Newsletter: October 2007

Small example of Strategy and Execution at play

A few months ago I was on holiday in Alcudia in Majorca with my two sons. One day we decided to go down to the Port and sit in a bar having a few beers. My eldest son was expressing an interest in developing a career in marketing and we started to discuss what this might entail.

During our conversation we started to discuss the art of marketing in the restaurant and bar trade. (One thing that has always amazed me is when you walk along a street full of restaurants and bars, some of which are constantly busy and others that are not, what actually is going on in the minds of the management of the less than busy ones).

From where we were sitting we could see a number of restaurants and decided to pick on three and analyse why they were or were not busy. The three restaurants we decided to consider were 2 spanish restaurants located next door to each other in the town centre and a Chinese restaurant located approx. 200 yards away but beautifully positioned directly on the beach with great views over the bay.

We visit the area at least 4 times per year and we know that one of the Spanish restaurants is always busy, the other is rarely busy as is the Chinese restaurant.

We decided to rate the restaurants on a number of factors as follows:

Following this back of the envelope rating system we analysed what was really going on.

1 Alcudia is a seasonal resort with many restaurants open only from April to October. All the above restaurants are open all year round and therefore attracting the local market is crucial. Only one of the restaurants attracted the local market in any numbers – Spanish 2. We felt that this was because it offered cuisine that the local market wanted and of a quality that surpassed most of the competition.

2 It seems good news travels quickly. Many of the more affluent tourists seem to find out about Spanish 2 restaurant even if they are visiting the resort for the first time. These tourists tend to want to eat high quality local dishes for most of the time during their visit.

3 Although quality of service is important it seems that if the type of restaurant and the quality of food is not good enough the restaurant will not be successful.
We then decided to consider what the strategic options were for each restaurant.

Spanish 1
It seemed to us the options for this restaurant were:
a) to up its game by significantly improving the quality of its offerings in an attempt to surpass the quality in Spanish 2 or
b) reinventing the restaurant with another offering – type of food, entertainment etc

Spanish 2
We felt that the best option for this restaurant was to continue to build on its strengths but never get complacent.

Chinese
We were worried for the owners of this restaurant. Alcudia has a significant number of Chinese restaurants and competition for those that want this sort of food is intense. Our conclusion was that the only option was to take out the rest of the competition by becoming extremely high quality. (Our favourite restaurant, the Riverside Cantonese in Cardiff, is in another league).

We then decided to analyse what we thought might happen to the three restaurants. We felt that the probability was that only 1 of these restaurants would be around for the long term because the management teams of the others would fail to react to the problems they face.

This view is founded on the belief that most management teams fail in the critical work of setting, implementing, reviewing and updating strategy to ensure at least a fighting chance of survival and make possible the level of success they require even when the need for it is staring them in the face.