Archive for the ‘Uncategorized’ Category

Is The Cheesecake Factory The Worst Trend of the Decade? – Not According to Customers, Stock Price

I recently read a piece on the 10 worst dining trends of the last decade where David Chang, famed chef of the Momofuku Noodle Bar in NYC, declared The Cheesecake Factory the worst.  Well David, this graph of the CAKE ticker symbol performance over the past year begs to differ (nearly 3x increase over last 12 months)

I’ve gushed about my love of The Cheesecake Factory before (Sorry Chef Chang) and I have a new found appreciation for how they operate.  In spite of the terrible economic environment for casual dining restaurants, The Cheesecake Factory continues to outperform the likes of Applebee’s and Chili’s yet The Cheesecake Factory is in the higher end of the casual dining spectrum.  The average menu price is also more than Applebee’s or Chili’s.  How does the team at Cheesecake Factory do it?  Here are the three methods they use to deliver value and drive business results at the same time.  They will work for your business too:

1. Pay attention to competitors and out innovate them.  In March, several restaurants offered cheap eats to increase foot traffic and sales.  The Cheesecake Factory was one of the few that succeeded in driving sales.  Instead of discounting existing entrees with a 2 for $20 style promotion, they launched a new menu called “snacks and small plates” that was designed to be combined to create an entire meal.  This tapas-like menu had been in the works for prior to the economic downturn according to company CMO Mark Mears.

2.  Offer customer choice without damaging the brand.  The Cheesecake Factory approach to providing consumer value enhanced the existing brand.  They created a new set of items that appealed to budget conscious consumers without cannibalizing sales from existing entrees.  The Cheesecake Factory experienced an increase in the average check size after introducing snacks and small plates as consumers spent more on drinks and of course cheesecake to accompany their “value meals.”  This is one of the reasons that Cheesecake Factory enjoys an impressive $10 million in revenue per location.

3.  Leverage social media to offer value while building loyalty.  The Cheesecake Factory is promoting Twitter and Facebook to build connections with its fans.  This helps to reduce customer acquisition costs by using loyal Cheesecake Factory fans to promote Cheesecake Factory messages.  During Cheesecake Factory’s “12 Days of Cheesecake”, they were able to increase the follower base from 2500 to 5000 in the space of a few weeks through a retweet contest.   While Cheesecake Factory’s Twitter efforts are just beginning, they have invested in Facebook over 250K Facebook fans.

To get 2010 off to a great start, take a page out of The Cheesecake Factory recipe book for success.

  • See what what your competitors are doing and do it better
  • Make sure what you do to match your competitors efforts to meet customer demand fits your brand and delivers bottom-line results
  • Experiment with social media to lower your customer acquisition costs and build customer loyalty by giving your customers something in return for delivering your message

Happy New Year.  Have a piece of cheesecake!!!

3 Ways to Maintain Control of Your Digital Self

Judging by the dizzying rate of growth of Twitter and Facebook over the past several weeks and months, general web users, and in particular small businesses, are embracing social media.  Not to be the voice of doom and gloom but what happens if Twitter and Facebook disappear? While that is not likely, what is likely is that Twitter and Facebook will look radically different in 12-18 months.  Why? Both entities need to innovate to continue to be market leading social network services (SNS) and more importantly, they need to find a sustainable business model.  Facebook needs another cash infusion and is having difficulty securing it.  Twitter is helping third-parties like Comcast, Zappos and Dell streamline customer service but does not yet have a way to directly monetize its platform.  So while we are enjoying the free ride today, it may not last.  Somebody has to pay for the  servers, storage and bandwidth – either advertisers or users.

How do you take advantage of the growth of social networks while protecting yourself from shifting business models and implementations?

1.  Maintain An Online Hub for Your Digital Self – It is critical to have an online home for your content, your brand and your products that you own.  Use social media sites as outposts and use your website/blog as your online headquarters.

2.  Use Facebook and Twitter As Spokes – Leverage these growth engines to hone your ideas, do market research, market your brand and acquire new users.  Make sure that whatever you do points back to your online hub.  Use these sites to provide sampling/teasers to pay off at your hub.  This strategy will work when the next Facebook or Twitter competitor emerges.

3.  Create A Conversion Event on Your Online Hub – Continue to move users down the awareness-consideration-purchase (action) funnel when they get to your site.  Promote registration to a newsletter in exchange for an email address.  Determine the action that gets the user closer to driving revenue while providing value in return.

I’ll elaborate further on the 3 control techniques above in future posts.  Until then, no social networking presence takes the place of your own online hub.   Use Twitter, Facebook, YouTube, MySpace and LinkedIn to your heart’s content.  Just make sure you understand why you are using them and how you will know if your goals are being met.

Business Timing and Cheesecake

In the midst of some recent research on the online food and recipes marketplace, my low blood-sugar filled brain cells became fixated on cheesecake.  Strawberry, Cookies and Cream, White Macadamia Nut, Chocolate and Peanut Butter.  If my local Cheesecake Factory wasn’t so far away, I would be finishing this post from there.  Their menu has all kinds of good stuff in it, including a story on how it was founded.

Evelyn Overton began her road to cheesecake fame in the 1940s.  She opened a small cheesecake shop in Detroit but soon closed it to focus on raising her children.  She didn’t let her commitment to family stop her dream.  She continued to perfect her recipes and supplied cakes to well-known Detroit eateries.   In 1971, when she and her husband Oscar entered their 50’s , they moved to LA using the last of their savings to open a 700 square foot store.  The rest as they say is Cheesecake Factory history.

I love this story because it has universal truths and maxims for business owners trying to make it big.

  • Overnight success is rare.  Evelyn Overton’s dream was deferred for 2o+ years.   Don’t expect your business to blossom instantly.  It takes time
  • Passion is critical to success.  Evelyn balanced her passion for family and food rather than following one at the exclusion of the other.  Try to combine and balance your life’s passions to carve out a unique niche.
  • Performance comes from refining your product.  Evelyn used her time raising her kids to perfect her recipe and study her marketplace. Starting small to perfect your product and positioning in the market is critical.  Never settle for stopping at version 1.0
  • Supportive friends and family will fuel you:  Oscar (Evelyn’s husband) and David (Evelyn’s son) were key members of the Cheesecake Factory braintrust.  Go find people among your family and friends that believe in you and your dream.  You will need them.

My experience as a founder of a small business and work with friends and family attest to the truth of  the keys in the Cheesecake Factory story.  Go get a slice of cheesecake and read the menu again.  As those calories course through your veins, study the story and learn something that transcends that delightful cheesecake.  Business success takes time so make the most of your time to enjoy the journey.

5 Web Research Tools To Overwhelm Your Enemies

The similarities between business and warfare (and politics) are uncanny.  Each requires an in-depth understanding of the enemy to be successful.  Sun Tzu’s The Art of War is a must read for business strategists and White House Press Secretaries alike.   Here are the study tools I use to survey the enemy.  You may have others.

  • Google:  This one is pretty obvious.  Chances are that your enemy is using this too.  Find out who owns the keywords, terms and phrases critical to your business.
  • Daylife:  This is a news aggregation service that allows you to search on topics and keywords.  Very helpful to get a handle on the recent articles featuring your enemy
  • Compete.com:  Learn the growth trends in traffic to your enemy’s website(s)
  • Twitter:   Sign-up and use the search feature at the bottom of the main page to see who is talking about your enemy in real-time
  • Yahoo Site Explorer:  Find out who is linking to your enemy’s site to find potential partners or foes.  Enter the website address in the “Explore URL” box and click on “Inlinks” to get a sample.

You can even do this for your own site or brand if you have already launched your venture.

“If you know your enemy and know yourself, you need not fear the result of a hundred battles.  If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.”

– Sun Tzu