Why Local Businesses Can’t Compete With Chains (and that’s OK, for now)

On the anniversary of popular local restaurant Goodfella’s last meal, I’m finding myself reflecting on a recent twitter conversation I had with beer enthusiast @the_pint_chaser, Kyler Keith.

Background: As a life-long Alamo Drafthouse fan, I saw them post a photo on twitter of their ribbon cutting in Lubbock, Texas – a windy, college town where I spent four years studying advertising. It left me missing the beautiful plateau, especially now that the town also boasts a Chuy’s, another institution from my past. I complained on twitter, as I frequently do, about when these two beautiful companies would set up in my current hometown. Keith sent me back a profound question:

“Why can’t we have local restaurants step up so we don’t need those?” – @the_pint_chaser

The result was a friendly but probing discussion of what chain restaurants mean to small towns and the local restaurants within them, albeit limited by Twitter’s 140 characters or less nature. The conversation has stayed in my mind, and Goodfella’s anniversary made it all the more important to write my thoughts down.

The Numbers: Beaumont’s 2012 population was shy of 120,000 (if you include the greater Southeast Texas region, you’re looking at a number closer to 200,000). Comparatively, the city of Lubbock is 236,000 strong (Lubbock County’s 2012 census reported closer to 286,000).

Keep in mind these numbers include those too old or two young to be inside the typical target audience of local restaurants. Subtract those demographics and our restaurant draw is decreased.

However, Beaumont’s I-10 location makes it a perfect draw for chain restaurants, as evidenced by the typical wait time at Saltgrass Steakhouse on date night.

The Debate: So why doesn’t the success of Saltgrass Steakhouse transfer to locally-owned restaurants? Do chain restaurants pull business away from local restaurants or does it encourage local restaurants to improve their service? My answer is a bit complicated (surprise), but if you’re interested, here are my thoughts as to the disadvantages local restaurants face when compared to chains:

1. Resources:

Local business owners don’t have the resources of a franchised business. Successful restaurants that have built their brand have a good system in place to where opening a new location increases their customer base as opposed to decreasing it: a balance of quality menu and service paired with innovation and efficiency. Add in a work environment that is fun, plus pay that is attractive, and you have a business ready to grow. Show me a local business that can devote equal time to developing training infrastructure as much as they do managing the day-to-day functions. There aren’t enough hours in the day for a local business to truly focus on innovation, not without the help of experienced restaurant managers. Most local restaurants aren’t doing business on the level to where their profit margins are high enough to warrant that measure of advanced forward planning.

2. Bad habits:

Now throw in a Southeast Texas culture of chain-favoring and home-bodies. An oversimplification of the problem is that locals complain there is nothing to do in Beaumont, thus they stay home during the week and leave for Houston on the weekend, leaving local businesses in the dirt.

Both customers and business owners are to blame for these developed bad habits. Local businesses fight against a history of taking the consumer for granted: bad service, bad quality, lack of options and poor communication creates a bad restaurant experience memory.

But customers are equally culpable: we’re more likely to complain on social media where the loss of context makes it difficult for managers to respond (props to Zydecco and Madison’s as restaurants that address negative reviews online). However, when it comes to demanding the level of service a restaurant should deliver, we need to leave Southern Hospitality at home. You’re within your rights as a consumer to request rectification when a bartender gives you the wrong drink, a server doesn’t promptly greet you, or your meal is lower than traditional standards. Waiting until you’re behind a computer screen is not the correct way to address conflict (though I’ve been guilty of this behavior as well).

3. Service vacuum

That being said, there is a major service vacuum in Beaumont. We’re missing an entire generation of high school and college students available on weekends, willing to work customer service jobs in pursuit of higher education. If you can graduate high school and get a good paying job as an operator at a local refinery, why wait tables?

Those willing to stay and work are subject to zero training. Remember when I mentioned earlier that franchises have resources? One of those is a tested procedure manual for properly training their employees. Local restaurants have to create these training procedures themselves, often not containing all of the necessary information, or trust that servers have the experience to bypass training, and therefore create inconsistent service for customers. Ever ask a waiter at a local restaurant for happy hours or inquire about a certain menu item’s contents and get a blank stare? That’s a business that hasn’t prioritized, or may not know to prioritize, the proper training of wait staff. When I worked at Chuy’s, waiters had to pass tests with regards to how certain dishes were made. This practice may not even cross the mind of local restaurant owners.

Another factor is pay. If chain restaurants pay better or draw bigger crowds that guarantee a larger tip jar at the end of the day, those restaurants will draw the more talented wait staff.

4. Brand is important

From the bouncer at the front door, to the last person to thank you on your way out, every representative of your business is an extension of your brand. Don’t believe little old me; entrepreneurs more successful than I believe this. But the concept of branding is vague to local businesses. As I previously established, local restaurants are focused on surviving, not thriving, so the practice of branding falls to the sidelines. However, chain restaurants recognize branding as a necessity. They’re buying up ad space, reminding customers they exist, offering and fulfilling their promise of consistency. Granted, most chain experiences are mediocre, but would you pick a guaranteed “good” over an uncertainty?

5. VISION

I do believe local restaurants can compete on the levels above. I can cite a few examples: Katherine and Company, Banh Mon, Finch Hutton, Chaba, Tokyo, The Boudain Hut and New York Pizza and Pasta are all popular, locally-owned restaurants that deliver consistently good service and good food (there are probably more but I’m a little tired so forgive me).

But when you’re talking about Alamo Drafthouse, that’s a once-in-a-lifetime type of innovation. Other companies have replicated the experience (movies plus dinner plus beer equals awesome) but they miss several intangible pieces of the equation: the weird collection of clips that enhance the movie, Master Pancake Theater, sing-a-longs, menus full of film references and the super ninja waitstaff. I’d rather have the real thing than an imitation. Alamo Drafthouse movies are typically more expensive than a regular movie theater, and I rarely see movies in the theater in general, so if I’m going to pay a premium for enjoy a beer with my movie, I want the entire experience to be worth the extra dollars.

Vision isn’t something you can buy or learn and it’s not something everyone has.

So what can local businesses do? Learn from chain restaurants. Visit them. Examine them. Prioritize hiring the right people and training them to be as passionate about your business as you are. Cultivate an enjoyable work experience where employees may forgive a smaller paycheck considering their personal stake in the business. Hire a talented general manager who can manage daily business while you focus on ways to tweak, streamline and innovate or (if you’re better at process than creativity) create an advisory board of trusted friends who can help you capitalize on trends and local needs.

But customers can also help: buy local, address complaints with business owners, support the businesses that respect you as a customer, and stay flexible. In Beaumont, right now, eating local is a sacrifice. You may not get the same level of service you expect from restaurants in Houston or Austin, but eventually, with time, you may be a part of pulling the tide of patronage over to locally owned restaurants.

And repeat this mantra: local is cool. Supporting local restaurants and businesses helps develop our community identity. Things that originate in Southeast Texas are cool. There is a unique history in this town that we should celebrate and support.

Good things are happening in Beaumont, but all the organized awesome in the world doesn’t mean anything if no one supports them by showing up. You don’t have to plan, build and make things to change your community, you can be the person at the bar counter and still make a difference. By frequenting local businesses, you keep your dollars inside the community, which benefits everyone.

Austin promoted local businesses by using the mantra “Keep Austin Weird”. Beaumont has yet to embrace its “weird” but we are certainly trying.

Notes: Shout out to Grace Mathis who inspired several of the thoughts in this piece. Also, I’m in the process of compiling a list of my favorite local restaurants, one of which would definitely be The Logon Cafe where I wrote a bulk of today’s blog. Let’s all go out this week and support a local restaurant, ok?

4 Responses to Why Local Businesses Can’t Compete With Chains (and that’s OK, for now)

  1. Kevin Herrin says:

    This article is dead on. I was amazed at how some businesses ran when I returned to this area. A complete lack of server training & knowledge as well as employees that had no clue & didn’t care about customer service or even doing the job right. I bet you could fill an auditorium with unhappy ex-Cheddar’s workers. The management of that place was (is?) HORRIBLE even though it is a chain restaurant. It was simply a revolving door that would eat up and spit out people at an alarming rate.

    I had the pleasure/displeasure of working at Planet Hollywood in Orlando. It is/was? one of the busiest restaurants in the world. Our training lasted two weeks and we even had to know the weights of the protein in each dish as well as the main ingredients in the food and drinks. The test was fill in the blank. The page was blank and you filled it in with all the food and drink names & ingredients. We started training with 18 people, graduated with five, and I was the only one left after six months. I learned a lot about consistency and how to handle high pressure situations during that time.

    Unfortunately, all the restaurants you mentioned are “higher end” in terms of price. Yes, the quality is great at all of them, but the prices don’t lend themselves to nightly outings unless you are making refinery-worker-on-a-turnaround money. The average college student & retail worker would be lucky to enjoy once a week at one of these restaurants. The folks who can afford to eat out nightly most likely don’t because of the hours kept by our mostly blue collar workforce.

    Additionally, the lack of quality nightlife of any substance in our area will continue to see our population drive their dollars to Houston. You have overpriced beer at really crappy dive bars or overpriced beer & liquor at crappy cookie cutter “nightclubs”. The one or two chances you have to actually enjoy a nice evening out in Beaumont each month also end up being a dice roll with either mediocre entertainment, prohibitive cost or both. Frankie does a great job of providing a balanced diet of affordable options, but he’s a rarity.

    Your country crowd goes to one place on one night once a week. You can always count on the Golden Trough’s parking lot being full. Great restaurants sit idly by on the weekdays, ignored for the “convenience” of cheap & crappy fast food. The richest restaurant owner in SETX is Mr. Ellis who basically owns all the McDonald’s franchises around here and that may be the saddest reality of all. (sorry, I didn’t intend on writing this much as a comment)

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