Escaping the commodity mindset
Simply put, there are only two kinds of products in the world:
Commodities
Luxuries
And the reason restaurants struggle so much is because we've locked ourselves into selling the former, when what we should really be doing is convincing people of what they already know deep down... that restaurants are an indulgence. We need to treat our product as the luxury that it is.
A hundred years ago the average American would dine out 2 or 3 times a year.
In the year 2025, most people rely on foodservice 2 to 3 times a week.
People very much love what we have. They're willing to pay considerable sums for what we provide. But with so many great options out there, it's becoming harder and harder to beat out the competition. Success begins by understanding what game you're playing.
The Commodity Game: All things being equal, a consumer will make their decision based on one of three criteria: 1: Familiarity, 2) Convenience, or 3) Price.
The best example I can give is gasoline.
Let's say you're going on a weekend getaway. You pack up your luggage, buckle your seat belt, and turn on the car... only to discover that you're almost out of gas. Better fill up now before you get on the road. In that instance, you'll probably go to the gas station you usually go to. In that moment -- since gas is gas is gas -- you're making your decision based on familiarity.
But let's say you pulled out of the driveway without taking notice of the gas gauge. You get an hour into the trip when suddenly the light pops on to alert you you're almost out of gas. In that instance it doesn't much matter where you go. Since gas is gas is gas, you get off at the next exit and pull into the first gas station you see. You're making your decision based on convenience.
But let's say in that scenario you get off the highway and come to an intersection with two gas stations. I'm guessing you'll do what most people do: you glance up at the signs and make your decision based on price.
I don't think I'd ever go into the gas business simply because we're always trading commodities. It doesn't much matter what I put in my car, as long as it makes my car go.
But that mentality will never work for you. As a restaurant owner you will never be the cheapest, the closest, or the most well-known option. So I don't think you should even try.
When you play the commodity game, it becomes a race to the bottom. Mass market products aren't usually very good because quality isn't something they're interested in. What they're after is "mass appeal."
... Being liked by the largest amount of people
... Being close to the largest amount of people
... Being the cheapest option on the market
Play the Commodity Game and you will lose.
Why?
Because you're going up against the big boys: McDonald's, Taco Bell, Panera.
So don't even try.
Instead, I want you to adopt the Luxury Mindset. Why? Because that's what you're serving... a luxury. A meal out is expensive. You're paying a premium to have people shop, prep, cook, and clean up after you. You're paying for the beautiful surroundings and a team of well-trained staff to take care of you. It is an indulgence that nobody needs.
But it's one that people are willing to pay for.
When you find yourself looking at competitors and slashing your prices:that's the commodity game talking.
Play it and you will lose. I promise.
Chip Klose MBA, Helping independent restaurant owners hit consistent, predictable 20% profit, Restaurant Coach, Author, and Keynote Speaker with 25 years of industry experience.
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