Every time I pass YO! Sushi in Dublin City, I cringe at their confused tag line and think about the future of any niche business, including Contrast.
Keeping it focused
Keeping a new service or product offering focused from the start is a great way to get into an established market: indie is cool, small is sexy, boutique is quaint, and overall, different is remarkable. You need to really “get” what makes you special and why anyone would give a damn, but this often comes naturally to smart, passion-driven entrepreneurs.
When YO! Sushi opened its first restaurant in 1997, AA Gill for The Sunday Times declared it had “the best sushi in London”. This standing left sushi-loving Londoners with little choice but to eat there; again and again and again. Why risk sushi in Joe’s Japanese Eats when you can eat at the best sushi spot in town?
And so, like good, well-placed niche businesses do, YO! Sushi became a run-away success. So much so that by 2001, the company was “the market leader in sushi restaurants”, in 2003 the company’s majority shareholding was snapped-up by an investment firm and in 2008, that shareholding was bought again with their CEO “keen to expand to 100 restaurants worldwide by 2012″.
A growing dilemma
This success is enviable by anyone’s standards; its forecast turnover for 2008 was £36m. But its dilemma with respect to its growth targets is not. A niche by definition is restricted. It’s a slice of a market and you grow by getting deeper into that slice. And just like the returns from a slice of pie diminish if you eat it from the edge inwards, the end of a niche market is hard to capitalise on: some people in the sushi market are price sensitive, some don’t like the music YO! Sushi play, some live in hard-to-reach rural areas, and so on.
So what are you to do when you’ve got your eyes on the 100 restaurant prize? Faced with the plateau that is the shape of growth in an exhausted niche market, the temptation is to go where many good brands have gone before and diversify. And ruin your brand. Sure, offering “more than sushi” potentially opens the door to less-ambitious diners like me, but what of the sushi fans? What a sushi fan wants is a sushi joint, not “sushi plus other”. And what someone like me really wants is a steak joint, a Thai restaurant, a tapas bar, not “sushi plus other”.
Realistically, this less focused approach will help YO! Sushi in the short-term. Sushi enthusiasts can now drag along their sushi-fearing friends, for example. But in the longer term, diluting and spoiling a special, targeted brand can only hurt hard-earned market share by opening a slot for the next niche rock stars, and lose the loyalty of the fans that loved it as a specialist.
An unpalatable conclusion
And so, while my conclusion here is not palatable in a global economy hooked on growth, I can’t think of an alternative for a cool brand like YO! Sushi but to accept decelerated growth and chill-out and enjoy their niche and market position. It’s not sexy and it’s not an option when you’ve got an investment firm looking for quick returns, but a business dependant on being special needs to stay special.
9 Comments
One solution would be to offer more than Sushi, but not advertise it and don’t make it a selling point. The die hard fans will notice there is something else so they can invite their friends without losing the “sushi niche.”
I would compare this to Apple. In the Apple Store and the Apple Online Store they sell more than Apple products. They have accessories, headphones, etc. but they ares till very niche. I know that I can get those things there, but I also know that that is not the focus of the store. It’s just an “add-on.”
Posted by Paul Smith at 2:31 am on 29 July, 2009.
Good post Eoghan.
Posted by Marcus Mac Innes at 8:57 am on 29 July, 2009.
This is really a branding post and I from my reading on this is called ‘brand extension’. Once a brand has become successful there is a natural inclination in mos organisation to try and extend the brand into other areas. Invariably this is at a cost to the meaning and ethos of the original brand leading to isolation of the customers that original made the brand a success. We can all think of many examples of this, however the one that springs to mind as being current is Bulmers attempt to extend their apple cider brand to perry.
Posted by Caelen at 9:27 am on 29 July, 2009.
A third view is that the economic compulsion is to grow, grow, grow. And if you’re not growing fast enough, you’re doing it wrong. This seems to be especially important for publicly traded companies and anything funded by investment looking for a quick return.
For a niche company that is a leader in it’s chosen field, this is the wrong model to follow. If you move outside your niche, you leave the niche open to being taken over, and you’re suddenly competing with other people that might be doing it better in the new market you’re hitting.
Posted by Murf at 10:08 am on 29 July, 2009.
Starbucks are at a more advanced stage of this dilemma. It make for an interesting study to see how many SlideShare presentations on UX mention Starbucks and how they designed the experience or the brand. To which I say bullshit.
In place of authentic chalkboards, we’ve now got plastic. In place of roomy leather armchairs, we’ve got faux leather bum pinchers.
Others can also replicate this model, Pret-a-Manger in the UK, Insomnia here.
The impact of trying to spread or replicate the brand is a well documented fall in sales, closure of stores.
And the answer? Let’s start selling wine in our coffee stores.
Posted by Lar at 12:29 pm on 29 July, 2009.
You can probably pin-point YO! Sushi’s peak and decline to the moment the company went public. That’s when investors come in and the mission becomes growth for growth’s sake instead of offering a great product/experience.
Posted by Design Spike at 6:44 pm on 29 July, 2009.
I agree in general but I think it should be pointed out that to blindly maintain a niche and spurn change is just as hazardous.
The example you gave commonly occurs where a business is consciously driven into the ground to squeeze out every penny. I say consciously because the modus operandi is to convert that something special into a commodity. It is well understood that by its very nature a commodity has a lifecycle with an evitable decline. I would suggest that this decline is endemic not simply due to saturation but also because the business has lost its ability to evolve initiating a steady march towards irrelevance.
Ultimately it’s a question of leadership. As I see it the ‘dilemma’ lies in the balance between enabling change and mortgaging control over the business. This is a matter of judgement and I would not suggest that the YO! Sushi approach is entirely correct or incorrect but that I expect they have their reasons.
Nice work, I’m really enjoying the blog.
p.s. Thanks for not using the “recipe” pun; I just resisted the urge myself!
Posted by rur at 10:49 am on 31 July, 2009.
How about a restaurant (or any other retail store) experiment with a planned, and even promoted, limited life - “We’ll be open for three years, and then we’ll be gone forever. Check us out before you lose the opportunity.” Then you get a benefit out of that nice-style decline, and you can re-open in the same location with a whole new concept after the current one has run its course. There be some carry-over from one venue to the next, as people anticipated the new concept. Lots of positives! Someone try it, and post back here with the results.
Posted by Steve at 3:50 pm on 31 July, 2009.
“but a business dependant on being special needs to stay special.”
Great post! I enjoyed reading your outlook on what it means to maintain a niche business. I’m not sure if the first mistake was selling out to the stockholders, so they could make all the decisions, or not. But then again, I really don’t know much about business.
What I do know about though is a brand, and what a consumer enjoys about said brand. And for this “exclusive” sushi restaurant to now offer “More Than Sushi” is a bit of a let down. I agree with what you said in that I much rather prefer a solid sushi place, than a mediocre sushi + noodles + [insert other foods here] place.
Posted by kyle steed at 3:43 pm on 2 August, 2009.
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Posted by IONIZED: A Journal of Witty Commentary - Stay Special at 3:07 pm on 29 July, 2009