In today’s economy, restaurants are doing just about anything to fill tables. But there’s a way to drive traffic and strengthen your business without turning to deep discounts — organized barter.
The economic downturn has led many restaurants to discover barter as a way to fill tables, move perishable inventory and access business-building tools and services, while still having customers pay full price. Barter exchanges help companies join “small economies” comprised of member businesses eager to trade goods and services. Yet unlike direct barter, where two businesses must have what is called a mutual coincidence of needs — each party has to have what the other wants at the same time, and whatever is being bartered must be roughly the same value — barter exchanges provide a barter currency, or trade credits, which allow for a great deal more barter flexibility.
Barter exchanges can give businesses access to a wide variety of goods and services, including equipment, dining room decor, maintenance and repairs, advertising, and even valuables that can be used to reward and motivate one’s own staff.
My company, BizXchange, worked with one operator whose business benefited from organized barter in a variety of ways. John Schmidt, founder of the Neighborhood Grills chain, runs six restaurants in the Seattle area, and though all of his restaurants are popular, on any given night he still has tables that go unused. Instead of absorbing this lost revenue, he turns to barter to make it work for him. He earns barter dollars by selling gift certificates and meals at his restaurants, and he can then spend those barter dollars with other exchange members. The arrangement gains Schmidt many new customers each month and greatly increases his spending power while keeping his cash in the bank.
Schmidt found creative ways to use his barter credit simply by asking. Before each new restaurant buildout, he delivers an itemized list of everything he needs to his account executive, and that person scours our member network in an effort to find helpful and meaningful connections. In his last buildout, John used barter to purchase chairs for the dining room, plumbing, electrical work and painting. These arrangements have saved him thousands of dollars on new restaurant buildouts.
Barter dollars can also be leveraged to gain additional cash-paying customers. One of the first things John spent his barter dollars on was advertising. He purchased bus advertising, which told the story of his restaurants to a greater portion of the public, who were then more likely to pay him a visit.
The cashless trading of goods and services is nothing new, of course. For years, people and businesses have been using the age-old practice of barter in order to save their cash and move perishable inventory — like empty seats in a restaurant. According to the International Reciprocal Trade Association, there were 400,000 exchange members in 2009 that used barter to activate excess business capacity and underperforming assets. For these organizations, barter was responsible for an additional $12 billion dollars in revenues in 2009, according to the IRTA.
The simple fact is that economic realities have made barter more mainstream. The average barter exchange is seeing strong growth each year, and new exchanges are being launched nearly every day. Companies are starting to see their barter exchange as another necessary business tool. If you’re not already a member of an exchange, I highly recommend exploring the opportunities wherever you do business.
Bob Bagga is the chief executive and president of BizXchange, a barter exchange company with offices in Seattle; San Francisco; and Dubai, United Arab Emirates. He can be reached at bobb@bizx.com.
