Late last year, I did a blog post looking at how clustering of competitors may have positive results (https://smallbizsurvival.com/2016/11/competition-and-clustering.html).
Recently I was asked about this idea in terms of small rural town cafes. If any of you have lived in the Great Plains region of the country, you know the towns and the cafes I am talking about. These restaurants are a crucial element in maintaining a viable community.
The question was in terms of competing with each other.
Let me outline the situation – Several small towns within a county have a cafe (one town has two). These cafés are open until mid-afternoon Monday through Saturday and closed on Sunday. Maybe once a month, the café may be open for a Sunday brunch/lunch. What often happens is cafes choose to be open on the same Sundays.
I was asked, based on my previous blog, was “is this a good thing?”
As we discussed the question, another piece of information arose. Sometimes a nonprofit will also have a benefit lunch at that same time, meaning more competition.
This question is a good example of where broad answers may not always apply in specific circumstances. I could argue that more opportunities would bring out a larger audience than might normally be expected. Now it would seem that the potential audience is being split as they decide which of two or more opportunities they will attend.
So the answer is an unknown. It’s probably unlikely that the entire audience for the two or more cafes and events that might be open on a Sunday would all go to the one open location. But would it increase the number of customers somewhat? Let’s think about this.
For some of the audience, it would be further to travel and time might also be a factor.
Also, people like being with other people they know and having conversation. Going to a place further away may limit such social interaction. That may be as much of a draw as the food.
Another way to look at the question is from a capacity stand point? Having a larger audience is fine but do these small cafes have the staff and the physical resources (seating space, kitchen space, kitchen equipment, etc.) to handle larger crowds?
And would the shift of audiences be a consistent thing? Such cafes have small margins. Cooking too much food and not having people show up would be hard on the bottom line.
And there is the other issue of not having enough food prepared. Since the capacity to quickly do more, even if the food is on the shelf, is limited, you may hurt future attendance not only for your café but for others in the group of these planned Sunday dinners (is it dinner or is it lunch – another question for another time).
Last, will it be possible to develop a cooperative plan? Owners have the right to do what they want. Experience may show that certain Sundays are better than others. From my perspective, it certainly wouldn’t hurt to try. And if there is a local tourism board or economic development group, they also might want to be involved. If other events were planned around this (rummage/flea markets; local food sales/food stands & farmers markets; sporting events), the potential market size just grows. Market it as the Sunday “comfort food” trail.
Just thinking about the question can be a great reason for the café owner to connect with his or her customers. Ask them what they think? Would they go to the other cafes? Would they encourage their friends and neighbors to also go? What would be the best way to market this plan if it should happen?
It would also encourage the owner to develop a schedule for themselves of when they will be open. People are a creature of habit so knowing when would help the owner and the market plan.
So does increased competition in this case translate into a better bottom line for the entities involved? We don’t know.
What we do know is that an exploration of the question would be a good thing in general. Plus whatever the answer is to that question should offer the owner guidance for his or her future direction.
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Glenn Muske is an independent expert on rural small business, working as GM Consulting – Your partner in achieving small business success. He provides consulting, and writes articles for county extension agents and newspapers across North Dakota. Previously, he was the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality.