Keep the Vandals out of Rome! – how to deter new competitors

It can be so annoying, when you have built a successful business, to have cheeky new me-too rivals come along and try to eat your lunch (Sorry for the mixed metaphor!)

I may be ancient, but at least that means I’ve learned stuff that may be useful – even today. Here’s one case.

Vandals on the horizon!

In the fast-growing restaurant market sector where I learned my strategy skills, we had built a great – and very profitable – business with over 50 units, and had plans for over 100 more.

But some twenty would-be competitors had recently announced growth plans that in total would have tripled the number of units in the market over just 5 years. They were encouraged in those plans not just by the market’s growth, but by our very public success.

Had that number of units actually been opened, most of those competitors would have lost money and failed – a well-known phenomenon in all kinds of seemingly attractive new business sectors. But in the meantime they would have inflicted huge damage on the eventual victor. (That was us, by the way! We got to over 300 units and were by far the most profitable operator in the market, outside of fast-food)

Winning – not just surviving – long-running competitive wars means figuring out what to do, and doing it right …

So what did we do?

Now I used to think that “strategy” was all secret-squirrel stuff – don’t, for goodness sake, let anyone know what you are up to!
Not necessarily.

Too many firms thought that running restaurant chains was easy, not understanding the complexity and skill involved in great product development, staff training, operating procedures, sourcing and logistics, and real-estate development.

So we had to re-educate them.

We used open communications, such as industry magazines and conferences, to show just how tough it was to build a successful restaurant business and to show just how powerful our business system was.

The implicit message was “Sure, we are successful, but do not for a minute imagine you can match us—and if you try, be sure that we can take you out!”

The Vandals retreat

On reflection, many of the would-be entrants decided that the challenge of taking us on was just too difficult, and abandoned their plans. Less than half of the announced new units were ever opened—still plenty enough to provide choice and availability for consumers, but not so many as to leave most of those restaurants empty and unprofitable.

We can do much more to explore, rehearse – and then win! – tough competitive situations now than we could back in the days I was learning this particular trick.

Catch my full-on workshop on the power that digital-twin competition models can offer here.

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