Posts Tagged discounts

TRIANGLE THEORY IGNORED

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The Triangle Theory has been around a long time. It has been successfully used by many of my former employees and students. These days it can even be found in a number of places  on the internet.  It is a very simple concept, properly interpreted it says take care of your employees and customers and they will take care of your bottom line. The goal is for management to  balance the benefits of the business among the three sides of the Triangle. The smart  leader quickly learns that the more you invest in your employees and customers the faster sales and profits will grow. (This of course must be done properly to be effective….this is a plug for my book!)

I am watching with great interest the slow collapse and consolidation of the chains in the restaurant industry. Almost without exception the decline of various brands was caused by IGNORING the concept embodied in the Triangle Theory. Profits were the #1 priority and cost cutting became the #1 focus.  This of course was at the expense of the other two sides of the triangle, the employee and the customer. As sales AND profits declined, the obvious answer is advertising saying “please come back, we are not that bad!”. When that doesn’t work the next obvious answer is to buy them back with discounts, bundling and couponing! This all cost money so we are back to where we started……cost cutting!!!

Interestingly, well run companies with a balanced triangle, that are sold by their founders, are almost always immediately subjected to the profits priority and  the cost cutting strategy begins the never ending spiral down. 

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FOUR WALLS THEORY

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I was sitting at a car wash, 20 miles from my home, musing about the fact that I had driven past a number of new, fancy car washes, that didn’t have lines to this older less attractive car wash that did. Why? You guessed it, THEY GIVE A GREAT CAR WASH!

While writing the book I have become a student of current business in general and specifically the restaurant business. Most, experiencing declining sales, are focused on all the outside reasons for poor performance. The ‘economy’, fickle consumer, rising cost, and the old tired facility. Nothing has changed these were the same problems identified when we first launched Friday’s, in the early 70’s. Todays answers are no more creative than those of several decades ago. DISCOUNT, ADVERTISE AND/OR REMODEL but don’t take responsibility and look inside the four walls at product, service and cleanliness.

The Four Walls Theory teaches us to look to ourselves and inside our four walls of operation, literally or metaphorically for the answers.While monitoring many, “looking in all the wrong places” I am also happily monitoring some great success stories. The differences are dramatic. You can read about them in the book but doubling sales and profits is not uncommon. Oh, and without DISCOUNTS, ADVERTISING AND/OR REMODELS!!

I threw in a picture of Tadich’s Grill in San Francisco. Like my car wash it’s older but clean, un remodeled but charming, GREAT FOOD and long lines since 1849!

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