Archive for June, 2008

12
Jun

Keep your favorite restaurant open

   Posted by: rew   in Business, General

[I actually drafted this post about a week ago, when Mama Fu's was still open; I just found out this week that they've closed down. I don't think that this post would have made much difference for them by itself; it was likely too late. But still, I shouldn't have waited. I'm telling you, "too late" can sneak up on you in a hurry. If there's a place you like, don't wait around.]

The other day at Mama Fu’s, I talked to one of the owners for a few minutes while she folded napkins and I ate Honey Glazed Chicken.

She said things were rough, though they had picked up a little in the last few days. The Bridge Street opening has hurt them badly. Mama Fu\'s She said it has always been brutal, but now it’s “doubly brutal.” I feel really bad for her, because I know what it’s like. I’ve been there, but I didn’t know what to say.

The truth is I hadn’t eaten at Mama Fu’s in a couple of months. I like the place; no, I love the place. I talk to people about how I like Mama Fu’s, and take people there. I can’t think of anywhere else in Huntsville that I enjoy as much for the price as Mama Fu’s. There are places I prefer to eat, but they all cost more. It’s convenient for me; I drive by it all the time. But for various reasons I just hadn’t made it there.

I wanted to tell her, “Hang in there, it will get better,” but I don’t know if it will or not. I wanted to say something to encourage her, but it occurred to me that it won’t help. What she needs, as the owner, is not encouragement; she needs customers.

Unless you’ve owned a retail establishment, you may not understand that the way to express appreciation for it is to go there and spend money as often as possible, and encourage your friends to do the same. Everything else - compliments, encouragement, smiles - is just a packet of sweetener for whatever the owner is having to drink.

My wife and I had a lovely bookstore and coffee shop a few years ago. It was a fantastic place - I still miss it to this day - but it was never profitable, not for a month, hardly ever for even a week. We stuck it out for 3 years before finally shutting it down.

When we closed the store, we had people come by in tears. They were so upset, but yet they were often people we hadn’t seen in weeks. We had people going on about how much they missed us, how much they’d loved us, who came in once a month and hardly spent anything. They couldn’t imagine why we would close: “It was such a lovely place, and it was always so busy!” Well, it wasn’t busy enough, and too many people just came there to mill around and talk, and didn’t buy anything. If half the people that said they loved it had supported it the way they say they loved it, we wouldn’t have had to close.

I don’t say this to whine, because by now I know it’s probably good that we did close. But I learned this then, and had forgotten it. Mama Fu’s has reminded me, and I’m sharing it with you: it won’t do you much good to be standing outside the shuttered front door saying, “I loved this place! Oh, my goodness! Why did they go out of business?” Usually, the store went out of business because I, and people like me, didn’t spend enough money there. We got bored, we got distracted, we didn’t think about it, and we didn’t patronize them enough.

It’s hard to be in business, and it’s especially hard to be in a food business. It’s a lot like the music business, but without the glamour and riches. it’s vicious and cut-throat, expensive and difficult, capricious and terrible, and almost everyone fails at it sooner or later.

So here is a warning to you: if there is a place that you like to eat and it’s not a big successful money-printing chain like McDonald’s (they’re like roaches, you can’t kill them) - if it’s an independent place that you like, go there as often as you can.

But what’s more important, urge other people to go there. Sell for them. Not in an annoying-salesman way, but by telling people, “I went there, it was great, you have to go try it.” And then ask them, “Have you gone? Have you had the mushu pork? Have you had the Philly cheese-steak? Did you try that chicken sandwich I told you about?” Grab them by the collar and say, “Oh, let’s go there for lunch!” Go spend money and encourage other people to go and spend money. That’s how you support places you like, and that’s how you keep them in business.

You will be surprised how much difference a single person shopping or eating at your place regularly can make to a small store.

Zemanta Pixie

When Apple introduced the new iPhone 3G on Monday, they changed more than the hardware. They changed their deal with AT&T, giving up the cut of monthly revenue from iPhone users. Instead, AT&T will “buy” iPhones from Apple, and then sell them at a lower price to customers to get them into a 2-year contract, and (hopefully) hooked.

This is, after all, how it’s usually done in cellular-land. But Apple had gotten a lot of press for their “game-changing” deal with AT&T (and AT&T had gotten a lot of criticism). So did AT&T suddenly gain the upper hand? Did they outsmart El Jobso? Did Apple stumble here?

Hardly.

According to this Marketwatch piece, the iPhone 3G subsidies are expected to cost AT&T around $1 billion this year.

The new entry price point for the 3G iPhone - $199 - is killer, and is going to move a lot of the devices to customers who’d been unable or unwilling to part with $399 or higher before. And a lot of that difference is coming out of AT&T’s pockets. AT&T, for their part, has a plan here; cellular companies have this game worked out pretty well, having subsidized cell phones nearly since their introduction in order to lock-in long-term revenue.

But back to the original question: was Apple willing to give up their monthly cut of all those locked-in customers just to move more hardware? Did they give up on trying to carve out a recurring revenue stream from their ground-breaking phone?

No, they just moved on to the next phase of their plan.

The key is the App Store. Apple has created a new market for software applications - the iPhone - and has made itself the single retail outlet for selling software into that environment. There are some exceptions - you can deploy apps within your own organization, or to a hundred or so iPhones ‘ad hoc’ - but for pretty much everyone else, if you develop an iPhone app, you’re going to sell it through Apple’s App Store or not at all. And there are going to be a lot of iPhone apps sold.

Steve Jobs spent twice as long during his keynote talking about the App Store, and applications available for the iPhone, as about the new iPhone itself. Including the enterprise elements and the SDK, it was almost 4 times as long. Clearly, this is a big deal to Apple.

Having unleashed the iPhone as a target platform for 3rd-party developers, and then set themselves up to take a cut of every application sold for it, Apple wants as many iPhones in the field as possible. So they’re letting AT&T keep all the monthly revenue in exchange for subsidizing the rollout of the new iPhones to millions of new subscribers (I predict they easily beat their 10-million-iPhone target for 2008), all of whom will be hungry for new apps for their new toys.

And Apple stands to profit from every single one.

Skate to where the puck is going to be,” indeed.

Update:Reuters reports that “some estimates” put the impact of the lost monthly revenue from AT&T at 3c/share.

But Piper Jaffray’s Gene Munster projects hundreds of millions of dollars in revenue for the Apple Store, which would dwarf the lost revenue from AT&T, even by his “conservative” estimates.