Coopetition in the Restaurant Industry

Have you heard the term Coopetition? If not, you’ll hear it soon. It is causing quite a stir in the marketing circles.

So in case that you are not familiar with the term, let’s start by defining coopetition. If we check Wikipedia, we find the following definition:

“Coopetition or Co-opetition is a neologism coined to describe cooperative competition. Co-opetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage, and where they believe they can share common costs. For instance, the cooperation between Peugeot and Toyota on shared components for a new city car for Europe in 2005. In this case, companies will save money on shared costs, while remaining fiercely competitive in other areas. For co-opetition to work, companies need to very clearly define where they are working together, and where they are competing.”

Your long-term business success comes not solely from competing successfully against other restaurants, but also by working with them to your advantage.

Coopetition is part competition and part cooperation. When restaurants work together, they can create a much larger and more valuable market that they ever could by working individually. Restaurants can then compete with each other to determine who takes the largest share of the increased number of potential customers.

A good example of coopetition between restaurants is when there is section of a city or town that has several restaurants concentrated in a relatively small area. If you look at this area from a traditional business point of view, opening a food service establishment there looks like a bad idea.

Why should anybody open a restaurant in an area already full of restaurants?

The reality is that the abundance of places to eat attracts customers who may visit the area without any specific restaurant in mind, and make their decision when they arrive.

This is where the competition starts. baden baden restaurant

Typically, the restaurants with the best ambiance or most attractive menu or the best quality/price, that are filled with the most people, usually bring in the most customers…

There are many typical examples of coopetition such as:

o    Food courts: All the restaurants are placed together in places like shopping centers – sharing tables, trays, cleaning services, etc. Customers are brought to the same spot (cooperation), and then they compete for their business (competition).

o    Advertising: Sometimes restaurants collaborate to put together a food magazine or similar publication where they each contribute (both in money and in content) to the publication.

o    Special food events: Sometimes several restaurants organize food events where they all contribute food or display their items at food stalls. Because of the participation of many restaurants –and good marketing — crowds of people attend these events (there is usually music involved and often many other activities as well).



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