Stay special

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.