What Your Startup Can Learn from the NYC Restaurant Scene

Caitlin Riederer

April 4, 2013 · 4 minutes read

Uncategorized

Noon in Manhattan is every entrepreneur’s dream.  The streets fill with hungry customers who are ready and willing to pull out some cash or swipe their credit card.  Lunch in the Big Apple is legendary for the number of choices, from the swanky Four Seasons’ dining room to ubiquitous street carts.  Looking at how these diverse eateries succeed in the notoriously difficult restaurant business, every startup can learn a thing or two from New York’s lunchtime cornucopia. Here are just several of the lessons:

1. Build a Strong Brand

There are thousands of places to buy a burger in Manhattan, but New York’s legendary Shake Shack charges a premium over the neighboring McDonald’s.  Tourists and locals alike wait in long lines for Shake Shack’s burgers and milkshakes because of its legendary image and selective expansion.  This doesn’t mean that all startups should target niche markets.  A few blocks away, the Olive Garden in Times Square is surrounded by scrumptious neighborhood eateries.  Still, tourists fill its tables because they recognize the familiar brand.  Whether you operate as a specialist or a generalist, defining your brand drives customers to your business.

Similarly, New York’s Magnolia Bakery is an iconic brand.  Allysa Torey and Jennifer Appel founded the bake shop in 1996.  The single West Village location was at the forefront of the cupcake craze, featured on HBO’s Sex and the City, and expanded to become an online and international presence.  While generating eight figures in revenue might be hard to imagine when starting a bakery, big ideas blossom when you start small.  By gaining traction before expanding, startups pursue growth wisely after developing a solid concept and a customer base, whether you sell cupcakes or software.

2. Differentiate Through Creativity

Over time, popular ideas evolve into commodities, and food is no exception.  Take sushi–the Japanese delicacy has become so popular you can pick up pre-packaged salmon and avocado rolls at Whole Foods.  Takeout provides a budget-friendly alternative to white table cloth establishments, but customers still willingly pay for fine dining.  Why?  Creativity differentiates restaurants like Michelin-starred Sushi of Gari from its less prestigious competitors.

Competitors can’t easily copy intangible assets like ingenuity.  Offering an experience that goes beyond selling a product also helps your startup stand out. While Bouchon Bakery earned fame for its decadent macaroons, Chef Thomas Keller’s concept extends beyond French pastries.  The brightly lit shop features quaint décor, from chalkboard menus to charming ceiling murals, creating a distinctive haven steps away from Rockefeller Center.

3. Serve Quality at Any Price Point

However, no matter how inventive your startup’s products are, keep in mind that customers expect basic features–for a sushi restaurant, that would mean having soy sauce, ginger, and wasabi readily available.  Customers crave consistency, and your startup needs to meet or exceed these expectations.  On Manhattan’s Lower East side, Pomme Frites serves “authentic Belgian fries” with signature flavored sauces.  Customers crowd against the counter to watch sliced potatoes being deep-fried before jostling for the few tables at the back of the shop.  It’s not fancy, but the product is fresh and consistently delicious.

Quality counts–and there are no second chances after a customer has a bad experience. Consider releasing minimal viable products.  There are many merits of distributing an early version and quickly iterating, but bad experiences drive customers away quickly, just like a surly waiter or soured glass of wine.  While perfect may be the enemy of good, each and every impression matters.  Additionally, word-of-mouth and social media amplify the impact on your company’s reputation.  The best restaurants focus on clear communication when addressing food allergies or agreeing to catering requests.  This demonstrates the company’s commitment to its values–and helps avoid scathing Yelp reviews.

4. Address Legal Uncertainty

Earlier in March, a judge recently struck down Mayor Bloomberg’s soda ban.  Through the debate, there were two constants: the demand for twenty-plus ounce colas and the huge impact of regulation on small businesses, like New York’s bodegas.  Like it or not, regulation is here to stay.  Successful entrepreneurs invest time in understanding the impact of laws on their company, from legally incorporating to issuing the correct 1099-MISC tax forms to independent contractors at the end of the year.

In New York, city health inspectors issue letter grades to restaurants, which are prominently posted in the front window of each establishment.   This improves food safety because owners strive to avoid tarnishing their reputation with a failing grade.  While food safety is industry specific, attention to detail differentiates good from great companies when following rules, filing taxes, or raising a round of capital.

Final Crumbs

At their core, Manhattan’s crowded storefronts fulfill a universal need: everyone must eat.  Running a startup can feel like a rush hour cab ride–in the hustle and bustle of the city, avoiding major collisions and unpredictable pedestrians is the primary focus.  But next time you grab a bite to eat in the Big Apple, take a New York minute to consider what your startup can learn.

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