New, Not Always Better By: Roy Bergold The other day a stock analyst called me. His job is to watch quick service restaurant stocks and guess which ones will go up, so he can recommend them to his clients. He hadn't been at it long and was looking for some wisdom. Of course, I told him that if I had that tuned-in crystal ball, I would be a very rich man. But, never lacking in opinions, I talked to him. He specifically wanted to know my thoughts on one large chain that was about to embark on a whole new business within the walls of its existing restaurants. Would they be successful or a bust? As we talked this over, it struck me that a lot of businesses seem to be trying to be all things to all people. There is sort of an attitude of "If it is good for one, it must be good for me, so I'll do it." I want to give you some ideas to think about before you jump in. Now, if you are a franchisee of a big chain, you don't have much say in whether you're going to take on a new business venture. You are tripping along selling hamburgers and some genius at headquarters decides there's money to be made selling marinated squid, and all of a sudden the fish truck pulls up. You have to start marinating. But, if you do have something to say about new business ventures, think about the following before you get tempted. Image: That's right. What will it do to the image you have worked so hard to create and maintain? Let's say you are an adult restaurant with a happy customer base. You look at the place down the street with all the little kids dragging their mommies in and you think, "I should have kids in my store, too." Be very careful. Your core business and image is for adults, not kids. Sure, those kids mean business, but think of the messes they make. Think of the adult customers who come to you because you are quiet and peaceful. It may not be worth changing your core business.   Price: Can you afford the new business? New products mean food and paper costs you didn't have before. Additional labor may be needed, or a different type of worker, and a part of the store may be needed to prepare the new product. Of course, if your store is not being utilized efficiently, this may be good. If you get rid of seating that's not being used to put in a coffee bar, your store may be more efficient. And, heaven forbid, you have to raise menu prices to compensate for the costs associated with a new product. Not good. How about the crew training needed to handle a new product? If it's intense, you may have a whole new set of problems. You have to think about morale, and management priorities. There are also equipment costs and repairs. Every new piece of equipment brings a whole new set of worries. Space: What about something as mundane as storage space. Do you have enough room for the additional food and paper? Do you have the capacity to handle the additional waste potentially generated... Read More