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How Independents Can Compete With Big Restaurant Chains

Chain restaurants have soared in popularity since the global financial meltdown of 2008-9. But independents are fighting back with great customer experience and a unique offering. Read on for tips on how to secure a foothold in the market.

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Chain restaurants have soared in popularity since the global financial meltdown of 2008-9. But independents are fighting back with great customer experience and a unique offering. Read on for tips on how to secure a foothold in the market.

Guides

How Independents Can Compete With Big Restaurant Chains

Chain restaurants have soared in popularity since the global financial meltdown of 2008-9. But independents are fighting back with great customer experience and a unique offering. Read on for tips on how to secure a foothold in the market.

Share this article

IT is often said curry is Britain’s national dish, but recent reports suggest family-run curry houses are under threat due to changing food tastes, a shortage of chefs, and competition from big restaurant and pub chains.

This highlights a problem facing many independent eateries – how to survive against the marketing might, bottomless pockets, and ubiquitous presence of the food franchises dominating UK high streets.

How can smaller, one-off restaurants win against their larger rivals? And how might they make their size a virtue, and steal customers from the bigger brands?

David versus Goliath

As much as a third of the business Boost Capital does is with hospitality firms, so we’re familiar with the woes of business owners in the sector, and restaurant SMEs have a battle on their hands.

Since the economic downturn, consumers want value for money, as well as an experience they trust, accountant EY has found. Against this background, chains have flourished, more than doubling in number between 2001 and 2014, according to analysts Horizons.

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Chains have flourished since the downturn, but what about independents?

One in four of the UK’s 23,500 restaurants is part of a chain, as are about a third of its 50,000 pubs, many of which serve food. However, while independent businesses may outnumber chains in the hospitality sector, with recognisable names set to proliferate further, the big beasts will win yet more customers, squeezing out stand-alone enterprises.

Food trends for 2016

So, the chain restaurants have economies of scale, brand recognition, and promotional pull. But that doesn’t mean smaller outlets can’t compete, playing to traditional strengths, as well as embracing innovation.

There are several food-related trends for 2016 identified by researchers NPD Group that nimble, independent businesses are well-placed to exploit:

-          A desire for variety and experimentation. Discerning diners want to find something distinctive and out of the ordinary, so one-off restaurants with a regularly changing menu, or sharing plates allowing people to try a number of new dishes, could prove popular.

-          Making life easy. Increasingly, punters expect to eat whenever they want, so the pressure is on to extend opening hours, and to offer a broader service – breakfast in pubs, for example, or cafes having a more formal evening menu.

It could pay off to invest in a further smaller premises offering a limited menu in a large location with a high footfall. This could attract more passing trade, who are then tempted to try the original business when they have more time.

-          Using technology to engage with people, and improve customer service. Consumers expect digital developments in all aspects of their lives, speeding up how they find venues, book tables, order food, pay for it, and share information about their experience. Smaller firms that invest in technology could win a slice of this custom.

Bringing technology to the table

The restaurant industry is quite old-fashioned, but where customers lead, smart restaurateurs will follow. Now almost everyone uses their smartphone for location-based services - researching where to go in the vicinity - hospitality businesses must get on board.

A recent study by Boost Capital found more than half of customers want to read a restaurant’s menu online before a visit, see reviews, and research its location – all signs that even a small outlet must have an up-to-date website.

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Most people check reviews online before visiting a place for the first time

More than this, one in three people wants to make mobile payments, and would like to see the use of more apps and tablets to speed up the dining experience. About the same number – 29 per cent – read a restaurant’s social media feed before booking, so savvy businesses will create a presence on the digital platform most popular with potential customers.

Signing up to an app, such as Opentable.co.uk or Bookatable.co.uk, could also bring in bookings, and advertise your restaurant to a wider audience.

Outlets that embrace mobile wallets, such as Apple Pay, Samsung Pay, and Google Wallet, could both satisfy tech-smart clients, and gather useful customer information. Payment technology isn’t just fast, it allows businesses to gain insight into customers’ habits – when they visit, what they order, and how much they spend.

This transactional data could be used to form the basis of a genuinely desirable loyalty programme, which could prove more useful to an independent than discount schemes, such as Groupon or Taste.

Play to your strengths

While technology may be on the rise, don’t forget traditional virtues. Customer service will always be of primary importance, and this is an area where stand-alone eateries can really excel.

Independent SMEs are almost like families – many are family-run, after all – and customers love a welcoming restaurant where they are made to feel at home. Gaining a reputation for looking after diners is as essential as good food, so spend money on staff training.

There’s also a growing movement to eat local food, and independent enterprises are well-placed to identify themselves with this grass-roots approach to dining. Sustainability is increasingly important to many consumers, so promote your local credentials, identifying suppliers on your menu, and detailing the journey of ingredients from farm to fork. Marketing your business through websites such as Localfoodadvisor.com, or joining the Sustainable Restaurant Association could lure in customers with a conscience who want locally-sourced fare.

Finally, make sure you’re keeping up with local competition. Keep an eye on other restaurants nearby, and those further afield with a similar offering. Every premises needs a revamp at some point, so judge whether your dining room still looks fresh, fashionable, and appealing.

A little investment to redecorate, update your menu, improve your wine and drinks offering, or even increase your capacity could be the difference between success and failure. We’ve worked with many hospitality firms who want to borrow to undertake a redesign, and their profits improve as a result.

Times may be tough for small food businesses, but people will always want to eat together in convivial surroundings served by friendly staff. Get the recipe for your independent restaurant right, and you could be the one keeping them content – and away from chain rivals - for years to come.

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How Independents Can Compete With Big Restaurant Chains

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