Specifics about restaurants business models and rural restaurants business models

4.3 Specifics about restaurants business models and rural restaurants business models

Restaurant businesses deliver the value to customers as a mix of a product and a service offering. In general, the basic product of a restaurant is the meal being served. However, in case of high quality restaurants a recent trend can be observed which shifts the focus from the plate/food more towards the totality of the experience that the customer is being exposed to during (and sometimes also before and after) the visit to the restaurant. For that reason, the strategic and operational aspects of the business models of high quality restaurants in general are changing. First, the meaning of the term quality is changing so that there is greater interest in the use of local ingredients and recipes rather than in the global sourcing of ingredients of the highest quality (Sonnino & Marsden, 2006). This has consequences for the operational and economic aspects of the business model. For example, it influences the costs and variety of supplies, and it also affects inbound logistics and relationships with suppliers. Second, the expansion of the value proposal to customers, extending from the actual meal to the overall experience of the restaurant visit requires restaurateurs to extend their collaborative network and collaborate with new partners, which also leads to more complex network structures.

Furthermore, entrepreneurs being aware of the necessity to create additional value that would attract the customer and make him or her buy the service have an increasing awareness that if bundling offers there is a possibility for additional value creation. Therefore many of the gourmet restaurants offer deals connected to accommodation, theater or other local attractions. In that sense the image of restaurant entrepreneurs is changing. The traditional macho image of entrepreneurs acting alone, similar to the Marlboro Man and possibly best illustrated in the restaurant sector by celebrity entrepreneurs such as Gordon Ramsey has to give way for entrepreneurs that instead surf their social networks to bundle value proposals from multiple businesses to their customers. Simply put, restaurant entrepreneurs can become more attractive for their customers by greater involvement in alliances and partnerships. This becomes even more crucial for rural restaurants, which located in distant locations are far away from big customer markets. They need to intensify their efforts in order to bring the customer to their business. Some creative restaurants are by bundling of offers trying to achieve it, others are behaving as institutional entrepreneurs trying to change and build the surrounding society to help them attract other customers while still other restaurants find ways to physically bring the customers to their place.

From a customer viewpoint, it is evident that high quality restaurants frequently innovate and renew their market offers. Innovation can be defined as the introduction into the market of technologically new or improved products (Becheikh, Landry, & Amara, 2006; OECD- Eurostat, 1997). High quality restaurant menus typically change completely at least once every year but often more frequently than so. High quality restaurants are –more or less by definition – creative and innovative places. Introducing new dishes, new ways of cooking, new ingredients and new ways to present and combine the meals are in the centre of these firms.

The innovative and creative process of continued change and ambitions to surprise the customers of the restaurants does often include the whole staff of a high quality restaurant. It is also common that gourmet restaurants are closed during a part of the year (or days in the week), which are destined for experiments.

Restaurant innovations extend far beyond modifying menus or food presentations. Restaurateurs develop and refine cooking techniques and cooking equipment or apply technologies established elsewhere in the restaurant domain, thus exhibiting classic product and process innovation behaviours. For example, Adrià Ferran at El Bulli (Spain) has developed and sells specific chemicals and equipment to other gourmet restaurants worldwide. These innovations allow chefs to produce dishes that were previously impossible. The food creations that are made possible thanks to these technological advances have received substantial attention and even featured at the latest Documenta exhibition of modern and contemporary art in Kassel, Germany.

This means that high quality restaurants must be considered as one genuine entrepreneurial sector of the economy. The firms ‘ business activity are also characterized by a large degree of complexity. The operation of successful high quality restaurants is known for how they are able to compose new products, identify new markets and places where a top restaurant can evolve. Studies in this field shows that both internal and external conditions related to a firm are of importance with respect to its performance. On one hand access to market in terms of individuals as well as businesses with preferences for high quality meals can be assumed as a factor that explains external conditions of importance for the performance of restaurants. On the other hand, administrative management, organization of the work in the kitchen and strategic choices of how to develop the business are examples of internal conditions that have effects on performance. This means that both demand driven external as well as supply-side driven internal factors is of significance with respect to the success of a restaurant.

Although innovation in the high quality restaurant sector resembles innovation in other industries, there are also certain features that make these innovations unique from a localization viewpoint. A first unique feature of gourmet restaurant is that the knowledge used to make these restaurants innovative and unique is almost exclusively tacit and uncodified. Knowledge codifiability captures the degree to which knowledge can be encoded, even if it is not currently in a coded format (Zander & Kogut, 1995). Uncodified knowledge is implicitly acquired and cannot be fully articulated (Gopalakrishnan & Bierly, 2001). It is related to know-how and based on experience (Nonaka, 1994). It is difficult to pass this kind of knowledge on to others outside the practicing community because the terminology and basic principles associated with it are not easily understood. The transfer of uncodified knowledge often requires informal communication methods and face-to-face contact, making it very difficult to transfer the knowledge from one organization to another or from one location to another. The difficulty of codifying the knowledge of chefs has led to a master and apprentice system, where young aspiring chefs travel around to do training periods at famous restaurants. Another indication that a chef‘s knowledge is largely uncodifiable is that restaurant education at all levels is fundamentally practically rather than theoretically oriented. Students practice cooking rather than read about it in books. Thus, also the nature of knowledge used in restaurant innovation makes these innovations highly localized.

Second, the delivery of restaurant innovations and products is localized in time and space. That is, restaurant innovations are produced, delivered and consumed in a specific location at

a specific time. The customer has to travel to the restaurant and consume the food there. To some extent, restaurant innovations share the feature of simultaneous production and consumption with many service innovations. A unique aspect of restaurants, however, is the geographic localization of the restaurant and the consumption of its products.

A third localization aspect of high quality restaurants stems from the above, namely that customers have to travel to the restaurant to consume the product. Consequently, restaurants are dependent upon the presence of auxiliary services, most notably hotels and physical infrastructure, but the access to complementary experiences, such as other forms of entertainment or recreation are also likely to be important for consumers.