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Since time began, the bigger guy swallows the smaller guy. The old rule applies - Build a better mousetrap and the world will beat a path to your door.
Where I live, there are gazillions of pizza places in a 20 mile radius. There are some national chains, a few local chains, and some Mom & Pop's that have been in business for a looooonnnng time. And they continue to do well. There is a Little Caesar but I don't know what it's like. And I'm not about to find out.
We have several huge Chinese buffet restaurants. But as good as they are, they don't offer take-out or delivery, so the smaller places have survived because they will bring the food to your door. And they offer a free egg roll or a can of soda with every $15. order. It's called marketing.
We have WalMarts, and K-Marts, and Targets galore. And in a four mile stretch there are no less than seven supermarkets. Not counting the WalMarts and K-Marts and Targets. And in most cases, you need to cruise the parking lot for a spot.
Not every small business succumbs when the Big Box comes to town. It depends on what the little guy is willing to do to compete.
the problem with a national chain and a mom and pops place is, that the food costs are less for the national chain. for example, the fries, buns, beef patties from mcdonalds are from a plant somehere in america, and they ship it out to the individual store. buying the same ingrediants of the same quanity, might cost a mom and pops place double, because they dont get it in bulk.
Like I said before, you are just not thinking about this in the right way. But firstly, though its certainly true that large businesses can negotiate lower prices with food distributors or create their own distribution networks, the idea that they are getting food for a 50% discount from small restaurants is a profound exaggeration. The difference is fairly modest...
But more importantly, you're focusing on just one small piece of the cost structure of a business. Though large businesses can negotiate lower prices and increase gross profits, the very size that makes this possible requires additional bureaucratic layers which increases operation costs and reduces net profit. Its not clear, at least prima facie, whether a large business has a legitimate cost advantage over a small business when you consider all expenses.
Additionally, you're ignoring price strategies. Focusing on McDonalds, Little Caesars, etc low margin items makes no sense. These businesses couldn't survive if that is what they mostly sold. You need to look at how things work in their overall pricing strategy. Offering some low priced, and hence low margin, items to get people in the door is an extremely common pricing strategy....the fact that so many mom and pops don't "get it" demonstrates how little they typically know about business.
Anyhow, chains are killing mom and pop businesses because the latter are usually run by incompetent individuals. One has to remember, that the vast majority of large businesses today were once....mom and pops. They were just the ones that knew what they are doing....
I believe your story but at the same time I find parts of it difficult to understand concerning pizza.
Little Caesars is garbage. It's a very sad representation of pizza comparatively to most mom and pop pizza places.
Here in eastern PA there is a very large Italian population and because of that you have masses of small pizza shops everywhere.
They thrive and succeed because the quality of ingredients are very high including the dough that is tossed by hand not frozen.
The answer to why these shops succeed is in the taste of their product.
Despite price they succeed in a very large way.
Little Caesar's caters to the lowest common denominator of society by their low ball product.
I love pizza from non chain mom and pop shops and will gladly pay 20.00 or more for a large high quality pizza and apparantly so will a large section of society here in this area.
Quote:
Originally Posted by civic94
My friend opened a chinese take out place in a small town in a midwest state (I'm not going to say where) and that town has 1 other chinese take out place, population is very small. anyways he says that there are 3 mom and pop pizza places there, and then a little ceasers pizza place opened there, right next to his resturaunt, and they offer large one topping pizza's for 5 bucks.
The pizza kind of sucks, it has little ingredients, such as less cheese, and less topping quanity. anyways my friend says that it doesnt really affect his business because its 2 different cusines, but it is killing the other 3 mom and pop pizza places that has been there for a while. Sure, opening a little ceasers might help with unemployment for a little bit, but for them being there, it undercuts the other places, and sooner or later the other 3 might have to close.
He told me that a walmart is within 20 mins drive, and the locals there said that mom and pop hardware stores have closed down. the economy there is pretty bad, but he opened there because the rent is really low, and it beats working for someone, he makes about 2000 a month total profit, so he looks at it as a job, getting paid his salary, and he dont have to listen to anyone.
I believe your story but at the same time I find parts of it difficult to understand concerning pizza.
Little Caesars is garbage. It's a very sad representation of pizza comparatively to most mom and pop pizza places.
Here in eastern PA there is a very large Italian population
you just answered your question. my friends business is in one of the midwest states, its in a small town with little jobs, people dont have money, and there is a large american popluation, not much italian. maybe their ancestors were, but after a few generations they were mixed with other races. anyways an Italian can taste a good pizza vs a bad pizza, just like how I can taste very bad chinese food compared to good chinese food... and most americans can not taste any difference between good and bad chinese food, I can taste chinese buffet/panda express quality vs good restaurant food, its just like eating at a old country buffet vs a good restaurant with american food. I ate little ceasers pizza before, and ate a mom and pop pizza before, for me I cant taste the difference in crispyness/saltiness/sweetness, but I dont know what is good pizza and what is bad pizza.
if my friend opened his place in NY chinatown or the chinatown in philly, it will get crushed in a second. open it in a small town where the population is not chinese, the population there will not taste the difference, and there is only 2 places there for chinese food, even if it sucks people still go because they want chinese food.
Its like when I went to college last year, I wanted to eat chinese food, and the town where I lived at only had 2 places, 1 was a buffet, the other was a small resturaunt. both of the places sucks becasue they cant get their stuff fresh enough, since its a small town in WA state. it was either eat crappy chinese food or none at all, while most of the other students went there and thought the chinese food there was perfect, but me and the other chinese students went there only if we really crae for chiense food because the quality is complete garbage . We cant go to a real asian grocery store there and buy materials since there is no asian grocery store around.
A lot of people prefer small local chains because it "feels" more friendly and local. In a small town, the owners/workers should know their customers names. Greet them at the door, come talk to them and say hello during dinner, ask about their family, kids, hobby, job, whatever. These are the reasons people come back time and again to the local joints. The cost/quality equation is important, and there will always be the fast-food types, but small joints need to earn the loyalty of their customers so they wouldn't even think about going to the new chain. Those are the customers that will go out of their way to drive traffic to the restaurant.
I think someone nailed it. Big chains usually have management that is good at what they do. I think mom and pop places are just as likely to make poor business decisions as they are to make good business decisions.
I think someone nailed it. Big chains usually have management that is good at what they do. I think mom and pop places are just as likely to make poor business decisions as they are to make good business decisions.
Not always. Econonimies of scale is difficult to compete with. While a chain has the capital and buying power a smaller business lacks doesn't equate to poor manangment.
The chains have name recognition and the volume of marketing that small business generally lack. Hardly poor managment.
Not always. Econonimies of scale is difficult to compete with. While a chain has the capital and buying power a smaller business lacks doesn't equate to poor manangment.
The chains have name recognition and the volume of marketing that small business generally lack. Hardly poor managment.
Well of course "not always". But my guess is that is the case in a lot of situations.
I highly doubt it. I'd like to see you substantiate your statements.
This is just my opinion. I have no evidence to provide. Just like you have no evidence to provide how good mom and pop places are at business decisions.
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. We cant go to a real asian grocery store there and buy materials since there is no asian grocery store around.
Econonimies of scale is difficult to compete with. While a chain has the capital and buying power a smaller business lacks doesn't equate to poor manangment.
