HotOperator Money

Answer This Question: Is Your Restaurant Food A Commodity?

To better understand if your restaurant food is a commodity, we need to better understand what a commodity is in the first place. According to Wikipedia, in economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs, which includes goods and services.

The more specific meaning of the term ‘commodity’ is applied to goods only. It is used to describe the class of goods for which there is demand, but which is supplied without qualitative differentiation cross a market.

Did you get that? Without a qualitative differentiation. That means no point of difference.

Let’s break it down, because this is important to your business.

Without – you know what that means, when you’re without, it means you don’t have that, and in this case, that’s a really bad thing.

Qualitative – relating to, measuring, or measured by the quality of something rather than its quantity, which, in this case, being without means we’re measuring the number rather than the style.

Differentiation – recognize or ascertain what makes someone or something different. In other words, to differentiate is to make one special, different and better.

Why am I telling you this?

Because I was talking to a food distribution executive the other day and he said: “The distribution business has effectively commoditized restaurant marketing for independent restaurant operators, and specifically the restaurant menu.”

And I thought: “Wholly crap! Why would anyone want to do that? Especially someone who depends on restaurant operators being successful?”

Then the answer came to me – you asked them to, my friends. Restaurant operators who do not understand the importance of marketing asked for a really cheap way to market their businesses. And distributors have provided it. You can get a menu for a few hundred bucks. You can get marketing support from most distributors for FREE. Who wouldn’t want that, right?

Would you like to know the downside to that cheapness? I can do that in the form of a question: Why is advertising one of the largest industries in the world? According to Statista global advertising spending was about $563B in 2018. Why would anyone spend all that money on advertising? Really, what could possibly be the reason?

I’ll give it a moment and let that thought sink in. $563,000,000,000.00. And what did they get?

If you think that advertising and marketing communications is a commodity, then all that money was wasted. If you believe the distribution executive I quoted earlier, they got nothing for all that money. May as well have put all the money into a big pile and burned it.

But if you believe that advertising spending gives you a return on investment, then they got a lot. If you believe, like I do, that excellent marketing will return about $6.00 for every $1.00 spent, then they got $3.378 Trillion in return. Let’s see, that’s $3,378,000,000,000.00.

When I put this to the distributor, his answer was: “Well, some of our menus helped some of the restaurant operators, and it’s a step up from what they had.”

Not much confidence. An ‘Okay’ solution will not take your business to the next level. Good enough will not get your business to grow. Saying your advertising spend “May actually help you” is like building a bridge half way across a river. You will never reach the other side, so unless you were just looking for a better view of the river you got nothing at all in return for your investment.

If the everyone in marketing did what distribution is doing to restaurant marketing, many of the products you love best would disappear. The magic would be gone. There would not be a point of difference.

The last thing you want is for your products to be a commodity. Even McDonald’s products are much more than a commodity. The Big Mac can only be gotten from McDonald’s. And whether you love them or hate them, it is a significant point of difference.

Differentiate or die is the best marketing battle cry.

So rattle your swords, pony up and make your products different, special and better than the guy down the street. And think of it this way: If you came across a slot machine that for every dollar you put in, you could get $6.00 back, would you go cheap and put in 50¢ and then wonder why you didn’t get anything back? Or would you put in the buck and then ask: “Can I put in 2500 and get back $15,500.00?”

 

Mark & Kelly LauxMark and Kelly are a design-engineer team and managing partners of HotOperator. They have been working in the restaurant business since 1989. Either can be contacted through the HotOperator website, or by calling 800-316-3198.

Menu Design & Engineering • Restaurant Marketing • Social Media • Websites

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