The chain restaurant specializing in ribs in my neighborhood was struggling. Their business wasn’t doing well, the quality of experience started to decline, and the restaurant started to look shabby. In an attempt to increase the restaurant’s poor profitability, the owner switched to a new meat supplier. This meat supplier was cheaper, and that lower price point meant that there would be more profit.
But the meat was inferior. It was of very poor quality. First, there was very little meat to speak of. Worse, the bones were thin and translucent. I only know what happened here because the manager told me the story—before the restaurant closed forever.
By changing the meat supplier in an attempt to control costs, the owner made a bad experience worse.
Solving the Wrong Problem
The owner tried to solve the wrong problem. He believed his restaurant was struggling to make a profit because their costs were too high. The answer to that challenge was to lower his costs. But this wasn’t the problem. The real problem was that he was creating too little value.
If you aren’t making enough money, cutting costs isn’t the answer (unless you are profligate). By cutting costs and lessening the experience, you only exacerbate your problems.
The right way to grow your business and your profits is to create more value. The greater the value you create, the more attractive is your offer to your customers and prospects.