Choose your competition wisely

Not being a coffee drinker, I indulge in the guilty pleasure of buying a $1 fountain diet soda from McDonalds most mornings that I am working at our Meriden office. CEDF is on a busy commercial street just off Interstate 91 and there are eleven nationally- or regionally-known food operations in a seven block stretch: Dunkin Donuts, Nardellis Grinder Shoppe, Wayback Burger, Wendys, Burger King, McDonalds, Boston Market, Taco Bell, Little Caesars, KFC and Subway.

McDonalds is right in the middle of the strip so it gave me a ringside seat for the fight between these quick service powerhouses and the Tip Top Sandwich Shop. The battle didn’t even last past Round 1.

From the time I saw the sign for Tip Top go up – and it was done in attractive four-color graphics – I had a sinking feeling in my heart because, as a CEDF business advisor, I knew that someone’s investment, perhaps life savings, was likely wasted.

Honestly, I don’t know the owner.  I never visited the business.  And don’t really have any information on the details of its demise.  Although my only food service experience is as a consumer, as a veteran retailer I have stayed close enough to food operations to know that this was not going to end well.

I watched over perhaps a dozen weeks a progression of smaller signs: “Coming soon,”  “help wanted,” “closed” (which may have simply been the ordinary open/closed/hours sign, but I interpreted it as an omen). And then there was “For Sale” and finally, “For Rent.”

What was the prescience that allowed me to know the outcome without tasting a bite of the food or setting foot inside the door?

This reckless small business owner was going up against eleven chains. The stretch of East Main Street is probably the highest traffic, most commercially attractive on this side of town. Why couldn’t there be room for twelve outlets? It wasn’t just because most of the other operations made sandwiches too, although differentiation is certainly very important. Remember, I know nothing about the product quality. The answer is simply branding. And I don’t mean that Tip Top Sandwich Shop wasn’t a clever enough name.

For any hungry traveler who leaves the Interstate and wants to make a decision on where they will buy a quick meal there are eleven recognizable choices. Many Americans know exactly what’s on the menu at each of the names I listed above. They know the relative food quality, their perception of the value and the appeal (or not) of each. You know what you’ll be getting, for better or worse. And if big chain, quick service restaurant operations concentrate on anything, it’s consistency.

But what about Tip Top?  It really might have been better than all of the competition. But who wants to take a risk? Consumers aren’t very adventurous. That’s explains the power of branding. When successful, it communicates what a company stands for and generates trust. And most people will choose what they know over what they don’t, even if they really don’t like the food that much.

— Frederick Welk
CEDF Business Advisor

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