Baldino’s in Fayetteville, N.C. is in a really tough business segment, being in the sub sandwich category and selling against Subway, Quizno’s and the like. Competing against aggressive marketing campaigns supported by huge ad spending and deep discounts, Baldino’s knee jerk reaction was to run discounts too. But in the end, owner Peter Pappas had to admit that the cheap products, money off coupons and other incentives were eroding his business rather than enhancing it.
Our advice was to stop discounting and start building value in his restaurant brand by taking advantage of his unique history. In other words, start to build a relationship with his customers and start offering real value that could support a higher price so he could get away from the discount madness that seems to prevail in the restaurant industry today.
"Value is actually a perfect balance between function and price, with price resting just above function."
The price of a sub sandwich has as much to do with the perception of what the consumer is getting as it does about the actual ingredients that go into it. At the moment, Subway has promoted the $5 foot long heavily, so there is a tendency towards that number. And the more work they do, the more they hammer that price point home. So for Baldino’s, and really any other sandwich shop, the questions becomes: “If Subway is telling all my customers that a sub sandwich is worth five bucks, how do I get ten bucks for mine?”
And the answer to this question is: “You don’t unless you can support a higher price with real functionality that the consumer will believe has value for them.” I run into restaurant operators all the time who think they are offering a great value, but mostly they think good value is the same as low price. It isn’t. Value is actually a perfect balance between function and price, with price resting just above function.
Leveraging your strengths is a great way to add value to your business. What we mean by this is to take advantage of your resources in your restaurant. In this case, Baldino’s has fryers, which, if you haven’t noticed isn’t that common in sub shops. Most of them offer chips, some have soup, many have microwave ovens, but fryers? That’s fairly unique. To help make this an advantage for Baldino’s, we suggested that Peter introduce some appetizers, and we called the category UFO’s (unbelievable fried objects). In this way we are able to further develop a part of the business that helps make Baldino’s different.
We also encourage a menu makeover for Baldino’s and started to design a hand-held menu and then adapted that same design to the menu boards. Baldino’s had a black and yellow awning working for them on their web site, and because it is a relatively small restaurant chain, we wanted to find leverage in any way we could, so we decided to use the graphics treatment he had already started.
By removing the discounts, introducing new appetizers and re-designing the menu, the Baldino’s brand has boosted to a successful small-town sandwich chain. The end result has been a higher sandwich contribution overall, and a better impression on the Baldino’s guest.
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