Is A Settlers Mindset the Way To Go For the Restaurant Industry?
When opening a new restaurant, is it better to proceed as a pioneer or to hang back as a settler?
Fat Dragon on the left, Dosanko on the right.
Jamie Mah @grahammah
A few months back two good friends of mine joined me on my podcast to do a restaurant draft. It was an event of hilarity as we spent two plus hours debating who we’d want for our respective imaginary restaurants. We had to come up with a name and concept, with each of us choosing 12 candidates from Vancouver’s deep well of experienced restaurant talent. It was supposed to be a fun irreverent event as well as a chance for us to highlight some of the past and current bright minds who’ve helped shepherd and curate Vancouver’s food cultural scene into becoming the global paragon it has become. It’s pretty great. Have a listen.
In reference to this lighthearted theatre, the restaurant concept I came up with was a Mad Men inspired Ukrainian joint. A 60s themed, mid century modern affair with stylized Ukrainian and Eastern European food. My idea was by far the most regal of the three, a fitting ode to my admiration for Mathew Weiner’s now eponymous classic Tv series. In reflecting upon this choice, I’m reminded of yet another restaurant concept I’ve had boiling in my head for years, a pork chop driven chophouse, complete with all the trimmings of fine dining. Not one to stir fancy regarding the reality of either of these ideas coming to fruition (I have zero desire in becoming a restaurateur), their fates continue to sit close to my psyche while I ponder and analyze the fate of Vancouver’s restaurant scene in general, especially those new entrants to the field.
The reality is, it takes a lot of courage to open a restaurant, let alone one in this city, especially under the conditions we are witnessing currently. Even still, I’m always reminded of the primal fear many restaurateurs face, that new concepts are risky. It’s easier and smarter to open a safe idea when your rent is sky high and you have plenty on the line. My good friend just partnered up with an experienced team to help launch a Peruvian restaurant on Main Street. Initially I was skeptical of the idea, fearing diners might not understand the overall brand. Thankfully, I was dead wrong as I visited him recently to check things out. With a smile on his face after another successful service, he confided in me personally that they are “booked through Christmas.” This news gave me some optimism that a desire for originality (Vancouver diners) hadn’t been something a small few coveted.
With the success of his restaurant in mind, however, I wonder: What type of mindset should a restaurateur have while they deliberate opening their business, that of pioneer or settler?
To give context to this question, this idea came to me recently while reading Adam Grant’s widely popular book, Originals — How Non-Conformist Move The World. In it he distills that in most scenarios, being first to something isn’t often the path for success as markets for pioneers tend to be uncertain, underdeveloped and unknown, thus exposing them to greater potential for failure. I saw this first hand years back when Fat Dragon, Robert Belcham’s Chinese hybridized restaurant with a Southern US “lick of smoke” closed down after a short lived eight months. It was built up on east Powell Street in the heart of the Downtown Eastside. At the time, it was just a bit too far for most to venture out for considering the area. As someone who’d seen success earlier in pioneering the same idea (opening in areas where there wasn’t much else) with Campagnolo on Main Street and Campagnolo Roma on East Hastings, for Belcham and his team, the risk of Fat Dragon opening where it did probably felt worth the squeeze.
Sadly, being a pioneer in this respect didn’t pay off, at least not yet. Soon after, Dosanko, a cute and popular Japanese restaurant would take its place. It’s still there (well, sort of, a recent fire in their building has prompted them to close at the moment while they look for new digs, still had this freak event not have transpired, they’d still be going strong).
This example, though small gives a glimpse of what timing and being first can do, or should I say, not do, regarding a businesses fate, and how maybe waiting can prove to work to your advantage. Re: Dosanko.
“After being involved in starting over one hundred companies, Idealab founder Bill Gross ran an analysis to figure out what drove success versus failure. The most important factor was not the uniqueness of the idea, the capabilities and execution of the team, the quality of the business model, or the availability of funding. “The number one thing was timing,” Gross reveals. “Timing accounted for forty-two percent of the difference between success and failure.” — Originals, page 103
In relation to Fat Dragon, timing played a pivotal role in their demise. Had they come along a touch later, their fate might have had a better outcome. Nevertheless, even in spite of this one instance, the will of being a pioneer is one most can’t resist, because for every Meat & Bread success story, there are several, if not, hundreds more failures we always overlook. This concept is why Vancouver Magazine food editor, Neal McLennan, got into some hot water (a public apology on Instagram no less) a few years back after chiding the restaurant industry for being too enamoured with simplicity.
From Vancouver Magazine:
“I think we — the dining community of Vancouver — take Hawksworth for granted. We ooh and ahh over whatever new pizza joint combines flour, water and cheese but one of our few (some might say our only) true fine dining establishments goes to the immense trouble and grotesque expense of having a proper sommelier team, proper (pricey) glassware and tableware and we act like it’s a given a city has such a place. It’s not.”
His condemnation of what diners wanted versus what they should be excited about is what caused all the raucous. His annoyance stemmed from the settlers mindset, that too many restaurateurs were taking the proverbial easy route of opening whatever “new pizza joint combines flour, water and cheese…” rather than go the riskier direction as David Hawksworth had. It’s this critical thinking on his part which raises that very notion of what it means to settle and if it’s a smart move professionally, even if some, in this case, McLennan, feel as if it’s the wrong move overall.
So how should restaurateurs proceed?
“In a classic study, marketing researchers Peter Golder and Gerard Tellis compared the success of companies that were either pioneers or settlers. The pioneers were first movers: the initial company to develop or sell a product. The settlers were slower to launch, waiting until the pioneers had created a market before entering it. When Golder and Tellis analyzed hundreds of brands in three dozen different product categories, they found a staggering difference in failure rates: 47 percent for pioneers, compared with just 8 percent for settlers. Pioneers were about six times more likely to fail than settlers. Even when the pioneers did survive, they only captured an average of 10 percent of the market, compare with 28 percent for settlers.
If you’re someone who’s tempted to rush into a new domain, this knowledge should stop you cold and leave you thinking carefully about the ideal timing.” — page 104
To make sense of this excerpt, the best way to decipher this dilemma is to look at what are some of the disadvantages of being a pioneer. The first and most obvious is the example I’ve provided above regarding Fat Dragon, that of being prone to overstepping. In looking back on that decision now, it’s glaringly obvious the risk he and his partners were taking in trying to open where they did. Off the beaten path of Gastown for several blocks, deep within the confines of Vancouver’s most overlooked neighbourhood, success was always going to be a harder sell.
“Wouldn’t you rather be second or third and see how the guy in first did, and then … improve it? When ideas get really complicated, and when the world gets complicated, it’s foolish to think the person who’s first can work it all out. Most good things, it takes a long time to figure them out.” — Malcom Gladwell
Then there’s the belief that those who choose to be late movers may be better suited to succeed. When I think of this scenario, I’m immediately reminded of my interview last year with Adam Henderson from Superflux. The launch of his new restaurant in Victoria (the design is flawless by the way) piqued my interest in speaking with him initially, however, that wasn’t the only reason I wanted to chat, as I was curious to learn how he and his partner, Matt Kohlen, had taken the growth of their company in stride for years before they really began to grow. Starting as a small idea amongst themselves, they set up shop in local breweries for years testing and perfecting their brand and product. This approach proved, in my opinion, vital to their oncoming success as it gave them the time to trial and error their product without taking on too much risk.
Therefore, once it became apparent that building their own space was in their best interest for growth, the ball got rolling for their new home on Clark Drive. It is in this interview with Adam where he stresses how that journey took place with numerous variables on hand. It could have been easy once some momentum had built to push for growth way sooner than they had, but a settlers mindset cautioned their approach, ultimately paving the way for a stronger push once they were ready.
“Moving first is a tactic, not a goal, being the first mover doesn’t do you any good if someone else comes along and unseats you.” — Peter Thiel, Zero to One
Then there are the ways settlers can improve upon their competitors’ technology to make their products better while also giving them a chance to observe the market and shifting consumer tastes so as to adjust accordingly. The most obvious example I can lean on regarding this idea is with the Donnelly pub group.
For years they pushed and expanded their empire within Vancouver as the dark, minimalist concepts they were. It proved successful for awhile, but once diners railed back against the uniformity of their brand, new entrants saw an opportunity for something different. Bells & Whistles, owned by good friends of mine is a great example of this motif. Rather than what Donelly represented, Bells is the oppostie, bright and airy. It could have been easy or should I say, obvious at the time they deliberated opening a pub style bar to copy the success of Donelly (the London Pub is shiny example of said copy cat objectification), however, my friends James and Josh saw an opportunity to envision the concept of pub style tavern in a new light.
Many years down the line and with another location up in Dunbar, their settlers mindset worked for what they wanted achieve. Ironically, the Donelly group would eventually change their brand and open up newer locations which were the opposite of everything they had done previously.
I wonder if Bells success had anything to do with that?
Even still, despite the success of Bells & Whistles, there is some justification in being a pioneer. Someone has to be first to start something or we’d never have new ideas. JC Poirier’s, St. Lawrence and Shira Bluestein’s, Acorn, are perfect examples of this. Each are unique brands full of originality within Vancouver. There is purpose behind a great new concept. However, despite what both have achieved, odds of success aren’t in your favour if you’re first to market. Napster and Myspace are cautionary tales in other fields where being first proved ingenious at first, but unfortunately not longterm as settlers saw what they achieved and improved upon their creativity — iTunes and Facebook. We need both pioneers and settlers in every market to help grow and improve upon original ideas. This I will concede.
Nevertheless, the lesson here is that if you have an original idea, it’s sometimes not in your best interest to rush out to being first. Taking your time and studying your market often bears worth doing so as to minimize risk exposure. My two restaurant ideas are somewhat novel in many ways and though it would be exciting to hit one or both of them out of the park if I chose to do so, there’s also considerable benefit to waiting. If I’m in a field where strong network effects make being first worth my while, then I push for a pioneers mindset. But for the restaurant industry, I suggest hanging back and waiting for the market to evolve.
There might be some originality in that.