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.
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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!
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