As I wait for my temporary job to begin in January 2010, I have found myself with the freedom to explore the web, as I never have before. I stumbled upon a white paper written by Professor Christopher Muller. Muller heads the Center for Multi-Unit Restaurant Management (CMURM) at the University of Central Florida’s Rosen School of Hospitality. The paper caught my interest and got me thinking how accurate was Muller’s prognostication of the restraint industry. My blog posting reviews his paper, “The Business of Restaurants: 2001 and beyond”, published by the International Journal of Hospitality Management.
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Christopher Muller makes the case that the future of the restaurant business is evolving from the traditional model to a knowledge-based system. The traditional model runs by controlling the activities necessary to running the business based on past events. Restaurants are adapting to the information and service orientation of today’s economy by acquiring information and using it as knowledge to make forward-looking decisions regarding their business.
The author analyzed the business environment in the late 1990’s and extrapolated the data to predict how the restaurant business would evolve into the next century. His source material supported his contention and the evidence in 2009 would validate his contention that successful restaurants would evolve away from the traditional business model.
Muller made three assumptions regarding the future of the restaurant business. The first being restaurants would identify themselves as custom retailers realized by identifying themselves as purveyors of time and customer experience. Walk into and successful restaurants and two characteristics will be the store strives to consistently meet your expectations with regard to the time spent in their store and the experience or feel that you have once inside their doors. Violate either one of these perceptions the customer has and the store either will lose the customer or the time before the next visit will be father out. I like going to the local Rosa’s café and have the expectation of good food at a low cost with little or no wait. The atmosphere is brisk yet inviting. If anything about my next experience is much different from my expectations, I will not go back to Rosa’s as soon as I might have.
The second point of branding and product differentiation is the most valid of Muller’s three presuppositions. Your store needs to be distinct from all the others either by-product, quality of product, price, and ambiance or feel. Subway has captured market share in the recession by advertising their value menu. Lunch for $5- in hard economic times was brilliant. Why go to Togo’s or Schlotzsky’s Deli when you get nearly the same quality for less. Many local restaurants popped up and died in our local area. My family and I tried a few of them one time only and never went back because they did not distinguish themselves in any tangible way.
Using data and information to drive your business forward is the wave of the future for all business. Implementation of knowledge systems will help with creating efficiencies in your business and surveys of your customers will help plan for the future. Data mining systems quite often are historical in nature and have not evolved to the point of consistently predicting future behavior. Knowledge systems are quite often using neutral or positive market data, which in a down market as if we are experience now could lead to costly mistakes. In my opinion, restaurants should use knowledge to make decisions but over reliance will stifle creativity and the ability to adapt quickly to changing environments.
The market for restaurants show Muller was mostly correct in his predictions. Stores need to create an identity and a distinct brand or their chance of long-term survival is small. Data is important for operations and making strategic decisions but Muller completely left out knowing your market and the economic conditions. Market can be implied in a knowledge-based business, yet a small business will have a distinct disadvantage if they follow Muller without consulting other sources. Service has become a defining point of all successful business and Muller again may have assumed it yet did not expand on it.
The Muller article is worthwhile and recommended reading for restaurant owners yet needs to be supplemented by other material for a more comprehensive view of the industry.
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