Location-based Marketing Tactics for Restaurants

Hong Kong is one of the top 3 cities in the world with the highest rent.  Many restaurants are established in sometimes the most obscure locations to avoid the high rent to survive.  Operating restaurants in different locations requires different marketing tactics to attract the greatest number of customers.  This post focuses on the different promotion tactics for each type of location.

Shopping Malls

It is very common to find many restaurants located on the top floor of many shopping malls around the city.  Having customers go all the way up to the top floor and passing through all the shops increases the likelihood of shopping.  Some new shopping malls have plenty of floors (for example, the Megabox shopping mall has 19 floors of restaurants and shops) and restaurants are established on dedicated floors.  

If a restaurant has decent products and services, it is not difficult to find customers coming into the restaurants by themselves. Usually the shopping malls organize promotion events (perhaps seasonal events such as the Chinese New Year's eve or Christmas) and can draw huge crowds during the holidays.

The marketing tactics for having a restaurant in a shopping mall are:

• joint promotions with the shopping malls.  One example of such promotions is to offer meal discounts for those who spend over a certain amount at the malls.

Streets

A large number of restaurants are established in regular streets. Some restaurants just don't do anything in terms of promotion because on a busy street, someone is bound to walk in.  For this reason alone, the rent for a restaurant in a busy street is often extremely high.  Some restaurants therefore move into hidden streets in which not many people have a reason to go there to eat.  These restaurants therefore must promote a lot to give people a reason to visit.

The marketing tactics for having a restaurant in a street are:

• for those restaurants in busy streets, every once in a while having a huge promotion sign near the restaurant entrance can draw huge crowds.
• for those restaurants in hidden streets:
• tell potentials customers about the uniqueness of the products and services using targeted advertisements such as in food related publications, food websites or celebrity endorsements etc.
• those without a budget can make use of the internet.  Promote in internet food forums, food websites or use social media platforms such as facebook or twitter etc.  Word of mouth or word of mouse works best.
• promote in travel publications.  Tourists don't mind spending time to find good restaurants in foreign countries.

Buildings

Many new restaurants now move into commercial office or residential buildings because the rent is substantially cheaper.  However, the price to pay for cheap rents is that it is much harder to get people to take the elevators to visit these restaurants.  Without any promotion, nobody will know that there are restaurant establishments inside any of these buildings.

A lot of cafes are established inside commercial buildings in a busy shopping district.  Young customers are generally more receptive to patronizing these places.  They don't mind taking the elevators.

Some restaurants such as private kitchens (restaurants which serve only 12-24 customers each night) often do not want too many customers.  Some may only open for business on the weekends.  They rely solely on word of mouth promotions.

The marketing tactics for having a restaurant in a building are:

• promote in youth related magazines.
• use word of mouth heavily.  It may take a while to secure a group of loyal customers.  Having good products and services is essential.
• use social media platforms to spread the word.

Factory Buildings

According to the laws of Hong Kong, restaurants inside factory buildings cannot have any sign that says "this is a restaurant".  Restaurants located in these buildings look just like any manufacturers or factories.  Most of the factories in Hong Kong have moved north into China, so in the last 20 years or so more and more of these factory buildings have become offices.  These restaurants don't even serve customers on weekends and align their working hours to the 9 to 6, Mondays through Fridays schedule.

The marketing tactics for having a restaurant in a factory building are:

• promote by fax, email etc to offices inside or nearby factory buildings.

Agglomeration

In some of the tourist attraction areas, many restaurants are established one next to another.  This is called an agglomeration and is a powerful marketing tool.  One example of an agglomeration for restaurants is Lan Kwai Fong where many restaurants and bars are established in the same area in the Central district in Hong Kong.  If customers cannot find seats in a restaurant, they can just walk to the next until they can find seats.  Usually restaurants in an agglomeration promote together during special events such the New Year's eve celebration.

The marketing tactics for having a restaurant in an agglomeration are:

• joint promotion with other restaurants during special events such as Halloween.

Conclusion

Restaurants in each type of location have different challenges.  Location is only a small piece to the big picture.  Although it has become more and more difficult to operate a restaurant due to rising costs, those who are able to survive are the ones who can come up with creative survival ideas.

Number 1 Myth of Entrepreneurship Debunked: Be a Loner to Succeed

Last year I decided that I could no longer work for anyone.  I keep realizing that I don't like to answer to anyone especially my superiors, and I don't like the work I am doing at any company that I work for.  Therefore after my contract ended with my last company, I left without any hesitation.

I have always wanted to start my own company.  Back in 2003 I quit my job at Oracle in the USA and came to Hong Kong to start my first company.  It was a SaaS (Software As A Service) company also known as an application service provider (ASP) at that time.  I spent one year building the technology by myself.  Towards the end of the first 12 months, I had an epiphany which was the fact that I was lacking the fundamental skills in marketing that prevented me from finding paying and non-paying customers.  So I went back to school and spent two years to get my Master degree in Marketing.  Here I am again, thinking that marketing can provide part of the solution to my business problems.  I am ready to take the leap of faith and try the entrepreneur thing again.

A Master degree in Marketing only changes the way I think.  Our professors often like to say: these marketing concepts are going to be difficult for you to understand and you may never understand them.  While I may not be smart enough to understand everything there is to understand, but now I understand that at the startup stage, my company has to offer value to a very small group of people.  Marketing needs to target these evangelists: find them, partner with them, pay them to use my services etc.  Do whatever necessary to turn them into paying or non-paying customers.

For the last few months, when I tried to turn my friends into these very small groups of customers, I keep getting the same reaction.  Whenever I tell them about my advertising business and ask them for help, they will say yes but there is no action.  Sometimes I even offer money and hope that in return I get some help from them.  None whatsoever.  Perhaps the money is not enough to motivate people.  On one occasion when I offered money to a friend in exchange for some nice-looking food photos, she kept saying that the money wasn't enough.  Eventually she just told me to get the pictures from her facebook photo albums and pay her.  Sometimes I think that I just ain't a good enough friend to them that they are willing to give up their time and energy just to help me out.  Sometimes I think it's a cultural thing for the Chinese: don't do this unless it gives you something in return that is worthy.

We entrepreneurs keep hearing the myth that an entrepreneur who is a loner is destined to fail.  I think it is wrong.  If anyone can survive in business as a loner, he or she will excel as an entrepreneur.  Think about it.  Most companies are founded by a few friends, but in the end it is always left with one single founder.  Great musical groups or bands break up because the founding members always have different agendas or goals at some point in time.  When we entrepreneurs go for outside help, nobody is going to help unless you are ready to offer lots of money with no guaranteed return, just like gambling.  If you ask your friends for help, they will make you wait forever, because they just say they are happy to help but not really act to help.  When we small companies want to work with larger companies, they never respond to our proposals or inquiries.  Mr. Li Ka-Shing, one of the wealthiest individuals in the world, remembers what his father taught him: it is always better to ask yourself for help than to ask somebody else for help (求人不如求己).

This greatest myth of entrepreneurship must be debunked right here right now: be a loner and you are better off doing the entrepreneur thing all by yourself.  You may ask: those Venture Capitalists look at the team behind a startup, not at an individual.  Then I say to you: don't even bother with Venture Capitalists.  Some of the greatest startups survived and grew exponentially after all of the Venture Capitalists told them NO.  You may ask: I don't know everything and I must get help from someone.  Sorry to break the news to you: you need to do everything by yourself.  I am not a web designer or any designer for that matter, but I have to do it for my website.  I don't want to do the programming but I get more scared if I pay someone else to do it because there are so many cheating freelancers and outsourcing firms out there.  I am not a photographer but I need great looking food photos for my advertising business.  A professional photographer offered me the pictures for an amount I couldn't afford.  I have no choice but to learn how to take professional looking food photos because this is the most cost-effective.  Over the years I keep doing the "impossible" and find that it can progressively become easier to overcome the next "impossible" task.  I have learned how to systematically acquire the knowledge necessary to complete each task.

I am not trying to discourage anyone from being an entrepreneur.  However, if you are ready to become one or are already one, try not to have any partners or ask your friends to help out (as a favor).  Learn to do everything by yourself.  When your business takes off, pay your non-friends (or sometimes friends) as regular employees/contractors to do the work that you don't have time for.  Remember that you are the only person who is willing to run your company for free.  Nobody else (including your friends) is willing to work for free or for very little money.  Before you can afford to pay someone, do it by yourself.  It is going to be difficult, but the "training" will make you prepare for the even more difficult problems (which very likely you have to face by yourself) in the future.

Fresh Made Burgers: the End of McDonald's?

Here in Hong Kong, there are many burger joints which offer fresh made burgers: Monster Burger, BLT Burger, MOS Burger etc.  These joints offer a different kind of service than the traditional burger joints such as McDonald's or Burger King.  The moment when you order a burger, the shop will make it from scratch.  Therefore these burgers are fresher and hotter.

One good example of fresh burger joint is the famous MOS Burger from Japan.  It is the second largest fast food franchise in Japan with shops in many Asian countries.  At the time of this blog post, there are 15 MOS Burger joints around Hong Kong.

After you order a burger, and if you decide to eat inside the shop, you pick a seat and wait for your order.  After your burger meal is made, it will be delivered to you by a waiter or waitress.  The following picture shows a fish burger at MOS Burger:

The burger was really hot and it is the way I like it.  Of course, the service offered by MOS Burger comes with a price.  A fish burger meal is about HK$37 whereas a fillet-o-fish meal at McDonald's is about HK$24.  So customers are paying more than 50% premium for MOS Burger's service.

There are way more variety of burgers at MOS Burger than McDonald's.  At the same time, the number of seats is a lot smaller.  What customers get is a comfortable (that is, not crowded) place to enjoy an expensive burger meal with relatively good customer service.  The question is: are customers willing to pay this price?

The answer is an astounding yes.  Life is short.  Take your time and enjoy your food.

What Does it Take to be Shown in the Michelin Restaurant Guide?

Hong Kong is the food capital of the world.  You can find virtually anything to eat here.  Every year Michelin publishes their restaurant guide.  There has been some controversies with the guide because many say that the restaurant list doesn't represent the true restaurant scene in Hong Kong.  The list has been seen as bias towards Western restaurants serving non-Chinese cuisines.

At one point Michelin started to include more local Chinese restaurants in its list, but these restaurants refused to be named, claiming that they don't need any foreign authority to say that they are good or bad.  Regardless, the controversies do help to get these restaurants exposed in the media and people would take notice of these restaurants.  Promotion is free so take advantage of it.

A few weeks ago I visited a Michelin 2010 listed 2-star Chinese restaurant in the Langham Hotel:

We ordered a few dishes and it turned out that one of the dishes was incorrectly put into the order system by the waiter.  We said it's okay and would be glad to pay for it (we are a loyal customer and have been to Ming Court many times before).  The waiter immediately said in order to make up for his mistake, he would like to offer an expensive desert to us  free of charge.

In service marketing, this is called enpowering the frontline employees.  These employees have the authority to do whatever necessary under the circumstances to resolve issues with the customers.  This is almost unheard of in the local Chinese restaurants, since most owners tell their frontline staff that if you make mistakes, they come out from your paychecks.

Ming Court dishes are not that outstanding among all the available Chinese restaurants in the city.  However, not many restaurants will be able to match its service.  Keep in mind that the service is part of the marketing strategy a restaurant should have, since it affects the perception of the restaurant's brand.

Promoting Restaurants with Celebrity Endorsements?

There are two types of food critics here in Hong Kong: one is called Food Critic (食評家) and the other type is called Eating God (食神).  The term Eating God has become very popular after the release of Stephen Chow's 1996 movie called The God of Cookery:

The other day I walked by a restaurant and saw a picture of a well-known Eating God (he's known as the Young Eating God) with the restaurant owner posted on the front doors of the restaurant.  I cannot help but wonder if a celebrity says he/she patronizes this restaurant, will I be tempted to patronize the restaurant myself as well?

Celebrity endorsements used as a marketing tool for products and services are quite common.  Personally I never understand the appeal or effectiveness.  In the context of a restaurant business, would I intentionally go to a restaurant just because a certain celebrity endorses or visits it frequently?

Restaurants or food are different from other products or services in the sense that people have great differences on why they like to eat certain kinds of food.  The likeness factor is very personal.  Some people love spicy food but I cannot eat it.  So if my favorite movie star says he often goes to a particular curry restaurant, that's not going to affect me because I don't eat or like spicy food.  Nothing he says is going to change that fact.

What makes us like to eat a certain kind of food?  Is there any criteria for likeness?  It is very difficult to come up with a laundry list of reasons because everyone can have very different preferences.

A better promotion strategy for restaurants is to use social media.  When 10 friends say that this particular is restaurant is good, I will at least try it once and see what happens.  On the contrary, one person (celebrity) says I should try it doesn't make it persuasive enough for me to take action.

Ordering the Same Dishes Every Time

Have you noticed that when you go to your favorite restaurant (or one of the many restaurants you visited before), you look at the menu and order the same dishes you ordered last time you were there?  If you do this, you are not alone.  I went to a Japanese restaurant last weekend and I ordered the same salmon sashimi during my previous visit:

Why do we do this?  Isn't it boring to eat the same dishes every time in the same restaurant?  Don't we want to explore the wild?  Here are a couple of reasons:

1. Reading the menu is a waste of time.  We go to restaurants because we want to eat.  We hate spending all the time only deciding what to eat and not eating.
2. People are afraid of change.  It is a safer investment to order the dishes we know we like, rather than take the risks to order something new and it turns out to be bad.

Any restaurants practicing any sort of customer relationship management strategies can exploit this behavior .

1. Instead of giving the customers a menu, ask the customers if they want to order the same dishes based on their past ordering history.  Now that is customer service.
2. Reduce the operation costs by getting rid of dishes that aren't popular.
3. Focus on improving existing dishes instead of designing new dishes.
4. Cross-sell new dishes that may be of interest to the customers given what they usually order.

Remember that only the food in a restaurant is not enough to keep customers from coming back.  The atmosphere, the service (very important), the hygiene etc are all important factors in creating royal customers.

Back to the Basics: Internet Word of Mouth Marketing

Last month my parents told me to get two tailored suits.  There is a shop on the 4th floor in an old office building located in the financial district in Hong Kong.  I asked them how they knew about it.  They said they were introduced to this shop by a friend, and my dad bought a couple of tailored suits from there.  He was quite pleased with the suits.

I went there and it was an extremely small shop.  However, the moment I stepped into the shop, I saw foreigners trying on their finished suits.  When the elderly gentleman (I suspect he is one of the owners of the shop) was taking my measurement, many customers came in to either get new suits or paid their finished suits.

While I may not know much about this custom tailor business, just by looking at how many people walked in and out of this shop, I would say this business is a high revenue business.  A regular suit costs HK$998/US$129/€94.  I counted there were about 3 people walked in during my 30-minute stay in the shop.  Each suit requires a HK$500/US$64/€47 deposit.  Assuming each person pays that amount on average throughout a business day, the shop makes HK$24,000/US$3,905/€2,259 a day.  From the business card, it says that this custom tailor company has two retail shops.  So the annual revenue can reach up to a total of HK$14M/US$1.8M/€1.3M.

About a month later I got back the suit.  Every suit has this logo stitched in the left inner pocket:

Some people have long heard that US presidents like George W Bush, Bill Clinton or Prince Charles etc often buy tailored suits in Hong Kong.  How did they hear about these tailors in Hong Kong in the first place? Did they do a search in Google?  I doubt it because most of these tailors don't even have websites or any kind of advertising.

Throughout all these years, what still works is the Word of Mouth promotion.  It is never going to change.  When your parents/friends/someone you know recommend something, you normally won't ask too many questions but will listen to their advice and go to their recommended restaurants or visit the same doctors.  

I made my first purchase on Amazon because one of my friends said it's good, not because I saw a banner ad on some random websites.  I created my account on facebook after my friend said I could locate my high school classmates from there, not because I read about this thing in the news.

With all the fancy tools available today for internet marketing, nothing beats your friends' recommendations.

The Good, the Bad and the Ugly Marketing of US Hosting Providers

A few months ago when we were about to launch our first web application to the public, we were evaluating a VPS (Virtual Private Server) solution.  Fortunately (or unfortunately), the local hosting providers were quite expensive and technically inferior compared to the US-based providers.  In addition, we try to avoid providers that require 12-month contracts.  We don't want to be stuck with problematic providers for a year if we find out they cannot deliver what they promise during the first week after we sign up.

Doing the shopping requires a  lot of reading on the internet, then actually signing up and see if there are surprises.  It was an interesting exercise.  We realize that every company has a different marketing personality and we are able to categorize these personalities into the good, the bad and the ugly.

The Bad
Dreamhost
Some comments around the internet gave high marks to a US-based provider called Dreamhost.  So we went ahead and tried to sign up.  During the signup process, after we entered the credit card, clicking next didn't seem to take us to the next step and there was no error message.  We didn't know if the transaction went through or not.  After a few minutes, we logged in to the Dreamhost account management system and found that our account was indeed created, but it was in a pending status.  What happened here?

It didn't inspire much confidence for customers that there was trouble getting past the very first step.  So we decided to do nothing and see if Dreamhost knew a problem had occurred and took proactive action to contact us.  So far Dreamhost didn't contact us.  Until today we are still able to log into the Dreamhost account management system with our account status as pending.

We have no way to know if Dreamhost is a good provider.  What we do know is that a technical problem had occurred and Dreamhost didn't know about it.  Can they find out problematic accounts by scanning their account management system?  Probably.  But to us that doesn't matter.  We left and probably would never go back, and we will discourage anyone from signing up with Dreamhost.

Rackspace
Next we went to Rackspace.  It is another US-based hosting provider and was credited for providing hosting services to Youtube.  It has opened a local office here and its website has a localized web domain.  We visited their local website to check out their plans.

So their first plan caught our eyes for 4xx dollars per month.  It was a great deal because the hardware options were extremely powerful.  However we had a question on the contract terms.  It didn't say if the price was only valid if we signed a long term contract.  We tried to contact their sales.  There is a link on their website that launches some kind of a chat window.

After a while, a live sales "person" came online at the other end.  We asked about this particular plan and asked if we needed to sign a long term contract.  This other "person" asked if we had trouble signing up and could walk us through the signup process.  We said we only wanted to ask if we needed to sign a long term contract if we wanted to get the 4xx dollars per month plan in our local currency.  This "person" then said the price was in fact in US dollars, not our local currency.  We asked how that was possible.  We went to their local website and common sense said that it should be in the local currency (since there's no US$ in the front).  This "person" said they are a US company so every dollar value is in the US currency.  So this "person" made the assumption that local customers coming to this local Rackspace website know that Rackspace is a US company, and hence only the US currency should be used.

We were quite annoyed by that time.  This "person" wouldn't stop but kept saying he/she could walk us through the signup process for that plan.  We politely said if you had put a simple US$ in front of the prices we wouldn't have this "conversation".  You wasted our time.

We tried to ask simple questions but were bombarded with pushy behavior to get us signed up.  It was also funny that such a "big" company had trouble using the right currency on their website (now I think about it, maybe they did this on purpose).  That sure is an effective way to push potential customers away.

Openx OnRamp
We needed to serve ads from our web application with the openx ad server and we wanted to see if the free Openx OnRamp service can help us.  We submitted our application to use this service.  For many days we didn't hear anything and one day we got an email from openx telling us that we downloaded a white paper from openx and asked us to contact them.  First of all we didn't download any white papers from openx and you were lying.  Secondly, please tell us if you had denied or approved our application.  The silence is killing us.  Well it doesn't matter anymore because we will never use this service ever again or recommend it to anyone.


The Ugly
We tried to find a hosting provider that can provide hosting services for our openx ad server.  The name Arvixe kept popping up so we decided to sign up to see if it could meet our needs.  Their plans are very reasonably priced and there's no contract.  Customers can pay month-by-month if desired.  We opted for a monthly payment option just to test Arvixe out.

After signing up and logging in, we immediately went to install openx in our hosting account.  The installation is done through another software known as Softaculous that can be launched from the Arvixe account system.  After the openx installation, we realized that there was a problem with the openx plugins.  So we contacted Arvixe's customer service by submitting a ticket through their support system.

Arvixe has a 24-hour customer service team so within a few hours we got a response.  It told us to reinstall openx in our hosting account.  We did that but the problem was still there.  We contacted customer service again.  After exchanging a  few messages, one of their staff said that we had to get support from openx and they couldn't help us resolve the problem because openx is a 3rd party thing.

It is always easy to blame someone else for your own problems.  We said Arvixe advertised openx hosting.  Now you are telling me to go somewhere else for an installation problem which obviously came from your own system.  We even googled the problem for Arvixe and the problem might be related to Softaculous.  We asked Arvixe to resolve the problem with Softaculous, but if you insisted us to go somewhere else to solve this problem, we wanted a full refund immediately and we would take our business elsewhere.

We reinstalled openx again for the one last time and to our surprise, the openx plugin problem went away.  We started putting in ads to the openx ad server and so far it is able to serve ads properly without problems.

We were about to leave Arvixe but somehow they quietly admitted their fault and quietly fixed a technical problem without telling us.  We will wait and see but we are staying with Arvixe at the moment.  But it doesn't give us a warm feeling that we were told to go somewhere else for support.

The Good
We were hoping to give Dreamhost our business but we couldn't even sign up.  Perhaps our fate was destined to find another hosting provider.  We were very glad we did.

We found the following US-based company Linode.

We had never seen such a clean and error free signup process.  It accepted our credit card (we are outside the US so we thought our credit card might have caused Dreamhost the glitch) without problems.  Once we paid we were given full control to our virtual private server.  In a few hours we were up and running.

Linode doesn't require customers to sign a contract and we can pay month-by-month.  So far we have zero problems.  In the future when we expand we may signup more servers with Linode.  We are not afraid to recommend Linode to our partners and friends.

Lesson Learned
Some companies like Linode are technically superior.  This is a big marketing win because it gives potential customers a safe feeling that their businesses are in good hands.  Some companies are technically challenged.  But that doesn't matter.  What matters is companies can take a step forward, own the problems and solve them, instead of ignoring them or telling their customers to go away.  Some companies just want to close sales using whatever means and simply won't listen to what their customers are saying.  Whatever these different companies do, it has a big impact on their company's brand images.  Potential customers may never be their customers.  These potential customers may tell their partners and friends never to patronize these companies.  Losing 1 potential customer can mean losing 10 more potential customers.