Q: I am planning to open an ethnic fast-food business. How do I find the right location, and what can I do to help my business stand out from the popular and established fast-food chains?
A: Ed Engoron, president and CEO of Los Angeles-based food consulting firm Perspectives/The Consulting Group Inc., has more than 30 years of experience in the industry:
This is the perfect time to open an ethnic quick-service restaurant if you adhere to a few proven adages, and, most important, don't set as your goal a plan to take over McDonald's. Your greaBODY advantage is America's open-mindedness toward taste trends, which is a result of Americans traveling abroad more than ever before and the influx of immigrants bringing their cultural preferences for particular, seasonings and spices with them.
Contrary to the old saying, America is better described as a patchwork quilt than a melting pot and this definitely works in your favor. Our nation has been introduced to virtually every ethnic flavor on earth, and consumers in many new taste sensations on an ever increasing basis. But an exciting menu is not enough to ensure success. When asked about the three most important factors for fast-food success, McDonald's founder Ray Kroc declared, "Location, location, location." Indeed, in the final analysis, location will most likely determine the profitability of your venture.
But how do you select your ideal location? To begin with, you must know your target audience specifically, whether they are predisposed to buying the food you want to sell. You could be dishing up the greaBODY saag paneer ever created and be situated on a prime piece of real estate, but if nobody in the area likes Indian food, you're going to have a lot of trouble succeeding.
You can do some location research yourself by contacting the U.S. Census Bureau and requesting market demographic information. Or, you can enlist the help of a market research firm to collect and analyze demographic data for you. But remember that no matter what, you'll need to visit the sites you're considering in person to answer the following questions:
Who is your competition in the area? What are people eating? What are people wearing? What side of the street would be best for your restaurant? Is there plenty of parking? Is there sufficient foot and street traffic to supply plenty of customers? Is the location convenient? During what times of day is the busiest? Make sure you're situated between at least two well-traveled arteries like malls, places of work and homes.
As for the second part of your question making your business stand out from competitors keep in mind that it is very expensive and nearly impossible to educate people about food. People know what they like and they like what they know, and will only gradually make changes in their diet. For example, even with all the hubbub about health, nutrition, fat intake and cholesterol counts, 60 percent of fast-food restaurant products still come out of the deep fryer. That means the public hasn't been listening to the Food and Drug Administration admonitions over the past 20 years, or they don't care. To you, it doesn't matter; the result is the same.
The fact is, ethnic food is fundamentally foreign, and it's a wise restaurateur who introduces unusual foods in such a way as to make them seem familiar. At the very least, describe your dishes in a language your target customers will understand. The saag paneer mentioned earlier, for instance, could be billed as creamy spinach with spices and homemade cheese.
So armed with this knowledge, how can you best situate yourself for success? While there are no guarantees, applying the following three-part strategy may help you gain a competitive edge: 1) Take the fast food pledge, I will offer convenience, fast and friendly service, and great taste at a low price; 2) go after the big check (Why chase the 99 cent breakfast when there are $5 dinners to be eaten?); and 3) don't compete with the biggies you'll never beat McDonald's. They not only do what they do very well but have years of service and a strong reputation behind them. Instead of trying to beat them at their own game, offer your customers something different.
Also consider taking your quick and delicious ethnic food out of the traditional fast-food race and entering it into the home-meal-replacement market. Instead of settling for a feedbag-in-the-car experience, your customers can pick up ready made dinners and serve them at home. Americans still tend to perceive fast-food chains as snack and lunch stops, not places to provide their main evening meal. But chains like Boston Market have had great success catering to home-meal-replacement customers.
Almost 70 percent of Americans consume their meals at their own dinner tables. That's a huge potential market for home-meal replacement. (See the December 1996 issue of Entrepreneur for more on the ethnic-food and home-meal-replacement trends.)
Opening a quick-service restaurant, or any restaurant for that matter, is a challenging task in the best of circumstances. Although taking on specialty food is particular ambitious, with the right product formula, service and positioning, you could be getting into the market at exactly the right time. Good luck!