Niche marketing goes against the grain of appealing to the widest audience possible, but does it make up for it in better customers? Sharon Aris investigates.
If you want to have a successful restaurant—or any good business, in fact—it makes sense to appeal to as wide a number of people as possible.
But that’s not the only strategy. Some restaurateurs have found success doing the exact opposite: targeting niche markets via location, specific market segments or unique strengths.
Indeed, niche marketing has some distinct advantages over mass marketing: because it’s specialised, it’s more productive and therefore more profitable, as well as recession-proof. But it also demands an exact understanding of your point of difference and what advantages the business
has over its competitors.
Deborah McCallum is an accidental restaurateur celebrating 21 years in the business. It began when she and husband Jim decided to renovate a heritage village store and post office in the historic mining village of Kembla Heights, NSW. They put in a small tearoom as part of the fit-out. What is now Ruby’s Country Style Cuisine is a little off the beaten track but its restoration attracted people right from the start.
“On the first day, 60 people came. The next day 80 people came,” she recalls. “They saw it as a restaurant before we did. We kept running out of food. I heard my husband say ‘give us a couple of months and we’ll open for dinner.’ I was in the kitchen thinking, ‘you’re mad’.”
Still, following their customer’s lead, they started trading from Friday dinner to Sunday lunch and for ten years also lived in the house with their two young children. “Ruby’s allowed us a family life. Containing those costs is part of the reason we’ve survived 21 years. The kids got used to being told ‘pick up your toys, we need the living room tonight’.”
But while the McCallum’s start may have been a surprise, they’ve hung in there with careful thought, maximising the appeal of the heritage setting: “People are tired of cold, hard surfaces. We have open fires, fabric tablecloths, a bit of plushness. And we have the appeal of private spaces.”
They are also very firm on the style of food they do and don’t do: “In a rural area, definitely not mod oz”. With nearby Wollongong well served by seafood restaurants, they’ve headed in an opposite, slow-cooking, direction. “The cuisine is quite specialised. European provincial is the best description. Regional comfort food in a rustic peasant style.”
They also have fixed menus. “We’re not in the centre of town, so we’re not into high yield. There are five entrees, five mains and five deserts. You put more labour into less dishes and people pay for two or three courses.”
Operating as a bookings-only space, which keeps staff costs in check, their main business is private groups. “Proposals, anniversaries, family dinners, celebrations where they feel they are dining at home but don’t do the work,” says McCallum.
The personal tailoring extends to individual sound systems in each room, which allows patrons to bring their own MP3 player and pop it on. “They can have a party, have a dance—and they do.”
It’s also a popular wedding venue, which McCallum credits to the combination of heritage architecture and quality food. “Being a restaurant gives us extra credibility. People try before they book, then they often come in with the bridal party, and return for anniversaries. That’s probably unique. The food is something we’re proud of. It’s restaurant-quality function food.”
As a NSW Restaurant and Catering Association regional winner for best Specialty Restaurant over the past three years, they’ve built on the success of Ruby’s and recently opened a second venture called Ravensthorpe, which won Best New Restaurant in the South Coast at the 2007 awards.
“If Ruby had a rich uncle, it would be Ravensthorpe,” says McCallum. Built by a wealthy doctor in 1893, it sports original chandeliers and Georgian design. Like Ruby’s, it’s on the heritage trail and McCallum estimates around 50 per cent of her customers come to appreciate the architecture, which they capitalise on by also offering high tea. “It has to be in the right building or it doesn’t stand up,” McCallum says of this specialty service. In a further extension of services, Ravensthorpe also has four rooms for accommodation.
“At a tourism award presentation last year, the judge suggested we were confused about what we did. ‘Are you a function centre, a restaurant, or accommodation?’, he said. Then he spent a few hours with us and ended up deciding we were unique in the market. But really we are European; they have auberges—country houses where they do whatever they have to do—just like us. We went with our intuition.”
As well as spotting opportunities, niche marketing can also be driven by an appraisal of where the market is closing in.
For Fiona Wright, former owner of fine dining establishments The Lobby and The Water’s Edge in Canberra, specialising meant leaving the restaurant game and getting into catering.
In the ACT, that also meant targeting government contracts. But while Wright had been catering for as long as she’d run restaurants, going for those contracts meant achieving something never done by a smaller catering firm before. Previous to Wright’s involvement, government departments in Canberra had always been serviced by the large multinational caterers. Wright began her push when she still owned the restaurants, and she laughs at her initial motivation as “just having a go”. But then they got serious and looked at what they could uniquely offer. For a start, they wanted to make their food themselves.
“The large caterers had a very limited vision on how to run a contract,” says Wright. “We went in with fresh ideas and triumphed. We had a can-do attitude. Sometimes in larger companies, management is stuck. All our managers are involved in day-to-day operations.”
The first tender they won was a café run by the Department of Foreign Affairs. More soon followed. The biggest they’re currently running is the Department of Defence, covering multiple sites. Once they had that, Wright sold The Waters Edge.
“Catering is a sign of the times. With the skills shortage in the kitchen and front-of house, I could see many years ago the problem of finding the right number of staff needed to run a two-hat restaurant. The burden of work was falling too heavily on those who were left. With cafes, there is no night work and no weekends, so we’re able to find more staff.”
“Food in itself is easy to do,” says Wright. “But you need to keep your food and service costs in the right band. The most expensive dish we have is $7.90. That takes some creativity. You have to be diligent, and watch your accounts.”
Tendering for contracts also presents some specific challenges, she adds. “Government contracts come with very tight probity issues. It takes an enormous amount of time to put together the tender and then the contract. They’re highly contested. We don’t tender for everything. I am very hands-on and always have been. I could be larger, but I don’t choose to be.”
At the moment, Wright says she’s happy with what she’s doing, and while she doesn’t rule out another restaurant, the time isn’t now.
“There are hundreds of restaurants in Canberra, so the market is pretty well served at the moment. With a change of government—and possible cuts to the public sector—I just don’t know how well a new restaurant would do.”
Rhys Passmore had a different experience in Western Australia. He’d already built up a local name and reputation over five years of running The Goose at another location. After starting to turn people away, he began looking for ways to grow the business into a year-round operation, capitalising on Busselton’s summer tourism profile. When a prime waterfront location become available for long-term lease, he set about doing his homework.
He started with two years of round-table discussions that consulted with as many people as he could. The answer was to diversify—appealing to a number of niche markets and catering to each accordingly.
It began with the design, which aimed to maximise the waterfront setting without making it alienating. “People need to feel they can afford to dine here,” says Passmore. The venue also offers conference facilities for business customers and can be opened up for weddings and other large events.
“We decided to overbuild because we want to see see growth in five years’ time,” Passmore reasons. With Busselton now a preferred fly-in-fly-out base for cashed-up miners, the potential for growth isn’t hard to spot.
“We’re a cafe by day and a restaurant by night. It comes down to what the customers want. Flexibility is the key.”