CREATIVE THINKING
As good as your business philosophy is and as successful the business becomes; we get stuck in the methodology of what works until it doesn’t work. We pay lip service to the ability to think “outside of the box” or to be creative or to keep our business relevant. The expression: “if it ain’t broke don’t fix it” is a favorite of those who think they have their business model figured out. The COVID crisis has provided an opportunity for businesses to reexamine their methodology and create a model that could be more successful than the initial one. The larger the business the more difficult it is to be nimble and creative. Like the ship in the ocean, it takes time to change course; however, that does not mean it is impossible. It just takes additional time and planning. The following is a story of two small hospitality businesses which were impacted negatively during this crisis.
Handlebar
This is a coffee bar started by a couple who had been very successful bicycle racing in Europe, hence the name. Initially, it occupied a small space in the downtown of Santa Barbara. Kim and Aaron roasted and served coffee/expresso drinks with a limited amount of baked goods. Their product was very much in the European tradition with a “proper” cappuccino – no multi-Grande latte-frappuccino here. Serving a quality product behind a massive expresso machine their business grew. They established a new larger location in an area with limited parking but because of the quality of their product people found a way to park and happily stood in line. They increased their food offerings with high quality but a limited offering appealing to varied tastes. This had the feel of a typical model for a specialized coffee bar. However, it required a hands-on approach as both of the owners were there at all times. Personal attention- inviting space – quality product – welcoming staff and the feeling that people were happy to work there and give that positive feeling back to the customer. Then came the COVID crisis and they were forced to shut down. This is where the owners became creative and pivoted their business to a model. Undoubtedly they had not dreamed of this change of coarse, but, it allowed them to keep the business running. They created a better model with a diversity of products and a broader product serving without the overhead you might imagine in a hospitality venture.
They immediately adhered to the county health requirements – closed their kitchen; removed tables; established signage for social distancing. At first, you would think that would have closed their business, but this is where they pivoted from the norm. They were able to keep their employees by moving to one shift. People don’t drink a lot of coffee at four in the afternoon, the majority of revenue occurs between 7 am and 1 pm. Lower overhead and 80% of your revenue is probably something they had not thought about in the business plan. To supplement the lost revenue, they began to offer bulk food products – flours, olive oil, sugar, etc. Turns out that a lot of their clients were staying at home and after coffee they were at home baking and cooking with the products they had purchased at Handlebar. Restaurant quality foodstuffs were offered at a reasonable price which was attractive to their clientele. Additionally, they started to support local wineries. Instead of the usual 30-50% mark-up Handlebar marked up the wine less; thus, giving the winemaker an additional outlet and their customers a bargain price. The result of these modest pivots was a revenue model that showed year over year increases in business activity and most importantly, revenue. Additional benefit – owners and employees were able to go home early to be with family and friends and to think about the next additional product channel to provide customer service and additional revenue. Maybe they even took a bike ride like the old days.
Bell’s
This is a high-quality fine dining restaurant in a small one-street town north of Santa Barbara. This young couple, he runs the front of the house and she runs the kitchen, established Bell’s in 2019. By the way, Daisy was just named one of Food and Wine Magazine’s best new chiefs for 2020. Bell’s is a proper French bistro. Daisy and Greg Ryan created a lovely space and an imaginative, incredible food experience. Their model was to provide a true hospitality experience where people remember not only the food but the ambiance and warm sincere service. COVID put a crimp in that model. Rather than bemoaning the interruption of a well thought out hospitality model the Ryan’s immediately pivoted to a different model. Taking advantage of the PPP loan program they were able to retain their entire staff. Granted it is a small group but nevertheless, their entire team continued to work. They remodeled their interior dining to adhere to the distancing rules, more importantly, they created a delightful outdoor space. Soon, as we know, interior dining was prohibited, but Bell’s was ready to receive people on the new outdoor patio. Another critical change was the type of dining offered. Bell’s now offered a 5-coarse prix-fix menu with a standard service charge. Seating was by reservation only with no walk-ins allowed. They started with dinner service 5 nights a week and eventually added lunch while remaining closed Tuesday and Wednesday. These modest but critical business model changes have resulted in better control of their inventory, control of their service, retained their employees and most importantly, provided an exemplary hospitality experience. Dinner at Bell’s is truly memorable with each offering better than the next. Oh, did I mention that this is a more profitable model and business continues to grow.
The experience of these two hospitality businesses and the alterations they made to their business models appear on the surface to be minor and not that creative.
I would disagree with that assessment.
Changes in one’s business model or one’s life model are often nuanced. The challenge is taking the risk to adjust at all. Change of any kind is difficult. Think how hard it is to change anything in your life. From the big - moving, relationships, job change to the small - coffee to tea, formal dress to casual, my tooth paste — we dislike change and the unknown. It is so much easier to remain the same, comfortable in what we know. Remember the negative is always the easier side of the argument. “No” to everything doesn’t move the needle much in your life or in your vocation. Even the slightest change creates an unknown. The unknown is uncomfortable as we like predictability. Change in no small way takes courage and confidence that you have altered the path for the better. Both of these businesses were achieving success with the old model. It is true some of this was forced, but many of the changes in our life are formed by things we did not plan for. Managing our success is the easy part; managing our risks is more challenging and difficult. The degree of difficulty of change is massively bigger than the comfort of doing things the same way. Bell’s and Handlebar are solid examples of how even the smallest change can bring large reward. They were rewarded for taking risk no matter how big or small it might seem to the outsider. They have not only continued to increase revenue and clients; they have created a positive experience for their clients. In many respects the result is better and more creative but at the core, it is still a memorable hospitality experience. When one is living in a world that looks stable it is probably just a trick (Solo un Trucco) as change is coming soon. The ability to take risks and the willingness to change is what keeps your life and business nimble and fresh. One thing that keeps us interesting and interested is a fresh view of the well planned.
“Life is what happens to you while you’re busy making other plans.” --John Lennon