The tale of two restauranteurs

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I went with friends recently to an Italian restaurant that has been running for several years and had to stand outside in the queue waiting for a table. The restaurant is thriving but the original owner and founder who moved on to find his treasure in another local suburb is doing very badly, barely surviving.

When we sat down at a table eventually, our host who’s been eating at the restaurant for many years explained that the original owner got tired of running the restaurant and wanted something more exciting. He sold up and departed for a new suburb where he is battling to bring in customers and it looks like he’ll eventually have to shut his doors.

If you look at the location of the restaurant that he sold, it’s an unlikely place to find treasure from customer demand. The restaurant is stuck between two neglected shops in an ageing building. There is no outside signage. Yet customers queue up nearly every evening of the week to get a table. The restaurant itself only has about 20 tables, if that. But all this means is that the profit margin is much better because the overheads are so low.

The new owner looks very happy with the strong business he acquired. He’s also on much better terms with the head chef. He continues to give customers what they want: a relaxed atmosphere with good food at reasonable prices.

The other day a restaurant owner who I’ve known for some time told me what he’s been doing since he sold his restaurant that was doing very well this year. He initially went for a new restaurant in a high traffic suburb but eventually got out of the deal because he wasn’t willing to accept the onerous terms from the franchise owner. He also didn’t like the idea of working almost every day of the week in the business serving revellers right up until before midnight.

This restaurateur bided his time until a shopping centre owner approached him with a franchise pizza outlet in another suburb which had been badly neglected by the present owner. The owner was a young guy who had several sports cars, was never at the business and took more interest in gambling and stock car racing. The result – he wasn’t paying the rent anymore.

The restaurant owner I know jacked up the franchise pizza outlet and within three months he has doubled turnover. All that was required was giving the pizzeria outlet a face-lift and doing some basic pamphlet marketing to the businesses in the area to increase lunchtime sales. The buried treasure in this business is that the new owner relies on takeaways for most of his business which means that he doesn’t have to suffer the gruelling hours that most restaurateurs face running restaurants.

Identifying growing local markets in any business can be a hit-and-miss exercise unless you do your homework. The restaurateur I know was driven to find a stronger market opportunity because he wanted something where the business was skewed to higher takeaway volumes. With so many choices available to consumers running a sit-down restaurant can be financially draining and physically exhausting.

It pays to have the right treasure map to find customers who can offer a stable but growing source of revenue in this economy.

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