This Snake Bites!
I go to Florida on occasion. I like it and who wouldn’t – warm water, beautiful beaches and friendly people. It’s really great. So of course I’m interested in the local exotic wild life.
A while back I was watching a nature show on big snakes that have invaded Florida and how they are rapidly hybridizing and taking over. The reason is that in nature, two closely related species can combine and produce a snake that is bigger, stronger and capable of crushing its competition. It’s called Hybrid Vigor. The idea is fascinating and it occurred to me that it also applies to many areas of business and we’ve seen various restaurant businesses add similar brands and operations and successfully grow. However, where catering and retail business units are concerned in a multi-unit restaurant operation, the idea of Hybrid Vigor is a complete myth – but few Executive teams realize it.
When you think about it, Hybrid Vigor sounds logical – you simply combine two closely related entities (such as retail and catering), run them largely the same way, and get something bigger and stronger – right?
WRONG! Just because it occurs in nature, doesn’t make it natural in the multi-unit restaurant world and not only can this mindset fool you into making some big blunders with your catering operations, it can weaken your existing business to the point where your competition crushes YOU!
Within the catering arena, I agree that you absolutely want to leverage existing assets and this has long been a solid business principle. Catering allows you to add profitable sales while keeping capital expenditures minimal and maximizing additional human resource bandwidth at the store level. In fact, catering is a hidden revenue channel for many multi-unit restaurant owners and I know from hands on experience it can add up to 20% in system sales and 40% to overall gross margin.
These economics make it so attractive that many multi-unit restaurant brands jump into catering without a clear understanding of the shift in mindset required to operate a catering business unit well. It’s like thinking you own an awesome show dog, but later finding out you have a python that you can’t control effectively.
This happens because the retail business LOOKS so similar to the catering business, but in reality it is a completely different animal. The customers’ demands are different, the execution is different, the sales are different and the store level economics are different. In short, it’s a completely different business and must be approached that way. While catering can be layered onto existing assets it is not really combined or absorbed into the retail space because it must retain its own focus to serve the specific demands of the catering customer.
For years I’d extolled the virtue of a dedicated executive catering position in every organization and this is the first (and most important) step to successfully operating a catering business unit. It is not an effective strategy to just tack catering onto existing job descriptions such as marketing or operations and expect things to go well. We all have priorities and when time and resources are tight it is human nature to focus on your main tasks – and catering gets shorted.
For those forward thinking executives who understand the differences in catering and retail at the core level, they are poised to maximize the opportunities that lie ahead. But this is not a case of hybridization, it is a case of two related business units sharing assets but maintaining their autonomy in order to serve different markets. Two large business units each pulling maximum efficiency from shared assets while attracting more and more customers to your business are much stronger than any type of hybrid will ever be.