Hoehn’s Musings

There’s a hot dog restaurant (not hot dog stand –  hot dog restaurant) about 10 minutes away from Wingman.  Hot dogs and brats are the only items on the menu, aside from the extensive list of toppings you can get.

According to my latest post, this restaurant is doing it right.  They should even be in the black!

Far from it.  They’re going out of business.

When they opened, I distinctly remember saying that it was a terrible idea, and there was no way they’d succeed.  There’s just no demand for hot dogs, unless you’re in a stadium or stumbling out of a bar.

Allow me to contradict myself: Being the only business in a category can certainly yield great results, but it is not a clear-cut recipe for success.  Nor does it mean that you can expect profits.

My last post was admittedly simplistic, and I was wrong.  The conclusion I came to clashes with countless examples of successful restaurants that don’t play by my rules.  Ryan Holiday rightfully called my wording and logic into question:

Charlie – Be serious. This fallacy has a number of different names, but it’s mostly just empty writing. You found a fun example. It something to think about. What it isn’t is a base of evidence use for generalization.

Frankly, 97 million dollars is a paltry number when you compare it to essentially every other restaurant in existence since no one else abides by this “rule.” Besides, what’s really going on here is a compromise between two important goals companies have – which are first to get customers through the door and second, to convert as much as possible once they are there. Simple, clear category differentiation is critical and that’s what only selling a single product can do. Adding additional items to the menu generates units-per-transaction which is an incredibly important metric as well. Why do restaurants serve desserts they don’t make themselves? The same reason the have a bar: the margins are better.

The fact of the matter is that these things are rarely as simple or clever or concise as the first impulse implies. In any case, it’s certainly “not more profitable to be the only one that does what you do” as many multi-billion dollars brands can attest. Sometimes it is. Sometimes it isn’t.

Quite a few of my peers and readers are pretty smart.  If I’m being a naive jackass, speak up in the comments.  That’s what they’re there for.

Or you can softly chuckle and let my foolishness go unchecked.