Independent Restaurants vs Chains. 5 Ways to Compete in the Restaurant Industry
July 30, 2019 • 11 minutes
As we know from Bloomberg, independent restaurants are just about to outpace big chains in growth rate. The annual revenue for individual restaurants should grow at a rate of 5% per year, while chains will likely only see a 3% yearly increase.
Independent restaurants rising in popularity shows a shift in customer expectations. According to Nations Restaurant News, consumers report greater satisfaction from independent restaurants in 12 out of 15 metrics.
The primary question that many independent restaurants face is how to compete with the big restaurant chain establishments. Despite their massive success with people around the world, large chains like McDonald’s, Taco Bell, and Olive Garden have more operational issues than individual restaurants. The biggest struggles for big chain operations include quality and consistency. They need to keep the bar high and guarantee that every new item is better than the most recent bestseller.
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Change your reaction to big corporations. They do have some advantages over you, but if you manage to bring to life one of the successful restaurant ideas, you'll likely outperform them in quality, service, and personality. Don’t panic; instead, think of all the advantages that are part of working as an individual restaurant. It’s a true family-owned restaurants vs chains showdown.
Comparing chain and independent restaurants
Your business model will impact your daily operations and customer base more than you might think. Many entrepreneurs will open franchise locations (with a franchise point of sale software on the board) of a large chain to get up and going. For some people, it seems like the easiest way to break into the restaurant industry. The difference between chain and independent restaurants will set the tone for the strengths and weaknesses of your location.
The benefits of chain restaurants include:
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Pre-built menus
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Marketing strategies
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Existing vendor relationships
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Well-known and consistent branding
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Extensive knowledge of their customer’s preferences
All of these are downfalls or at least obstacles for independent restaurant operators. They don’t have built-in national or international marketing or menus. However, independent restaurant ownership does come with many advantages, including:
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Ability to change and adapt menus without answering to a corporation
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Not attached to the negative press of a big brand
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Ability to pursue local or niche vendors
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Direct interaction with customers daily
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«Hole-in-the-wall» or «mom-and-pop» reputation
When looking at chain restaurants vs independent places, it’s clear that there are disadvantages of running a chain. Chains often struggle when they can’t make menu or marketing changes. Or chain restaurants will have issues with their vendors, and often they don’t have the chance to change them regardless of what problems arise.
There are strengths and weaknesses to both opportunities. But ultimately, the many benefits to owning an independent restaurant add up to having the power to decide what is right for your customers. Learn how to use your advantages to take a competitive edge over the chain restaurants near you!
How your independent restaurant can compete with chains
Competing with chain restaurants is a serious concern for most independent restaurant owners. You can, of course, play to your strengths and still experience the struggles of being located too close to a nationally or internationally well-known brand. Remember that you’re competing with this store, not the entire corporation behind them. To get ahead of your nearby chain restaurants, put your first focus on your operations. What you do daily can impact your business for years to come, so be sure to have a good plan.
1. Run your restaurant with purpose
Opening a restaurant or bar and hoping that everything will happen by itself, will likely lead to failure. Instead, take some time to map out your restaurant’s road to success carefully.
Make sure to establish your processes for everything from receiving orders to doing inventory. All restaurants, no matter how different they are, have roughly the same workflow: the waiter accepts the order, the cook prepares the dish, the bartender mixes cocktails, and the waiter helps the guests with the check. Each of these steps in workflow comes with the opportunity to outperform big chains.
Every restaurant should function as a well-coordinated mechanism. That means you need to purposefully reduce waste, increase repeat customers, and make every process routine.
When looking at chain restaurants vs local establishments, you can see a consistent struggle with processes and technology. To improve the quality of your work, create more consistency, and deliver a better experience to every guest, consider bringing in the right technology. The right technology should help eliminate common communication issues in basic restaurant workflow, such as orders being misread in the kitchen because of sloppy handwriting.
A cloud-based POS system can also help an independent restaurant, bar, or coffee shop owner have more control over daily operations. By choosing a system that is right specifically for your business, customers, and staff, you’ll have many advantages over chains that implement one technology into all of their locations regardless of any unique demands.
Your restaurant POS system should allow you to maintain your inventory, provide your guests with loyalty programs, and improve efficiency. A great system will let you see reports in real-time and make immediate changes whenever necessary. It’s a primary advantage over huge corporations that focus on hitting quotas instead of adapting to the daily fluctuation of business. A mobile point of sale system can help your restaurant in many ways.
2. Market your restaurant in unexpected ways
Restaurant marketing is something that many independent restaurant owners struggle with planning. However, you can quickly turn this weakness into a strength. You don’t need a national marketing strategy. You need a local approach that will get people to walk into your doors again and again. Use these methods to make an impact on your community, provoke engagement, or pull people in:
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Team up with local schools. Sponsor teams, host scholarships, or donate towards local education.
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Take part in local government provided events.
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Use social media to post exclusive offers, or give special incentives for people who post images of their orders. Make sure your menu is worth the gram!
59% of Millennials use Instagram regularly, and 53% of Millennials dine out at least once a week. Instagram can be a great way to tap into that specific market.
Marketing should always target the customers you actually want. Consider what niche market within your region fits your desired customer base, then look for ways to connect with them online. You can learn how to promote your restaurant on Instagram on our blog.
3. Give your restaurant a local flavor
Your place might have a perfectly functioning workflow and excellent marketing, but if the food in the restaurant isn’t good enough, you won’t have customers coming back. The cuisine will usually create a general perception of the restaurant. When developing your menu, focus on what kind of people are going to visit your place and how you can surprise them pleasantly.
Independent restaurants can deliver a menu in a much different way than big chains can. Operators of private establishments can frequently come up with new ideas to interest guests.
Perhaps you want to introduce popular dishes presented in a «homemade» format, or use classic techniques for cooking modern dishes. Where does a good menu begin? It all starts with the ingredients. Many restaurant owners use experienced vendors and choose quality suppliers. A good supplier doesn’t necessarily mean «expensive.» Look for appropriate options from local farmers.
The local food movement is still growing, and it’s a significant source of strength for independent restaurants. According to Statista.com, hyper-local sourcing was the top trend for restaurants in 2018!
Among other things, communication between the restaurateur and supplier is often limited. Getting to know your vendors a little bit more often leads to better quality ingredients and more consistent quality.
4. Build a strong team relationship
Chain stores have their approved greetings, check-in times, and table rotations. Independent stores might have processes to help their staff, but there’s a little something extra. Creating warm relationships between the people who stand behind the restaurant can personalize your place and make it more intimate and comfortable for your guests. Create a pleasant and team-oriented atmosphere by:
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Eliminate rivalries between departments (such as between hosts and servers).
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Reward good service and quality work in both the front and back of the house.
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Make your staff part of your restaurant’s journey. Include them in the story of success, and keep the story of your opening alive.
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Focus not just on training, but on motivating your staff to work together. Create systems of rewards and penalties.
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Give your team the opportunity to develop and grow in any way that is reasonable for your restaurant.
Your staff may already have a great artist or quick-witted marketing guru. For example, a pub waiter came up with the slogan «We have beers as cold as your ex's heart» and wrote this phrase on a chalkboard beside the front door. Pictures of the phrase spread rapidly across the Internet, and the pub scored a huge success.
The reality is that strong teams help team members continue to develop and perform better consistently. Not to mention, it makes for a more productive and enjoyable work environment, and your guests can tell when your team members are happy too.
5. Engage with your community
When considering how to succeed as an independent restaurant, consider your primary defining factor: you’re a local business. Local businesses are more flexible than chains and can take part in regional festivals, landmark events, and community charities. You can sponsor a bake-off challenge or host a cooking master-class to increase your brand recognition. Hold themed parties for special occasions or holidays like Halloween and Thanksgiving or maybe stick to the traditions and support a local feast.
Connecting with people face to face shows your dedication to the community. This is an excellent way to create an advantage for yourself, considering how large corporations simply can’t deliver this with all of their locations.
Chains put most of their focus on handling large traffic volumes. Planning to compete with local restaurant chains regarding turnover is not reasonable. But, you can turn the tables in a different way. Instead of focusing on getting as many people in-and-out as possible on a Saturday night, focus on booking up your dining room through the week.
You can significantly increase your total monthly traffic by offering special deals to locals. For example, if customers buy a burger on a Monday, they’ll can get free french fries or soda. This goes far beyond basic marketing. You want to ensure that your customers feel the difference when they come into your place.
Play to your advantage
Working as an independent restaurant owner seems daunting, but you have a lot going for you. These advantages are establishing the future of the independent restaurant niche. Get involved in your community, market locally, and do the things that big chains simply can’t get away with doing. Change up your menu, use local vendors or source ingredients from farms, and create a sense of family within your team. Put your advantages to work, and don’t panic the next time a big chain opens another location near you.
