Coopetition in the Restaurant Industry

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Have you heard the term Coopetition? If not, you'll hear it soon. It is causing quite a stir in the marketing circles.

So in case that you are not familiar with the term, let's start by defining coopetition. If we check Wikipedia, we find the following definition:

“Coopetition or Co-opetition is a neologism coined to describe cooperative competition. Co-opetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage, and where they believe they can share common costs. For instance, the cooperation between Peugeot and Toyota on shared components for a new city car for Europe in 2005. In this case, companies will save money on shared costs, while remaining fiercely competitive in other areas. For co-opetition to work, companies need to very clearly define where they are working together, and where they are competing.”

Your long-term business success comes not solely from competing successfully against other restaurants, but also by working with them to your advantage.

Coopetition is part competition and part cooperation. When restaurants work together, they can create a much larger and more valuable market that they ever could by working individually. Restaurants can then compete with each other to determine who takes the largest share of the increased number of potential customers.

A good example of coopetition between restaurants is when there is section of a city or town that has several restaurants concentrated in a relatively small area. If you look at this area from a traditional business point of view, opening a food service establishment there looks like a bad idea.

Why should anybody open a restaurant in an area already full of restaurants?

The reality is that the abundance of places to eat attracts customers who may visit the area without any specific restaurant in mind, and make their decision when they arrive.

This is where the competition starts.

Typically, the restaurants with the best ambiance or most attractive menu or the best quality/price, that are filled with the most people, usually bring in the most customers…

There are many typical examples of coopetition such as:

o    Food courts: All the restaurants are placed together in places like shopping centers – sharing tables, trays, cleaning services, etc. Customers are brought to the same spot (cooperation), and then they compete for their business (competition).

o    Advertising: Sometimes restaurants collaborate to put together a food magazine or similar publication where they each contribute (both in money and in content) to the publication.

o    Special food events: Sometimes several restaurants organize food events where they all contribute food or display their items at food stalls. Because of the participation of many restaurants –and good marketing — crowds of people attend these events (there is usually music involved and often many other activities as well).

o    Etc.

As you can see, these are some of the possibilities for coopetition. However, there are some other intriguing ideas for you to consider. Here you have a few to think about:

o    Cross-promotion with restaurants that offer different food than yours. Often your menu doesn't compete directly with other restaurants. If a person is in the mood for Italian food, for example, she won't go to an Indian restaurant to dine or vice versa.

Perhaps you can join forces with restaurants in your area that have other styles of cuisine, and together create a coupon book that you can distribute to the regular clients of the participating restaurants. Or maybe you could create a discount card that your customers could use in any of the restaurants in your area. This will attract more customers to your neighborhood.

o    Cross-promotion with restaurants that offer the same kind of food than yours, but are not located near your place.

Again, usually people prefer to go to restaurants that are near their homes or workplace. If there is a French restaurant nearby and they are in the mood for French cuisine, they won't typically travel far to a different French restaurant… unless the other French restaurant is so superior that it's worth the trip — and this where the competition kicks in.

So what can you cross-promote? Well, if you have an ethnic restaurant you could create a newsletter sharing printing and perhaps distribution costs with similar restaurants and distribute it to clients of all the restaurants involved. The newsletter should cover articles about the foods, culture, geography, etc. of the restaurant's native country.

But what if your restaurant is an all-American place? Give unique information about your areas. You still can have trivia about the specific states, some local recipes, etc.

o    Join forces to negotiate better deals for linens, food and beverage products, menu printing menus, etc. Imagine that you talk to the owners of nearby restaurants, and you make a deal to use the same distributors for common things like linens, candles, dishwasher maintenance and supplies, garbage and/or grease disposal, exhaust filters, printed menus, etc. You could then request a volume discount from these distributors and everybody will benefit.

These are just some quick examples of coopetition. Joining forces with your competitors could be a win-win proposition. Just be smart about it and think about areas where both of you could benefit.

Can you think of more areas for coopetition? I would love to know. Please visit my web site and let me know.

Happy Co-opetition!


Source by Jose Riesco

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