The Pizza Store Dilemma

Posted by writer | Active Event marketing »

 

How often do you see the same sad story around you? Small businesses struggling hard to survive - short-sighted and unprepared to take risks, unwilling to secure the potential future of their business. I have had pizza in 26 different countries in the world, and yet none of them compares to this tiny corner pizza shop in the Noosa Hinterland, close to where I live. They’re pizza’s are to die for. This is why I feel unnerved to see how their business hasn’t been ’secured’ for long term success. 

pizza

The couple (lets call them Jack & Jill for the sake of anonymity) took a vacant building a couple of years ago and built the pizza and coffee business from scratch. Despite the mouth watering pizzas, they still aren’t making enough money to buy the property. The property owner is stalling their lease renewal and wants them to leave if they can’t buy the freehold. Recently I found myself thinking about the possible reasons for a business that provides a great product and delivers such a valuable service to it’s customers, is not in a position to buy the freehold of the property it trades out of. Now my only interests other than looking at this as a great case study is to see them pull through - being a loyal customer who benefits from the value their store offers me (i.e. delicious pizza). I have vested interest in the business being a success. If it goes under, I loose a convenient destination for coffee breaks and an easy place to take the kids out for pizza on weekends. There will be no replacement shop if they fail to secure the building freehold which will not only effect the proprietors but will effect the lifestyle of customers who have come to lean on the business as well.

One of the core issues I can see with the business is the owners approach to business, the couple who run the place are chalk and cheese in the way that they view what the business is to a customer and how they translate this into success.

First Jill: Although friendly and personable, she is not open to advice on ideas for securing more revenue or funds to secure the businesses future. She simply phases out if you offer advice. She makes the business atmosphere casual and homely as though the customers are visiting her in her lounge room which is nice (they live behind the shop) but when it comes to money its impossible for her to hide a tight-fisted, short sighted approach to business.

Now I, for one, find the dynamic in this particular business as interesting as any I have seen before. Whats interesting is the fact that her attitude - being so money focussed - has such a contrasting effect on me as her customer than the opposite and equal reaction I have when dealing with her partner Jack’s attitude. She’ll skimp on servings, serve canceled orders to save making a fresh pizza & count every nickel and dime owed to a point where she actually makes me repel against wanting to give her any more money than I have to. Her attitude seems to instill a feeling of wanting to visit the shop less and spend less regardless of how nice it is if she is on duty. Also, if spending anything, it’s as though she makes me want to scrutinize everything she serves. Its almost as if she wills her worst fears upon herself. Being worried about not making enough money results in customers thinking about how much she is taking from them and what they are getting in return. Its a vicious cycle that I would never had contemplated if I wasn’t lucky enough to have been able to watch such contrasting styles in the same business on rotating days.

Jack the partner: A laid back personality compared to Jill with a completely different attitude to business. His attitude is to offer free coffee, give extra servings, and a philosophy that ‘near enough is good enough’ when it comes to the bill. He’d say nice stuff like “that ones on the house if the experience is anything but perfect”. His attitude makes customers feel like no matter what you pay him, you are always getting real value. He makes you feel like he is looking out for you as his customer and this attitude in effect translates into you enjoying the visit more, thus increasing your frequency of visits.

What makes this case study so interesting is the following question it raises. If the business is not generating enough money to buy the building it trades in, although the food and the service it provides is excellent value for money, will it survive? Is the business failings because Jack is giving away to many freebies to customers (although by doing so he entices them to spend more time), shouldn’t this translate into success? Or is it failing because of tight-fisted Jill who extracts every last penny from customers without winning any awards for enticing customers into spending more time in the business each week, even though she can be assured that she has extracted every last cent when customers do visit?

You can probably imagine Jill is always on Jacks back for giving away too much for too little or for being way too generous with the helpings and so on. I often see him hushing and hiding his generosity to avoid conflict. There are no awards for guessing who Jill blames for the business not earning enough money and if she had it her way, Jack would be forced to follow suite with the style in which she employs to govern the business, she sees no value in his style. You do not sense a willingness to compromise between her style and his, when it comes to the methods by which she believes, needs to be employed for profitability.

Now Jack on the other hand would probably subscribe to a view more in tune with a combination of a little tight-fisted scrutiny on Jill’s part giving him the bad cop enforcer behind him to cover positive approach to dealing with customers. Customers first. I sense that if he has the freedom of exercising his style of management without scrutiny that he would have the business pumping in no time.

Now to me, I see myself as a potential $5000 customer of this business because if frequenting the business daily I would spend just under $10 daily as well as the bi-weekly $50 family pizza nights we would enjoy. I am sure thats how jack sees me too which is probably why we are on the same page where he considers me a great customer & I consider myself lucky to have such a great value local hangout at my disposal that is so laid back and comfortable.

Now jack’s philosophy is probably to build more customers just like me that come in every day & his strategy is pretty simple, he gives back to ensure the customer experience is always positive. He seems to know that each customer’s experience is only ever as good as their last.

Now Jill on the other hand can only focus on what giving away a FREE cup of coffee means to her in lost revenue, she cannot get past the value she feels she is already providing for such a small return and she doesn’t feel she owes it to anyone to give them anything for free.

Jill does not see me as a $5000 customer, I sense she sees me as an $8 to $10 customer every time I walk into the shop and in doing so I feel like one, thus I am sure I act like an $8 customer by scrutinizing my change and what I am being charged, though when I am served by Jack I both feel and act like the $5000 customer I am.

Now lets do the analysis on this for arguments sake. I can say with absolute certainty that if Jill ran the business her way and Jack did not exist, the business would become little more than an inconvenience to me as it was before they took over the building. I personally would most probably become a $5 customer on bi weekly frequency as opposed to a $10 a day customer, buying little more than a coffee and the newspaper which would cost me a total of $520 per year. This being the case I would be $4480 per year richer and the business $4480 poorer.

What do I end up with at the end of the year for my extra $4480 if Jack was in charge? I get a sense of community, I have a place to visit when I need to get out of my office or away from the home, a place that feels like a second home. I have a place to take my family for stress-free casual dinners on Sunday nights & a place to meet business associates or friends where the proprietor is always friendly, always makes me feel like $5000 customer who knows my name and what I like to eat and drink. I can even ring him on holidays and ask him to check my pool for me.

Is it worth $4480? Absolutely, but if I didn’t have access to it my life would adapt & any perceived value would evaporate, as it does with most business services - its a want of mine to retain this facility, it’s not a need. There is a difference there. 

I guess the lesson here is that money is little more than paper or coin that is effectively worthless. It serves as a currency of exchange between goods and services from one person or group to others. Whats important is not the money but the goods and service being provided to your customers. Business is about perceived value, all a customer ever sees is your intent, the exchanging of money serves little more than to provide a common denominator by which we measure our satisfaction.

If customers feel they are realizing perceived value through any relationship they have with a provider, they will continue to hand over money asked of them without questioning it. The minute a customer questions the perceived value they are receiving they will focus on the money being asked which is the beginning of the end, of a mutually profitable relationship.

I guess the crux of this case study would be to always allow your to business to focus on the perceived value of what customers enjoy from your products or services. Ensure they keep enjoying it whilst finding others who will enjoy the same. Evangelism. Do this and your money will always keep flowing in, focus on the money and you will eventually run out of people willing to keep giving it to you.


| Management, Pre-launch, The Story

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