Arrived at the new and almost completed Rosebank hub this morning, situated between the Zone and the area that once housed Tijuana 220 and Baccarat to discover the place had changed quite dramatically since my days of body shots, Corona Beer and Gypsy Kings. You see back in the day, you could almost count the restaurants within 3 kilometers of us on one hand. There was Tijuana 220, Baccarat, Late Nite Al’s, Moosehead, Bourbon Street and few others, today you would need a Cray Supercomputer to count the eateries, add up the setup costs, calculate the square meters, the seats, the wage bill, the rental bills and most importantly the turnovers required in order to pay for all of this.
Within a radius of a few hundred meters you will find, brace yourself… The Grilllhouse, Katzy’s, Mahi Mahi, Doppio Zero, Kuzina Greek, Koi, Motherland Coffee, Red Mango, tasha’s, Pizza eVino ,Vida eCafe, Bombay Blues, Ocean Basket, Nino’s, Kuai, Anat, Vanilla, Europa, Cranks, Bulldogs, Fournos, Mastro, Mugg & Bean, Mimmo’s, Lulu’s, Meat etc, Primi Piatti, Spur, KFC, Liquid Chefs, Kofe, Lattelicious, Nandos, Kung Fu Kitchen, Metzuyan, Rosebank Mews Café, Jabulani’s, Tsunami, Sophia’s and Zeffarino. Currently closed are Codes, Seattle, Steer’s & Wimpy and rumoured still to open are Butcher Boys, Fish Aways and Debonaires. (Of course I may have missed a few as I was only working on a Pentium 4)
I would estimate that the close to 50 outlets cover 10 000 square meters of space! At an average rental of R300 that is a combined R3 000 000 and that requires around R30 000 000 in turnover to sustain that. Let’s average the ‘spend per head’ off at R100 to be exceptionally generous and all you need are 300 000 paying customers every month to make this viable. So another Zillion Rand has been ploughed into setup costs by unsuspecting, unprepared and over ambitious owners. Franchisors have once again allowed their charges to sign long term rentals in an untried and untested arena, landlords have let more space to eateries than anyone else (Take a walk around and you will see most of the LET space is for restaurants, the rest has not even been filled yet), suppliers will be bracing themselves for a string of unpaid accounts, the public, with their very limited spending power, are even more spoiled for choice than they ever were and I am completely baffled by it all… I really believed that after 22 years in the industry, I had some small grasp on how things operate… Clearly NOT!
It took me exactly 20 minutes to do the walk around, pen and paper in hand, another 15 minutes to do the math (I am a little slow) and the rest of the day to try and work out, unsuccessfully I may add, why no one else does these simple calculations. Of course there are long established Rosebank brands that have been operating for years. They will watch their market dilute and pray that out of somewhere an extra few hundred thousand customers will appear.
The Gautrain will open its doors one of these days and Standard Bank are set to open a Super Block in the area but will the Gautrain deliver the masses needed to sustain this monster and will Standard Bank staff leave the sanctity of the in-house canteen as they brace themselves for the next round of layoffs? The jury is out on this one!
If you are one of those listed above, break away from the computer for a few minutes and pour yourself a stiff drink, you may need it. Once you have that out of the way, start working on these two questions, you are really going to need the answers.
Question number one – Why will customers choose my store as they walk around? (What is unique about it, what is remarkable about it, what is memorable about it, what is pleasing about it?)
Question number two – If I am lucky enough that they have chosen my store above all others, what am I going to do to ensure that they return?
If you are unable to answer both these questions with more than “Well the food is not bad and the service is OK” or “I will do specials” you need to go back to the drawing board and put in the work NOW! It is too late after they have left, with this many choices, don’t expect any second chances.
The restaurant industry remains something I am truly passionate about and lately I have been told that my writing may deter people from entering the industry. That is NOT my intention; my objective is to see passionate, capable owners, thriving in and industry that is both exciting and highly rewarding and to warn the uninitiated that this is not for the feint hearted and the dreamers. Do your homework, do the math! Do not rely on the landlord or the franchisor to do this for you, it may come as a shock to you, but they do not always have YOUR best interests at heart.
Next week the final suspect “The Owner” will be revealed in “Who Is Killing The South African Restaurant Industry?” Until then, I hope it is a busy, successful and highly lucrative, season for all of you.
The post Overtrading – The Only Thing Missing In Rosebank Is Common Sense appeared first on brandstrategy.co.za.