Tag Archives: Business model

October 4, 2019 · 2:01 pm

McRib And You

The big news this Foodie Friday is the return of the McRib sandwich. It’s only going to be around for a limited time and only at select McDonald’s stores (which is about 10,000 of them). If you’ve never had one of these babies, it’s a pork patty formed to look like pork ribs (but boneless) on a bun with pickles and onions and a fair amount fo a sweet barbeque sauce.

I’d be very dishonest if I said this concoction appalls me since I’m a fan of the thing, or at least I was before I both quit eating a lot of carbs (45g in this baby) and lived in a place where real BBQ pork sandwiches are easier to find than a decent deli. When it hit the market back in 1981, it was a dud. It’s been released every so often since into a limited number of outlets and it sells out.

There is something any business can learn from the McRib or the pumpkin spice craze at Starbucks or Dunkin’. It’s the smart tactic of giving customers a reason to come back. There is a restaurant here in town that I patronize on a regular basis. The food is quite good but there are rarely any specials. It gets boring, frankly. I’ve tried pretty much everything on the menu. Something special might get me to make a special trip as opposed to the every 10 days or so when I want a really good burger.

There is something else. Here is a quote from a marketing professor at Northwestern:

For fast-food chains in particular, which rely on familiarity, holiday items can offer consumers some variety. “You need consistency because that’s the brand mantra,” said Chernev. “But no matter how much you like something, consuming something different … increases the enjoyment of what you consumed before.” Chernev says it’s a neat marketing ploy: Although a specialty item may be exciting on its own, it can also remind consumers how much they like the basics.
In my mind, it’s like how being on vacation often reminds you of how much you like being home if that makes any sense. In any event, every business needs to think about how a special product promotion (vs. a sale price promotion) can provide an overall lift to the business.  Got it?

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September 4, 2019 · 9:47 am

For Yourself, Not By Yourself

I left corporate America at the end of 2007. In the dozen years since I’ve worked for myself. Oh sure, I have always considered the clients for whom I consulted to be my bosses, but at the end of the day, I was on my own.

If any of you have been, or are, in a similar circumstance, you know that it’s both a liberating and terrifying feeling. There is the freedom to spend a beautiful day at the beach or on a golf course instead of working. After all, you’re the boss. Along with that freedom, at least for me, there was always guilt that I had taken the day to play or run errands rather than grinding it out as I had done for the 30+ prior years of my business life. I guess the Protestant work ethic applies even to Jews…

While I’m still working for myself, the last year I’ve not been BY myself. As a franchise consultant, I’m a part of a much broader network of several hundred other coaches. We share information, I have access to ongoing education about franchises and how to do my job more effectively, there is someone doing collections for me, and the network actually even finds leads for me if I want. I’m in business for myself but not by myself, as is the case with any franchise.

Candidates (people considering investing in a franchise) sometimes ask why they should go with a franchise instead of using their capital to start up their own business. The statistics answer that question for me. 90% of new businesses fail in anywhere from the first five years to as little as the first four months. 90% of franchises are still in business after five years. There is a reason for that, which is that you’re investing in a proven concept. The mistakes have been made, the operation has been refined, marketing plans have been tweaked, and all of that is being handed to you as part of your investment along with training that can last from a few days to weeks, with ongoing mentoring and education for much longer. Pretty spiffy, and a route I wish I had taken a dozen years ago instead of trying to figure it all out on my own.

So what can go wrong with a franchise? I think the two biggest sources of problems are when franchisees don’t follow the model or when they are undercapitalized. In the first case, ignoring the model is basically throwing away what you paid for and diminishing your success rate quite a bit. In the second case, ANY business will fail if it’s undercapitalized no matter how well-run it is. Counting on immediate cash flow to support the operation (or your ability to eat!) is short-sighted. That’s why franchising makes even more sense since there is a track record of what capital is needed to get the business up and running for the first few months. It’s actually so clear that the franchises put those costs in their Franchise Disclosure Document (item 7) and those are numbers I have and discuss with folks as they are looking at investing.

Being in business for yourself is great. It’s even better when you’re not by yourself. I can show you how to make that happen for you. Just click here and let’s get started.

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August 16, 2019 · 10:44 am

Pumpkin Spice

This Foodie Friday, we’re taking a leap ahead into Fall, and if Fall means one thing to most people, it’s pumpkin spice. I know – you were thinking football, but no, my guess is that far more people are affected by the pumpkin spice thing than the pigskin thing. It’s a relatively recent development as spice companies didn’t actually make “pumpkin pie spice” until the 1950s and that became “pumpkin spice” in the 1960s. Some candle company began marketing a pumpkin spice candle in 1995, Starbucks picked up the flavor after many small coffee shops did, and the rest is food history.

Today, I saw what might be the last straw in the craze: Pumpkin Spice Spam. This is not a joke – it will be available only online and there are already cans of it out in the wild. Apparently, it doesn’t taste too bad – kind of like breakfast sausage. While I’m generally a believer in the “anything worth doing is worth overdoing” philosophy, I think we just might have hit our limits here, although one might wonder where that limit lies after pumpkin spice hummus, Four Loko, Pringles, gum, and vodka, to name only a few of the products that are out there.

There is a serious business point to be made here. Pumpkin spice is a flavor and a scent, and of course, you can add either of those things to a product to make it seasonally relevant, at least to some people. That doesn’t necessarily mean that you should which is the broader business point. There are often moments in business when we’re confronted with what some might call opportunities while others might see them as dilemmas. A bank might be able to make more money if it charges its own customers a fee to use their own ATMs or to have a debit card. That’s a bad idea.

There was a great piece published years ago called “Companies and the Customers Who Hate Them.” It talked about charging penalties and fees especially in the cell phone, cable, and banking industries. It concluded:

One of the most influential propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by binding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays. Companies have found that confused and ill-informed customers, who often end up making poor purchasing decisions, can be highly profitable indeed.

I don’t think that adding pumpkin spice to an already good product is on a level with some of the outrageous fees we’re charged as consumers but it illustrates the point that just because we can do something in business doesn’t mean that we should. Not only do you run the risk of having seasonal merchandise go unsold (unhappy retailers!) but also of having customers question your sanity. Neither is good business in my book. Yours?

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