Case Study: Good Food Gone Bad

Charging More or Scrapping the Low Margin

My wife and I have been noticing a sad trend over the last few months - Paradise Bakery (one of our favorite breakfast dates) has be slowly and methodically destroying the reasons we dine there. First they changed their breakfast parfaits to use some new kind of yogurt that seeps into and soils the other ingredients, and then they changed their homemade oatmeal bowl to lose the cookie crust and use smaller, grittier oats. Several other changes and the revocation of waffles from their menu have us questioning why we keep going.

Being a business nerd, I can’t help but wonder _why in the world _they would make these changes? The waffles were hand-made as we watched, the oatmeal obviously made that day, and the parfaits were prepped but lasted due to the great ingredient quality. The first answer that comes to my mind: profits. These items all seem to me (a layman, with no real knowledge of PB’s financials) to be premium items, which are typically of the slim-margin but door-buster variety. Not much money made on them, but they lure people in who then purchase fountain sodas and teas which bump the bottom line big time.

So it would seem that someone decided that they weren’t making enough on these, so they either A) lowered the ingredient quality/prep quality thereby cutting costs, or B) eliminated them entirely.

Enter Macayo’s

(a.k.a. Burritos, the greatest mexican food this side of Ninfas, RIP)

Macayo’s is delicious. They make great food and the quality is consistent, and has been for years. The prices are another story. They creep up every year or so, and last weekend they climbed again. So, it adds a few extra dollars to our final bill, which I can justify because, again, the food is great. And anyone who can’t justify the prices to themselves, can eat something else, or eat somewhere else.

This is the brilliance of Macayo’s, and the mistake of Paradise Bakery. Give your patrons the choice. The chance to support you. This lesson applies to every field of business and probably every field in general. Don’t make your customers' decisions for them, known as “thinking with their wallet”. Let them choose! It may surprise you, and it will surely not put you out of business as fast.