Have you ever seen a nice restaurant next to a bar next to a burrito place and wonder how they can be so close to each other when it seems like they are competing? How about a movie theater, a chicken restaurant and an arcade? In the case of the former, wealthy clientele come to the nice restaurant. The employees go to the bar after closing and then get burritos at 11pm. In the case of the latter…
The arcade is failing now, but it used to be great. People would come for a movie and have dinner at the chicken restaurant. They would wait and enjoy the arcade in between dinner and when the movie started. Now the movie theater is run down and doesn’t get the latest movies. The chicken place is doing OK, but the arcade is dying. If the movie theater upgrades, the arcade revenues will increase. Unfortunately, pleas to the movie theater to upgrade from the arcade owner have fallen on deaf ears.
In another case, I saw a failing boutique shop. I watched it all day. A total of 30 customers came in and only 6 bags came out. It was the only boutique shop in the shopping area. It was next to a bunch of small, fast lunch shops and a dry cleaner. People come to have lunch and drop things off. They do not come to boutique shop. This boutique had better locate to an area where people hang out…or where other boutique shops are. When people go boutique shopping, they go to a place with lots of clothing shops nearby. The owner wanted to stay in that location and “stick it out”.
Another example is an Italian restaurant next to an Italian restaurant. I looked at this and thought these people must be crazy to be next to each other competing for foot traffic. They looked very much the same on the outside, and they both looked dead at noon. After checking a few things…the hours of operation, the menu and watching them both for about 3 to 4 hours, it became clear that they had adapted. Business began to pick up at one place just after noon and the other livened up at about 5. I spoke to the businesses about how they operated.
- Italian restaurant #1: They do lunch and dinner. The people who come to lunch are accountants and real estate agents bringing clients or having “Power Lunches”. Really, they were dressed for power lunches. I thought it was right out of a movie. Then, the whole place switches to dinner to accommodate families. They do pizza and spaghetti very cheaply with lots of coupons.
- Italian restaurant #2: This place opened at 3pm and was an upscale wine bar; however, you wouldn’t know that looking at it from the outside. It looked just like the other Italian restaurant. They clientele was more like the lunch crowd at #1, but there were also many younger folks who looked like they were looking for amorous connections. The atmosphere was for a much younger social crowd.
You can see this with large shopping centers as well. Do you know why Petco, Michaels, and Big Lots are often near each other? Because people go to buy those things in one stop. Either one can be the draw and the others create shopping opportunities by proximity.
These are key examples of symbiotic relationships of Small Businesses. If you look around, you can see this at play in any retail or commerce zone.