Competition?

[cowman]

As some of you know I have an interest in a couple of concession stands. One is at a permanent postion and it costs fairly dearly to have an exclusive market with no competition.
The other stand only goes to "special events", which are less frequent, but much more lucrative!
Last year there was this idiot who thought he was going to run out all the competition by cutting his prices to the bone! Some attempted to compete and some said to hell with this and refused to go to any event where he was going to be. Now you pay an upfront fee to go to these events and pretty soon organizers were not getting a lot of there old "regulars"! On top of this this halfwit wasn't able to keep his customers happy because he was always running out of supplies, long lineups, inadequate help and poorly prepared food. Actually a lot of the spillover found its way to other cocessions, who were not charging the cuthroat prices!
One large event phoned my partner early this year about entering a concession and she asked if this outfit was going to be there? Upon getting a yes she declined to enter. Apparently a whole lot of others did too, as it turned out to be a disaster, with a lot of unhappy campers vowing to never return!! Anyway to make a long story short word soon got around how he had basically screwed things up and he soon found out he was having a hard time getting into any event!
This past weekend, my partner told me he had gone broke and sold his concession.
I wonder how many people have been in similar situations where idiots who don't have a clue about business come in and try to muscle out the competition without any kind of idea about how to make a real profit? Going to teach the yokels how it is done! Well I would suggest he sured showed everybody?

[cowman]

cowman, not unilke the purebred cattle business. New breeder gets into a specific breed, goes farm to farm with a business card telling them he will sell bulls 30% lower than existing breeders. Works well for awhile until the newcomer realizes he can't exist on what he is making, then he is in a bind. Not too many folks feel sorry for him either.

[farmers_son]

I am wondering why the stand with no competition is not as lucrative as the stand with competition. If we were to assume that there is truly no competition at that venue than your ability to calculate costs and margins is as suspect as your failed upstart. However you may be paying for no competition but in actuality have competition down the street or around the corner. Although I do not know the exact situation it is possible that your competition occurs when your lease on the concession spot is up for renewal and your competitors are those rival firms that would attempt to outbid you for the lease spot. If there is truly no competition than with a little marketing, cost and quality control you should be able to persuade people to pay you a profitable price for your goods and services.

I think you missed an opportunity by staying away from venues where the upstart competitor was also going to be there. You were aware of your competitor’s offerings and prices, it was a golden opportunity to try something new and do a little marketing to see if you could compete on some basis other than price. It sounds like there were few fixed costs associated with attending so the risk of trying something new was small and if you were successful in meeting your competition head on you would have gained valuable marketing insights.

Concessions in other countries offer a different range of goods than most do here. Deep fried Mars Bars are a popular item especially with the teen crowd and a baked potato appears on many concession menus which you do not see here. The fish and chips you can buy here are garbage compared to what you can get at a fish and chip shop in the UK. Most hamburgers you buy at concessions here are not good at all, anyone offering a tasty burger would have a price advantage. Beef on a bun or chili is easy and often preferred to the obligatory hamburger. Lots of opportunities for a marketer willing to break out from the pack.

One of the most remarkable pieces of food service marketing I recall was a small roadside shop called the Lucky Cat Chinese Café. I always wish I had stopped in instead of passing by.

[farmers_son]

I think that boycotting functions where the cut rate competitor had a booth was the right idea. If people weren't getting good service, good quality food, and value for their dollar, they sure weren't going to patronize the fellow again and would give their business back to the old reliable vendor. Nothing worse than paying the price to have a booth at an event and watching your investment go down the drain because of some cutthroat.

Grassfarmer it isn't as simple as hanging in their, there is the cost of supplies that if food related are perishable that has to be considered.
I have seen the odd fish and chip stand that sells the British version, which I agree is much better than our soggy fat laden fish and chips are.

[grassfarmer]

Wow, my posts must be really improving - everyones starting to confuse them with farmers_son's

[farmers_son]

In rereading my post, I am concerned that my comment “If we were to assume that there is truly no competition at that venue than your ability to calculate costs and margins is as suspect as your failed upstart.” is rude. It was not meant to be and I hope that is not how it is taken. I did find Cowman’s post very interesting but of course unless you are the one there and actually doing it all anyone else can do is to only offer suggestions.

[cowman]

Well first of all I don't manage either of these stands, but I agree with my partner on how she runs them.
The non-competitive stand is outside a bar in Calgary and is a very steady money maker. The fee is $100/day. Not too worried about losing this site as the owner is a good friend from my childhood. In business it is who you know more than what you know?
The "special events" concession only runs weekends and of course not in the winter. My partner won't even consider taking it out unless she can clear $800/day after all costs including labor. She is not interested in working for free or competing for slave wages!
I kind of laugh when I hear the expression "couldn't manage a hot dog stand"? Actually you need to be on top of things if you want it to be successful. People would be surprized at the money a concession can make for the amount invested. But like any business it has to cater to the customer, be cost effective and make enough money to keep you doing it.

[cowman]

grassfarmer, sorry for getting you and farmers_son mixed up.