their website at:
http://www.shakeshack.com
For more information about Cafe Boulud, visit their website at:
http://www.cafeboulud.com/nyc/

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