Successful start-ups keep a narrow focusSuccessful start-ups keep a narrow focus

“Breakout Brands” was the subject of a recent Nation’s Restaurant News special issue. The editors picked 50 concepts ranging in size from a couple of units to 75. Each was chosen because it had an interesting point of difference and demonstrable expansion plans.

Imagine — 50 restaurant brands, each with an interesting point of difference. What other industry can generate so many new concepts in such a short time frame?

Obviously, few of these concepts will go on to become another McDonald’s. Or another Chipotle Mexican Grill. Or another Five Guys Burgers and Fries.

What determines whether a start-up will become a big success or just fade away?

Short-term vs. long-term strategy

Having worked with many start-ups in the restaurant and other industries, we find the biggest obstacle to future success is a failure to distinguish between the short term and the long term.

Too many start-ups start out with a long-term strategy they nail to the wall and from which they refuse to deviate. The entrepreneurs who run the business may have devoted a considerable amount of thought as well as resources to a business plan that spells out in detail their goals for the future.

Forget the future. If you want to be successful in the future, your business plan has to work today. A jet plane uses 110 percent of rated power to get off the runway, but at 30,000 feet, the pilot throttles the engines back to 70 percent.

The best short-term strategy

The best way for a start-up to get off the runway is to narrow its focus. An entrepreneur who wants to build a global restaurant chain needs to think small, not big. He or she needs to be ruthless in cutting out anything that will detract from the ultimate goal.

And what is that goal? It’s not to build a big business; it’s to build a big brand. Once you do that, the business will follow.

Take McDonald’s, the world’s largest restaurant chain, with more than 33,500 units in 119 countries. I may have miscounted, but according to my tally, a typical McDonald’s today has some 118 items on its menu.

But the chain didn’t start that way. The first units had just 11 items on the menu. Three things to eat — hamburger, cheeseburger and French fries — and eight things to drink.

What built the McDonald’s brand? Its focus on hamburgers. “Billions and billions served,” the signs used to say, without specifying exactly what was served because every consumer knew the chain was focused on hamburgers.

Initially, what was McDonald’s big advantage? Every diner, every mom-and-pop restaurant in the country served hamburgers. But McDonald’s was “focused” on hamburgers — the chain’s big advantage.

No more. Hamburgers are just one of the many, many items on a McDonald’s menu. Suppose the chain was launched in 1955 with today’s menu. Would it have become the world’s largest restaurant chain? Highly unlikely.

That’s the point. The short-term strategy that takes a jet plane off the runway — the hamburger — is almost always different than a long-term strategy that keeps the plane aloft.

Short term, you build a brand by narrowing its focus. Long term, you milk a brand by expanding it.

"That's not what we want to become"

(Continued from page 1)

That’s a common refrain from a start-up client who objects to our proposal to narrow his new concept’s focus. And this objection is logical. If a start-up begins with a narrow focus, it’s going to have to devote marketing resources to broaden the line in consumers’ minds when the opportunity arises.

The problem is, when you focus all of your resources on your ultimate goal, your new concept might not get off the runway.

Face it: There is no more competitive environment in the country than the restaurant business. Almost every human being thinks he or she is a food expert. By age 30, for example, the average person will have consumed some 32,850 meals.

The largest U.S. chains in terms of unit count all started with a narrow focus:

1.            Subway — submarine sandwiches
2.            McDonald’s — hamburgers
3.            Starbucks — coffee
4.            Pizza Hut — pizza
5.            Burger King — hamburgers
6.            Dunkin’ Donuts — doughnuts, coffee
7.            7-Eleven — convenience
8.            Wendy’s — hamburgers
9.            Taco Bell — tacos
10.          Domino’s Pizza — pizza delivery

Don’t try to appeal to everybody

It’s logical for a new brand that wants to dominate a new category to try to influence every possible prospect for the product. There’s a certain urgency to move quickly and reach every prospect before a competitive product or brand gets into the category.

But trying to reach everyone can be a big mistake, especially for a start-up company with limited resources. If a start-up spreads itself too thin, it may wind up with millions of half-sold prospects and no customers at all.

A good example is the success of Facebook. The brand was launched in 2004, after the introduction of Friendster in 2002 and MySpace in 2003.

But Facebook was launched narrowly, to Harvard University students only. After 90 percent of Harvard students signed on to Facebook, the site was opened to other Ivy League students. Then it was opened to all college students across the country, and finally to everybody.

The initial launch created the impression that Facebook was an upscale social media site. And when faced with a choice, most people would rather go upscale than downscale.

Many other brands have followed a similar strategy. FedEx started as an overnight cargo delivery service before branching out into all types of services.

I repeat: Short term, you build a brand by narrowing its focus. Long term, you milk a brand by expanding it.

Laura Ries is president of Ries & Ries, a marketing consulting firm in Atlanta. She can be reached at [email protected].