3 things chains can learn from independents

Cues don’t always come from the big dogs.

Even before the Great Recession, it was the fashion among restaurant-business savants to predict the imminent extinction of the independent restaurant. How could a single place compete with the purchasing, marketing, siting and recruitment advantages of a chain with any scale?

No wonder casual dining was in its heyday.

Those thinkers were intellectual descendants of the doomsayers who declared the Internet would never catch on and the public would shun ATMs for the personal experience with a bank teller.

Their blunder was in disregarding the party that would determine the fate of chain restaurants and independents alike, the consumer. And the public’s sentiment was and is unambiguous. Is there anyone who hasn’t caught a whiff of consumers’ predisposition against chain restaurants? There’s even a legislative movement to ban chains on a hyperlocal basis, as if they’re toxic dumps with silverware.

That big-is-bad mentality isn’t as widespread in retailing, where even the übercool will praise the benefits of cookie-cutter concepts such as Target (pronounced tar-jay, of course). Nor has it tarnished impressions of Starbucks, In-N-Out or Chipotle. Sales for  the latter chain alone exceed the combined intake of the Top 100 independent restaurants.

But Chipotle would not be Chipotle if founder Steve Ells hadn’t graduated from the Culinary Institute of America and forged his business ideas while working in the kitchen of a landmark San Francisco independent, Jeremiah Tower’s Stars. His distinctive coleadership of Chipotle is a good illustration of three things any chain executive or restaurant manager can learn from independents’ playbook:

1. Burn the catechism

Time and again, Chipotle acts as if it’s the first and only chain on earth, with no precedents to follow or conventional wisdom to flaunt. There’s no paralysis due to scale, potential static from investors or the gnawing awareness that every other brand does it differently.

So, when everyone took it as an article of faith that big chains couldn’t buy from farms as independents did, Chipotle opted for better beans and meat and saw sales and margins grow.

2. Try a one-restaurant mindset

So many good decisions die stillborn in chain headquarters because even the slightest change would have to roll through thousands of units, many of them franchised. There’s no such thing as a minor adjustment; because of scale, everything’s a moonshot.

Contrast that with Howard Schultz’s one-day systemwide shutdown for employee retraining during his second tenure as CEO of Starbucks. That’d be a bold move for a single restaurant; publicly held Starbucks was smaller then, but it still exceeded thousands of stores. Consider how many millions in sales were likely lost.

The operators of independent restaurants enjoy a latitude and authority their counterparts on the chain side couldn’t imagine exercising. But maybe they should.

3. Act like it’s your business

Suggesting the contrary to an independent operator would be like telling them they have no say over their kids. On the chain side, a battle is waging between an investor and the parent of Olive Garden over pasta cooking.

It’s glib to say, “Oh, just ignore those shareholders.” That’s just not real, especially with how much more restaurant-business-savvy investors have become. But Ells and Schultz have found the mojo to sell short-term return eaters for longer-range gains. It can be done.


View the full Top 100 Independents list



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