Market Segmentation / Field Trip

In the news, in the news, what's not in the news? An article in the New York Times about the home cooking of immigrants in NYC, led me to talk about a taxi stand on Houston and A, which has the most amazing Punjabi Indian food, made by women in saris at home and brought in to feed all the single taxi drivers. And of course, the 10 for $2 dumpling joints in Chinatown.

Chefs yanking peanut-based desserts off their menus underlined the ongoing drama of the safety of our food supply. Details emerging point not just to one freak incident but a much larger underlying problem. It seems these factories down South have few standards and fewer methods of oversight. Raw peanuts stored next to finished peanut product, minimum wage disgruntled employees wearing uniforms outside of plants, leaky roofs full of bird poop, and on and on. In 2004, a whistle blower informed the FDA that ConAgra found salmonella in their peanut butter and...nothing happened. Three years later, 100 or so people got sick and the FDA took action...and ConAgra refused to release their test results because they were deemed 'proprietary' and 'trade secrets'. WTF? The FDA didn't have power to make them release them or make their own tests! Thank you, George Bush.


In the Post, a stack of restaurants got busted for tacking on gratuity to the bill without properly informing customers. I was surprised to find the River Cafe on there, as it's a pretty well-known, supposedly legit spot. Part of this trend is because many tourists come from places where they don't tip....which is the way it should be here. Pay your own damn staff, you cheap f@ck owners!

The next part of the class was about market segmentation. Any population can be broken down to its target market. The ultimate unsegmented market is the entire world, but to develop a product that appeals to every single person the world is a bit unreasonable. A restaurant will probably not serve the entire population of the world, no matter how much they'd like to. A restaurant's market segment first and foremost is determined by a limited geographic segment. Richard broke it down thusly:

• Geographic Variables: How far will someone travel for it? One will travel farther for an internationally-know 4-star restaurant than a neighborhood diner. Additionally, what is the source of the people in the geographic segment? Residents? Office workers? Tourists?
• Demographic Variables: Age, class, income, family size, education, occupation, ethnicity -- all hard census facts that help define the aspects of potential segments.
• Psychographic Variables: "Lifestyle". Made from bald stereotypes, like 'yuppies' and 'dinks' (dual income, no kids). This is where those silly books about 'Gen X' and 'Gen Y' come in.
• Behavioral Variables: What triggers a buy? How much is a segment likely to spend?
• Benefit Variables: What benefits are people looking for in your product? Value, experience, atmosphere, etc.
  

What makes for a good market segment? Three things: first is sustainability -- there has to be enough of a market to make it worth while. Measurability -- the market has to be quantifiable. And Accessibility -- how to communicate with the market.

The second half of the class was a field trip to Daniel, a four-star French restaurant on the Upper East Side that is the flagship of celebrity chef Daniel Boulud. We were guided through the restaurant by the very Fraaaanch assistant general manager, from the beautifully appointed dining room to the spacious main kitchen. There is a skybox hovering over the front of the main kitchen, where for $1000, you and three friends can have a private 8-course tasting menu while watching the scrum below. The REAL scrum, of course, is in the basement, where a series of rabbit-warrens are linked together to create a massive series of prep rooms, storage, and cooking spaces. It was clean, but the low ceilings, the crowded crevices, and total lack of natural light would drive a normal person mad, especially if you were doing 12-hour shifts 6 days a week. Lesson learned: I don't have much interest in eating this kind of food, much less working to make it.

Sanitation / Product Life Cycle

The day started with an extended adventure into ServSafe and sanitation. Yesterday we visited viruses, bacteria and parasites. Today we said hi to fungi like molds and yeasts, which tend to spoil the things we like about food, but are not necessarily toxic. Fungi can be allergenic, however.

Then there's biological toxins -- seafood toxins can't be smelled, tasted, or cooked/frozen away. If you eat the liver of a puffer fish, you gonna die, whether it's grilled or made into ice cream. Mushroom toxins are only found in the wild, can't be cooked away, and can make you, uh, hallucinate. Or kill you.

Overall, food is the safest it has ever been in the history of man. However, due to modern distribution and the modern scale of the food industry, when there IS a problem it tends to loom large. Modern contaminants include chemical (cleaning fluids, machine lube), toxic metal (acids in a copper pot, lead from pewter) and simple physical (anything from some dirt or glass to Shanequa's press-on nail.) And of course, being that's it's 2009, lip service had to be paid to Food Terrorism -- 3rd parties and disgruntled employees who desire to sabotage the food supply. I love how Islamic terrorists and some kid who is pissed at getting paid minimum wage are some how equated in the vague and vaguely paranoid readings of ServSafe.

And then we saw a film, with some of the worst acting since Breakin' 2: Electric Boogaloo. Does a guy with a (fake looking) weeping sore, leaning over a cauldron stirring the sauce, REALLY need some manager-type with a tie and mustache to come over and tell him to get the hell out of the kitchen?

The other half of the class got into marketing and product life cycle, engaging in some wonky vocabulary. Customer behavior -- what makes for a positive purchase decision. One is searchability -- the customer must be able to find your spot, whether that's by google or by walking around the corner from your office. A customer will judge by the perception of similar restaurants. Then there is something Richard called 'credence qualities' -- only if something goes wrong or a special request is given does a customer see if the establishment is good by their behavior to said challenge.

Service quality was quantified in a series of 'gaps'. Particularly the gap between where I am and where I want to be. There is a knowledge gap: what I think the client wants versus what the client actually wants. (People say they want healthy. People actually eat McDonalds.) There is a delivery gap: what is supposed to be delivered versus what is actually delivered. And of course, the communication gap: what we say we are going to deliver versus what is really delivered. Nothing like raising expectations sky high (Ray's World Famous Original Pizza!) then delivering something else (mediocre deli pizza).

The product life cycle can be applied to a restaurant, a chain of restaurants or, um, an actual product. Start slow, grow into your market, reach saturation and try to keep steady, then decline and die or change. A company like McDonald's has been riding the 'maturity' part of the curve for long time, avoiding decline by introducing menu items and advertising like crazy against competitors. Twenty five years ago they introduced a 'Big Mac,' and with one silly song everyone knew exactly what that was, overcoming the knowledge gap pretty handily.

A big company in decline would be KFC, who changed their name from Kentucky Fried Chicken to try to accommodate fried food's bad. Recently, they've been advertising that they have 'a cook in every restaurant,' trying to overcome the perception that their food is pre-fab and made by minimum-wage poorly-trained expendable cheap labor. Their market has been eaten away by other chains like Boston Market, who spin fast food chicken in a very different way.

The Microworld/Product Life Cycle

First, we shared our recent experiences with food service from the weekend. I mentioned how I stopped in on a Chinese take out joint to pick up a meal to go, and on the way out I saw three little Chinese kids eating in the small, empty dining room. I couldn't help but notice that they were eating lobster tails and gorgeous huge shrimp -- I'd rather order THAT than fried rice.

Long Island Jenny spoke of a restaurant named Guilt, she and her boyfriend spent $600. The food was great, but the waiter was a little snobby about swapping out one item for another on the prix fixe menu. On top of that, they had to flag down a waiter at the end of the night to get the check. Good food or not, for that kind of price, she should have been made to feel pampered and not uncomfortable in any way.

White Sushi Chef went to a bar called Agave Sunday night with friends. Everyone got served except him...and they were the only people in the bar. The dude is a little meek, but still, that's kinda weird.

Another student described a restaurant where when you come in, you order from a counter, then are brought down a level to a game room and bar. Pinball, foosball, video games and drinks are available until the party is called and sat in the upstairs dining room where the food arrives as you sit -- no waiting. Kids eat at a set $3 price. No waiting and boredom, good for kids.

Richard was in Fairfield, CT this past weekend and had a meal at Joe's American Bar & Grill, a corporate upscale mini-chain. The menu was large and didn't specialize in anything, with everything from grilled fish to Mexican-American dishes like nachos. The thing that struck him the most was the text on the back, which was clearly written by a corporate drone. The fish is USDC-approved and all local, except when flown in from their 'native habitats'. Really? USDC fish inspection is TOTALLY voluntary and means nothing, and when is a fish flown in from a non-native habitat? The copy goes on to try to frame the restaurant as local, even though it's a multi-state chain that came in from elsewhere.

The next part of the class was ServSafe, the 'microworld'. Pathogens are microorganisms that are either toxic or give off toxins or come in the form of bacteria, viruses, parasites or fungi. Viruses beat bacteria simply due to the norovirus, most famous for making everyone sick on cruise ships. Common bacteria like e. coli comes strictly from an animal's intestines -- any contamination in ground beef is strictly from poor practices and sanitation, a human behavior, not natural circumstance. The fact that our regulatory agencies stress overcooking meat rather than cracking down on processing plants is a scam being perpetrated on the general public.

Another bacteria, salmonella, is so common in poultry simply because of the filthy way the birds are raised and slaughtered. A full 50% of poultry on the market is contaminated, but in studies of individual brands, the big brands go upwards of 90% and the smaller, more artisanal brands go towards 0%. Totally preventable if it's a priority. A new issue emerging is salmonella-tainted eggs: the birds are SO contaminated that their ovaries contain the bacteria, so they pass them on to a small percentage of their eggs.

Parasites are not so common. The big one in people's minds is trichinosis, but a case has not been discovered in commercially raised pork in over a decade. Always ordering your pork overcooked? Maybe you should reconsider the flavor and pleasure you're sacrificing for an unfounded fear, guy! The official government line is 'do not eat sushi for fear of parasites.' Ridiculous -- the official government line should be to regulate the hell out of cheap-ass fish! (The picture above is the 'causative agent' of trichinosis, the bit that actually burrows through your flesh to plant eggs. Pretty creepy!)

After a laughably lame video about everything we just reviewed, Richard briefly got into 'Product Life Cycle'. Restaurants, at the heart of it, sell services, which happen to involve food. People don't walk away with food, they walk away with memories of an experience, of which food is just a part.

Services are different than tangible products -- even after the customer pays for it, they do not own it. If something is wrong with it, it can not be returned or replaced -- it happens in real time. The fact is that most customers will not complain about poor service -- they will just choose not come back.

Unlike manufacturing a widget, there is a great deal of variability that needs to be accounted for in order to deliver satisfactory service. The main ingredient -- the employee -- is a wild card. The variety of customers, from regulars to insane people, are another. The food that comes into the establishment from a variety of vendors is yet another.

You can't keep an inventory of service -- you either have it or don't at the time you need it. Everything is time critical, and your distribution channel is limited. You can sell widgets all over the world, but the food and service you pump out in a restaurant is limited to in house customers and those in delivery range.