Elon Musk is famous for likening the path of an entrepreneur to “eating glass while staring into the abyss of death.” Sounds like fun right? It’s easy to think that the commitment and uncertainty that startup founders face in starting a new venture is unique to hackers cramped up in a garage and sustaining themselves on a ramen diet; however, launching a new venture is difficult no matter what field you are in.
For entrepreneurs in the restaurant industry, the unknowns of launching a new restaurant can be quite daunting:
- Will there be enough of a market for my restaurant theme?
- How will I secure financing (and how will I pay my investors and lenders back)?
- How much will I need to get going?
- Holy cow! Is it time to pivot?
With close to 60% of restaurants failing within the first year, starting a new restaurant can be a scary leap of faith.
What if there could be an iterative and approach to testing a new restaurant concept without going “all in?” Can the same lean startup principles that are common in the tech space also be applicable to brick and mortar restaurants?
At Vonjour we rely heavily on the lean startup framework. In launching, the founding team had a glut of ideas of how users could experience enterprise level communications tools in news. We had been talking to users for years in our previous roles at telecom companies and we thought we knew exactly what they would need in a solution.
However, instead of releasing with every feature that excited us, we designed an experiment to test our initial assumptions. We released with a functional product with elements of the features we were excited about. We used our beta release as an experiment to engage with customers and get their feedback before throwing some serious muscle into those features and marketing the platform.
Lean principles have become fairly standard with tech companies like Vonjour, but can these same principles be applied to a brick and mortar restaurant?
What makes a restaurant different than launching a tech startup are the many resources needed to get a restaurant started. A hacker can launch an app in her garage, while a restaurant requires a building, servers, chefs, and countless other investments. So does “lean” have any place in the restaurant industry?
Chef Roble, from the Bravo series Chef Roble and Co. showed us that it does. When it was time for Chef Roble to launch a novel restaurant idea, he first tested a “minimum viable restaurant.” Prior to investing the hundreds of thousands of dollars it would take to launch a full-fledged restaurant, he designed an experiment to test the viability of the new restaurant concept.
The experiment was simple: Roble invited approximately 30 guests to a temporarily staged “popup restaurant.” He invited guests that were in his target market and who had a higher propensity to try a new restaurant concept: fellow chefs, food critics, and potential investors.
Before products can be successfully sold to the mass market, they have to be sold to early adopters. In this case, Chef Roble was testing whether early adopters would see the value in his couple themed restaurant, even with its low budget and early imperfections.
Throughout the experiment Roble engaged heavily with his customers, gauging their reaction to elements of his menu and presentation. Traditionally, a chef’s role is to stay in the kitchen. However, as the founder of the restaurant Roble needed to interact heavily with customers to get feedback to improve the restaurant experience. The feedback from early adopters is critical to crafting a product towards a target audience’s needs.
In his case, Roble could suss out what aspects of the experience worked and those that didn’t. The customer feedback loop provided some guidance on how Roble could incrementally improve and align his menu and presentation with his target audience—what to emphasize and improve and what to let die.
The aha moment for a user can be much different than what the founders intended. Through these early customer interactions, it becomes clearer of what makes a product special for users.
This type of early engagement is critical to launching a product. The feedback you get from engaging directly with your earliest users will be the best you ever get. When you’re so big you have to resort to focus groups, you’ll wish you could go over to your users’ homes and offices and watch them use your stuff like you did when there were only a handful of them.
In the end, Roble’s initial assumptions were validated. The customers were more than satisfied with the menu and Roble had some data on how to improve the experience for future product iterations. The validation from this initial test group acts as a green light to take the next steps in the growth process—it becomes much easier to justify muscling up the product and transition into growth.
- Roble can approach investors with data and validation of the couple’s themed dining experience. In the investor’s eye, Roble’s idea becomes more than an idea—it has traction and momentum. There exist some product/market fit needed for a restaurant to grow.
- It’s no longer such a leap of faith to start muscling up personal commitment and investment in the idea. The product/market fit reduces the uncertainty of whether people will accept his concept and the user feedback provides Roble with some direction on how to improve the product.
Creating these early experiments of product market fit helps avoid costly mistakes. Investing hundred’s of thousands of dollars to an idea that no one wants seems reckless compared to the experimentation that Roble undertook. The idea of a pop-up restaurant is a great way for startup restaurants to validate an idea before going all in. Of course, once you validate an idea it is important to throw some muscle in the form of marketing and operations investment to grow the business.
Sean Ellis, the CEO of Qualaroo and lean startup marketing guru, created a survey question to objectively quantify when it is time for a startup to start muscling up. It is a fairly simple question. Present users who have used a product for at least twice with the following question:
How would you feel if you could no longer use our product?
- Very disappointed
- Somewhat disappointed
- Not disappointed (it isn’t that useful)
- N/A—I no longer use product
When 40% of repeated users indicate that they would be very disappointed if the product no longer existed, the product has arrived at a product/market fit or what Ellis describes as a “must have” product. The “must have product” or product/market fit milestone is critical objective metric in validating the initial founder assumptions.
If the idea has not reached that 40% point than it is important to continue to talk to users and refine your product. Otherwise, it is time to think about growth and “muscling up” by making the investments into operations and marketing.
Bringing a product or restaurant to market is clearly difficult. Experimentation like that of Chef Roble’s popup restaurant is helpful in mitigating some of the uncertainty of launching a new restaurant idea. Here are some additional resources that can be helpful in launching your next idea: