Anyone can give it away : ColoradoBiz Magazine
Free is easy; full price is not
When you have a quality product, selling is relatively easy. Selling at full price is, however, much more difficult. As a business owner I am frequently forced to remind employees that I really don’t need their help giving away food. What I need is someone who can look the customer in the eye and explain that my product is worth the price I’m charging.
Value is an interesting proposition. I have no problem eating at a greasy spoon if that’s what I’m looking for and feel that the quality of the food and service match the price. Similarly, I really enjoy a good meal that is well prepared and served with grace, and don’t mind paying the cost attached to such an experience. My problem starts when the highly acclaimed restaurant falls on its face because the food or the service is not up to par. I realize we all have bad days, but I feel cheated when reality falls short of expectations.
Value, therefore, can be defined as the combination of price and quality. When quality exceeds expectations, I usually think I got a good deal. When quality falls short of expectations I think the opposite.
The reason I speak to price is because I think that we too often compete on price rather than value. We are fortunate to have so many choices when it comes to dining these days, but it’s getting hard to take a family of four to dinner for less than $30. It’s especially hard when you want quality ingredients with minimum additives and fillers.
We believe this is part of the Anthony’s value proposition. Come and get a hand-made pizza and a large salad. (But if you add four soft drinks you’ll probably end up at a little over $30.)
Pizza places are notorious for constantly offering discounts. Many people therefore expect coupons or discounts from us. I’m not sure the same attitude exists when it comes to buying and selling burritos or hamburgers. In fact, I’m certain it doesn’t. (Let’s save for another day the discussion about why this is the case.)
At Anthony’s we believe that the customer’s perception is our reality. So if the customer is expecting a discount, we need to have an easy way to explain why we offer a better deal than someone else – despite the fact that we are not discounting. We can point to our oversized pizzas (22” to 24” for dine-in), our quality ingredients, the fact that we make our sauce in-house from scratch, and other key attributes. We can point to the increasing difficulty of feeding a family of four for a similar price. And we can smile as we serve fantastic pizzas and pastas.
I know a company that very effectively offers discounts on nearly every purchase. They do this by starting from an artificially high price and then offering 10, 15 or even 20 percent off that price. And they maintain their margins because the “discount” is part of their marketing plan. It’s an interesting strategy, but not one that we’ve adopted.
Each business needs to choose its competitive points – whether it be focused on quality, service, price – whatever. There’s a truism about airplanes and race cars: strong, light and cheap: pick two. I think competition is driving many business owners to think in a similar way about quality, service and price. Unfortunately, if you only offer two of those three, you are likely to find a competitor taking market share. Because when it comes to restaurants, customers want (and expect) all three.
To meet this demand, business owners and managers are being forced to find new ways to put their resources to work. For example, employee productivity continues to climb in the food service industry as we leverage technology. Panera is adding kiosks for ordering with the hopes of eliminating two cashiers from each store. Domino’s has invested in online ordering. Jamba Juice is introducing self-serve machines – and these changes are not limited to labor. We’re seeing new stores that have smaller footprints as efficiency improvements allow us to operate in less space. The key is to find ways to make changes that effectively stretch resources and also enhance the customer experience – or at least, don’t detract from it.
It’s easy to talk price when we really mean value. Value, while easy to spot, is hard to deliver. It’s also highly competitive so even if you have it today, you’re not guaranteed to have it tomorrow. While we relentlessly look for efficiencies to grow our margins, we are also looking for franchisees and employees who can sell our quality products at full price. People who can deliver on a promise day in and day out. People who can make reality exceed our customers’ expectations, thereby providing great value.
Tim Dodge is Chief Operating Officer at Anthony’s Pizza & Pasta International. He started his career with Hyatt Hotels and was co-founder of both Healthgrades and Baroness Wines. He graduated from the University of Colorado-Boulder.