We've always done it this way

Dec. 13, 2011 | by Ed Zimmerman

I read this week that Kodak is nearly out of business. Growing up in the 1960's and '70's, every family had a Kodak. Those yellow boxes were everywhere and getting your very own Kodachrome camera was a rite of passage. Heck, Paul Simon even wrote a song about it.

As digital cameras gained popularity, Kodak stuck to what they believed. They sneered at digital's quality, righteous in their knowledge that Americans would NEVER give up shiny pictures for their photo albums. Today, cell phone cameras take most of the pictures and they are rarely printed. Kodak will shut the doors, correct in their assertion that professionally developed pictures look better than low-resolution versions uploaded to Facebook.

Being dead and correct is not a great strategy.

These are statements frequently heard from successful pizzerias; like Kodak, crystal clear that what has always worked will continue to work:

  • We always use coupons
  • We never use coupons
  • We don't deliver
  • We don't use online ordering
  • ... or Facebook
  • We don't open for breakfast
  • We always buy our supplies at the club store
  • Having three distributors is the best way to get the lowest price
  • We don't measure cheese, my employees know how much to use
  • We can't raise our menu prices

How did a dominant brand like Kodak, in a rock-solid consumer staple, lose everything? Simple, they determined the market, the direction of that market and took the steps to conquer it. There is little about today's market, the consumer or marketing/promotions that was predictable three years ago. I think in the next three years the rate of change will increase. So let's look at the above list:

We always/never use coupons – coupons and promotions are very complicated today. Add the online aggregators like Groupon and how can you know what works. This is the point -- what you measure you manage. EVERY promotion must include a unique coupon code. At the end of the month, analyze your expenses compared to the results. Invest in activities that drive higher profits not sales.

We don't deliver – face it, convenience is a driving reason why pizza is popular. If you do not want to deliver, consider outsourcing.

We don't use online ordering – OK, I am biased, I sell online ordering, but if you don't have a way to connect your menu to computers and mobile devices, your competition will woo your customers. For pizza, consumers are hooked, get online or get out of the business.

... or Facebook – as above, set up a Facebook page. It costs nothing. Have someone help if you need it and then monitor your page 5 minutes a day.

We don't open for breakfast – you pay rent 24/7, breakfast is not for every location, but find ways to increase the utilization of your "factory." Considering catering or school lunch program.

We always buy our supplies at the club store – you can't save enough to be out of your store. Spend your afternoons planning, training your staff, measuring food cost and SELLING to local businesses/schools in your market area.

Having three distributors is the best way to get the lowest price – really, do you think large chains use multiple distributors? You get your best deal by making a commitment and increasing your drop size. What does it cost you to deliver the second or third pizza on an order? The same economics work for food distributors. The more they deliver, the less cost per item.

We don't measure cheese; my employees know how much to use – why have menu prices, let customer pay whatever they want. If you don't care what your product costs, you CAN'T make money.

We can't raise our menu prices – tell that to the gas station owner on the corner. Costs are up, you must raise your menu prices or you will not exist.

Kodak management, smart and hard working as they were, did not see the world changing, fortunately you do. Realize that change is good and necessary. Act now to challenge your assumption, create new revenue streams and increase profits.

Wishing you success in pizza – Ed

Topics: Business Strategy and Profitability , Cheese , Marketing / Branding / Promotion , Online / Mobile / Social , Online Ordering , Operations Management , Trends / Statistics

Ed Zimmerman / Ed Zimmerman is a pizza industry veteran and President of The Food Connector. His almost four decades of foodservice experience includes food manufacturing and distribution leadership, food industry technology, marketing services and restaurant and grocery operations management.
View Ed Zimmerman's profile on LinkedIn

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