How Does a Single-Location Independent Operator Restaurant Compete with Chain Franchises?
3 Min Read By Shannon Chirone
Even in the best of times, it’s mostly been an uphill battle for single location restaurants to compete with chain franchises. Differences in manpower, brand recognition, technology and marketing budgets have all presented significant challenges for single location restaurants to compete for market share. With the onset of the pandemic, the restaurant industry cratered after experiencing massive labor shortages and business loss, compounding the existing challenges. Despite these issues, by making strategic investments in technology and marketing, it’s still very possible for single location restaurants to compete with chains.
One of the biggest COVID-born shifts in the industry was the widespread adoption of technology solutions to streamline the ordering process. Diners became familiar with accessing menus via QR codes. Text and online ordering and self-service kiosks enabled with contactless payments became mainstays in franchises. While there are budgetary differences between a chain restaurant vs an single location, investment in technology must be made in order to meet new customer expectations and ease the burden of staffing shortages. For example, replacing physical menus with QR codes has become exponentially popular since the start of the pandemic with one firm reporting a 750 percent increase in downloads between 2020 and 2021.
This shift can help to facilitate other tasks like on-premises digital transactions (which made up one percent of restaurant sales in 2021) and contactless payments. These tools help to ease the burden of the staffing shortage, minimize order errors, and ultimately increase both brand recognition and repeat customers- the latter of which creates opportunity for even more growth.
A critical driver of growth for restaurants is word-of-mouth. Repeat customers help to maintain business continuity, share feedback by word of mouth, and reviews (think Yelp, Google Maps, social media), ultimately helping create free marketing through their positive experiences. Maximizing this opportunity for free marketing is key to developing deep relationships with customers and building customer loyalty. There are numerous avenues to building a dedicated customer base – from punch cards, to giveaways, to collecting contact information for any relevant future promotions or exciting news. Some software solutions even do the marketing work for you- automating email and SMS campaigns – so you can focus on day-to-day business management.
SL restaurants have a leg up on franchises in this regard, as their relationships with customers are more personal and meaningful than one with a franchise. Fostering a strong interpersonal connection with customers, undergirded by a deep understanding of their preferences, builds community and results in more referrals, more repeat customers, and increased business.
Promotion and Loyalty Programs
In addition to leaning into the marketing opportunity presented by building a customer community, targeted marketing efforts are proven to increase customer visits and order volume. Offering discounts on orders of a certain volume, leveraging local events for promotion, and running off-peak time promotions are marketing strategies that help you to do more with less.
Applying unique promotion strategies that leverage existing human and product resources is increasingly important as single-location restaurants struggle with the labor shortages and supply chain issues that plague the industry more than large chains. Marketing initiatives can encourage customers to order more items, notify past customers to repeat their orders, and inform restaurants with valuable data to increase those choices that have proven successful.
In order to succeed in 2022, it’s important that single-location restaurants consider what choices will get them on par with chain franchises. By capitalizing on many of the technology, marketing, and customer loyalty initiatives put in place as COVID-19 safeguards, restaurants will create long-term business continuity and brand loyalty.
Play to Your Strengths
One of the benefits of operating a single-location restaurant is that you do not have to comply with rules and regulations of larger chain franchises. With this in mind, SL restaurants are positioned to capitalize on their unique qualities, including founding story and history, menu items, promotions, and more. While it may sometimes seem like a David vs. Goliath fight between SLs and mega-franchises, by playing to their strengths, SLs have the ability to carve out a loyal, eager place in the market to maintain and grow their businesses.