In what seems like a never-ending slo-o-o-w economy, businesses are looking for ways to reduce risk and survive. This post is a about LudoBites, a great example of taking great risks to reduce risk -- and finding success.
(A version of this post previously appeared in Talent Zoo's Digital Pivot blog.)
Perhaps you've heard of LA's latest pop-up restaurant phenom? Now covered by the NY Times, NPR and CNN Money, LudoBites, created by Chef Ludo LeFebvre and his attourny wife Krissy is an entirely new concept in fine dining and restaurant experience. Rather than support their own high overhead restaurant, the LeFebvres rent the space from existing lunch and breakfast establishments-- for a few weeks.
You don't know when they'll appear, where they'll appear and what they'll serve.
Not only are they profitable, demand is phenomenal. At LudoBites 5.0 (the latest incarnation of their dining event) they moved 3000 reservations and were sold out in the first-half hour of listing, crashing their web server twice.
That's right: The biggest restaurant phenom on the LA scene is an "un-restaurant".
If you have a product or service that is excellent too but not sticking or if your overhead is smashing your profit, LudoBites' story provides seven precious lessons for any business.
1. Drastically Reduce Your Overhead: Rent Don't Own
One of key features of the LeFebvres success is that they avoid the exceedingly high capitalization, operational and maintenance costs associated with owning a restaurant. Even while Chef Ludo was offered $2 Mn in venture capital to open his own place, as he told NPR, " I was very scared to sign a lease for 10 or 15 years - that's scary." With no long-term leases, LudoBites is less susceptible to economic vissitudes and, of course, leverages the existing equipment of his partners. So how can your business do this?
2. Find Brick-and-Mortar Partners in a Complementary Business
The LeFebvres were smart in selecting lunch and breakfast type rental spaces. In doing so, they get the facilities they need, while their rent offers their partners a new revenue stream. (If you're first in your industry to do this, there's a chance you'll also offer your partners considerable publicity.)
3. Pass Through the Savings, Serve Happy-Making Prices
Compared to an average fine dining experience of typically $100/meal, LudoBites offers dishes from $4 to $34. It's been reported that many customers order ALL the dishes. Even while the Fine Dining sector languishes, LudoBites' tables are full. So think: if your company can manage Lessons 1 and 2 above, , you too are now in a position to pass your savings to customers, offering your product/service at a highly competitive price, (Note: I am NOT saying 1 and 2 are easy, by any means.)
4. Leverage the Principle of Scarsity to Create Urgency
The principle of scarsity capitalizes on a basic human tendency: If something becomes scarce, our fear of possibly not being able to acquire it creates an intense desire to obtain it immediately.There are two ways LudoBites uses the scarsity principle: (1) As a time-limited engagement, customers are deeply aware that they can access this product for but a few weeks. That iself creates tremendous urgency to get a reservation. (2) The LeFebvres choose restuarants that typically have a limited number of tables - some 14 -30 tables. Limited seating creates not only an intimacy and exclusivity feeling among the lucky customers, but for those who want reservations at a set day and time, it creates significant competition.
5. Publicize Your Limited-Time Product or Service
Here's where social media comes in. Both Chef Ludo (@chefludo) and his wife (@frenchchefwife) support Twitter accounts which provide the main vehicles for making and taking reservactions. With customer demand amplified via Twitter broadcast, wanna-be diners witness the full fury of demand online, creating more demand..
6. Create Your Own Cheese Cupcakes
A significant fact: There's sizeable talent here. Ludo LeFebrvre was named one of the World's 50 Great Chefs by Relais & Chateaux, nominated for a Rising Star Chef award by the James Beard Foundation and has appeared as a contestant on Bravo's Top Chef Masters. Chef Ludo is also legendary for his outrageous creativity in his dishes: The NY Times piece describes in exquisite mouth-salivating detail an octopus opus, "a deconstructed goat salad remade as a soup...".and even the likes of mustard ice cream and cheese cupcakes. Curious? Think about it: What is your company's no-fear product that people can buy exclusively from you?
7. Offer The Insanely Great Marketing Pairing: Mystery & Surprise
There's much mystery and anticipation surrounding LudoBites. When and where will it appear? LudoBites 2.0, 3.0 and so on - Chef Ludo brands each restaurant version anew as not only is each venue new, every night's menu is new. Guests have that extremely rare, truly exclusive feeling they may be the very first to taste one of the world's greatest dishes. And it's likely!
The New unBusiness unUsual
Yes, the restaurant industry has much to teach all of us. Even while many traditional restuarants go out of business running "Business as usual" , LudoBites' success and cutting-edge business model shouts out " Think Un-Business Un-Usual."
Chef LeFebvre has struck upon something very important, folks. The main reason to think outside the box is that there is no more oxygen inside the box.
Time to start designing your own cheese cupcake with chicken liver mousse, kumquats, and cornichon.
Image credit: My Last Bite Blog