Q. I own a small café in an office park that serves breakfast and lunch. I’m struggling to generate enough revenue. I’ve received good feedback regarding food quality. However, too few people eat with us. About 200 people work in the building. If 35 percent of them ate with us each day, we’d be successful. Many have never eaten with us. Many leave the building to buy lunch items we sell. How can I grow revenue?
A. Generating revenue is a challenge faced by many new ventures. That’s why every business must answer three critical questions.
1. Why should a prospective customer buy our product or service rather than a competitor’s? If you can’t provide a clear and compelling answer to this question, close your doors when the lease runs out. However, we believe, that with some work, you can develop a compelling value proposition.
You mentioned that the quality of your food is good. That’s wonderful. Is it better than your competitor’s? Do people recognize it is better? Will people come to your café because the food is the best in the area? Other factors to consider include:
Price – Will people come to your café because it’s inexpensive or because what you offer is different from other options?
Selection – Do you offer a broad selection? Do you have options for vegetarians, vegans, gluten free, low carb, etc.? If one member of a group can’t find something to eat at your café, it may send the entire group to a competitor.
Convenience/Speed – This may be a good place to start, because you have an advantage on this dimension -- your location. Can you exploit it further? Other ideas might be:
Lunch in a box – Offer a discount on orders placed before 10:00 for pick up after 11:30. People won’t have to wait to order or for preparation; they can grab lunch and go. This has the further benefit of spreading your workload to times that are slower. Therefore, it makes things faster for other customers as well.
No/low prep items – Offer soups, premade salads and sandwiches, etc. Accounts tied to credit/debit cards – Don’t wait to pay—pick up and go. Catering – Deliver lunches to offices for meetings. Offer sandwich plates or buffets that could be set up before the noon rush.
Environment – Make your café special to attract people. Offer privacy for business discussions, Wi-Fi, etc.
Relationships - Some restaurateurs build a loyal clientele, in part, by developing relationships with customer. You must be explicit about how you are going to compete. You must know why people should buy your product or service rather than your competitor’s.
2. Is there a segment of the market that values what you are offering, and is it large enough to sustain your business? People have to want the things that make you different. Included in this is the notion of casting your net broadly enough. You said that if 35 percent of building (or about 70 people) ate with you daily, you’d be successful. However, most people aren’t going to eat at your place every day. Let’s say that the average loyal customer will dine with you twice per week. Then, to have 70 people eating with you daily, you’d need to have 87.5 percent of the building as loyal customers. (200 people in the building X 87.5 percent loyal customers X 40 percent of the days = 70 people per day) However, winning almost 90 percent of any population as loyal customers is a very aggressive goal. You’ll likely need to attract business from outside of your building
3. How will you reach your target market with your message? Suppose you decide that the reason people should eat at your café is that you offer good food, at reasonable prices that is available faster than anywhere else. You’re marketing more productive work time in the day. Now, you have to determine how you’ll reach people with your message. You might distribute discount coupons to offices to get people to give your place a try. You might invite a group of people who are responsible for getting food for meetings to come to a free lunch where you explain your services. Decide what you think will work best for you. Try it. Then measure the results. Keep changing what you do until you find the best approach. Growing revenue is challenging, but clarity around the answers to these three critical questions will put you on the road to success.