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COOPETITION in the Restaurant Industry

By Jose L Riesco

Republish: EasyPublish™ Published: 04Mar2009 Word count: 873 Viewed: 254 time(s) Get Free Content For Your Site

Have you heard the term Coopetition? If not, you'll hear it soon. It is causing quite a stir in the marketing circles.

So in case that you are not familiar with the term, let's start by defining coopetition. If we look at Wikipedia, we find the following definition:

"Coopetition or Co-opetition is a neologism coined to describe cooperative competition. Co-opetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage, and where they believe they can share common costs. For instance, the cooperation between Peugeot and Toyota on shared components for a new city car for Europe in 2005. In this case, companies will save money on shared costs, while remaining fiercely competitive in other areas. For co-opetition to work, companies need to very clearly define where they are working together, and where they are competing."

Long-term business success comes not solely from competing successfully with other restaurants but also by working with them to your advantage.

Coopetition is part competition and part cooperation. When restaurants work together, they can create a much larger and valuable market that they ever could by working individually. Restaurants can then compete with each other to determine who takes the largest share of the potential customers.

A good example of restaurant coopetition is when there is part of a city or town that has a large number of restaurants concentrated in a relatively small area. If you look at this from a traditional business point of view, it looks like this is a bad idea.

Why should anybody open a restaurant in an area already full of restaurants?

However, the reality is that all this abundance of places to eat, attracts customers who may just go to the area without any specific restaurant in mind until they arrive and make their decision over there. This is where the competition starts.

The restaurants with the best ambiance, or the best sounding menu, or the best quality/price or funny enough, with the most people usually bring the most customers...

There are many other typical examples of coopetition such as:

- Food courts: All the restaurants are together in places like shopping centers, etc. sharing tables, trays, cleaning services, etc. Again, they all bring customers to the same spot (cooperation) and then compete for their business (competition).

- Advertising: sometimes restaurants group to put together a food magazine or a restaurant flier where they all pay and contribute (both in money and in content) to the publication.

- Special food events: Sometimes several restaurants organize food events where they all contribute with food or food stalls. Because of the participation of many restaurants, many people attend these events (there is usually music involved and often many other activities as well).

- Etc.

As you can see, these are some of the possibilities for coopetition. However, there are some other intriguing ideas for you to consider. Here you have a few to think about:

- Cross-Promotion with restaurants that offer different food than yours. Often you don't compete directly with other types of restaurants. If a person is in the mood for Italian food, for example it won't go to an Indian restaurant, or viceversa.

Perhaps you can join forces with restaurants in your area that have other styles of cuisine, and together create a coupon book that you can distribute to the regulars of all the participating restaurants. Or maybe you could create a discount card that your customers could use in any of the restaurants in your area. This will attract more customers to your neighborhood.

- Cross-Promotion with restaurants that offer the same kind of food than yours. But that are not located near your place.

Again, usually people prefer to go to restaurants that are near their homes or workplace. If there is a French restaurant nearby and they are in the mood for French, they won't travel far to a different French restaurant... at least that this other French restaurant is so superior that it is worth it the trip and this where the competition kicks in.

So what can you cross promote? Well, if you have an ethnic restaurant, you could create a newsletter sharing printing and perhaps distribution costs to clients of all the restaurants involved. The newsletter should cover articles about the foods, culture, geography, etc. of the restaurant's native country.

But what if your restaurant is an all American place? You still can have trivia, etc. about the specific States, some local recipes, etc.

- Join Forces to negotiate better deals for linens, food providers, bulk printing for menus, etc. Imagine that you talk to the owners of nearby restaurants and you make a deal to use the same basic distributors for common things like linens, candles, dishwasher maintenance and supply, garbage and/or grease disposal, exhaust filters, printing menus, etc. You could then get a volume discount from these distributors and everybody will benefit.

These are just some quick examples of coo-petition. Joining forces with your competitors could be a win-win proposition. Just be smart about it and think about areas where both of you could benefit.

Can you think of more areas for coo-petition? I would love to know.

Happy Co-opetition!

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