Tourist Trap Restaurant Model Of Profits

by Paul Simister on April 1, 2011

According to one survey 60% of British holidays makers have been ripped off by a tourist trap restaurant with bad food, bad service and a lousy experience. I am amazed it’s not more and I think it shows the low level of expectations we have.

I’m not encouraging it as a way to make money (because I believe in the value of happy customers who come back to buy again) but I do think it’s an interesting model.

First it is “differentiation by where”.

The attraction is a convenient location in a high traffic area popular with tourists (i.e. naive customers who don’t have the knowledge and experience of buying regularly).

If you’ve been to any popular tourist destination, you’ll see the restaurants lined up one next to another.

Each is possibly a tourist trap restaurant compared to those in the back-streets which, if they are good, will be full of locals.

Of course individually the tourist trap restaurants aren’t differentiated by location but often they are so busy, they don’t need to be. One can be as mediocre as the next.

Imagine you run such a business.

You’re selling to customers who won’t be around for long, with little local knowledge and what they have is based on comparing restaurants in the same location.

Prices are visible.

Popularity is visible – and low price may attract while high price repels.

Food quality and service is not visible – the tourists are on holiday and want to have a good time and cheapish plonk may have dulled their senses.

You’ve got a choice.

Pay more the ingredients, take longer to cook them with care and hire more, nice waiters – the result is that you have higher costs than your competitors.

Or cut back on the quality of ingredients and take little time or trouble on the preparation- and have lower costs and better profit margins.

Unfortunately the tourist trap model of profits makes economic sense which is why it prospers.

Partly the problem is the tourists themselves who can be described as convenience buyers – not particularly interested in the quality of the experience or the price. They just want to have a meal and get on with their holiday – and eating in front of a famous landmark or site gives them something to remember, even if the food is lousy. And most won’t complain.

It doesn’t have to be like that.

Last April we had seven nights in Majorca staying B&B at a nice hotel.

The first night, tired from our journey, we ate at the hotel – and sadly it can only be classed as a tourist trap.

The price was reasonable but the food and the atmosphere left a lot to be desired.

Next day we took to the back-streets, reading every menu we could find.

And we found two good places.

One close to the hotel and one a long walk away but it was along the seafront and past the shops so it was an interesting jaunt.

We ate at the first place, two nights and at the other three nights. The food (at the restaurant furthest away) was excellent and the atmosphere (inside or out) was great. In a week we became regulars and we spent much more than we would have if we stayed at the hotel.

The place was always packed, with locals and people who visited the resort regularly with the odd lucky newcomer. It reaped the rewards of being exactly what it was – an excellent restaurant where the food and the experience mattered much more than the location.

The first (the one closest to the hotel and the strip of tourists trap restaurants) struggled. We gave a little inner cheer each time a new group came in but unfortunately it didn’t happy very often. The resort was quiet – it was the week after the Iceland volcano stopped flights in northern Europe – and people weren’t being forced out of the convenience of eating in the tourist traps.

I understand the desire to avoid the tourist trap model of profits but this restaurant needed extra ways to increase awareness of it (flyers in the hotels, perhaps a free desert offer if you buy a main course) or it needed a way to communicate the quality of the food (reviews or an imaginative menu in sexy food language – think Marks & Spencer’s  TV Food advertisements)

We tried one other place, a little Italian restaurant right by the sea but a little distance away from the main tourist trap restaurants. It looked nice but disappointed.

Is it just restaurants who can use the tourist trap model of profits?

No.

It’s open to any business which is:

  • Selling to inexperienced customers with very limited knowledge of what’s available
  • Selling to customers who are time pressed or lazy
  • Selling products or services which cannot be judged before consumption

All you have to do is to be visible and price competitive. Convenience buyers will just buy what’s easiest.

Location works for tourist trap restaurants but regular promotion works for other businesses – and can even build up awareness of a brand which gradually becomes a preference (we like what we know).

Location doesn’t even have to be physical but on the Internet.

Sometimes it is better to get away from page one of Google – the seafront – to pages two and three – the back-streets.

Of course quality shouldn’t be terrible.

A really bad experience creates complaints and a lot of negative word of mouth.

Just disappointing.

It’s not the way I’d want to run my business – I like the model used by my three time visit restaurant in Majorca where I will definitely be returning if we got back to the resort. In fact it’s a big reason to go back. Sadly I don’t expect the other place to survive.

But the tourist trap model of profit can be successful.

You have seen how many places serve indifferent, unimaginative food in popular locations for the proof to be before your own eyes.

What do you think?

Paul Simister is a business coach who helps small business owners to profit from differentiating their businesses, being distinctive in the eyes of their customers and standing out in a crowded marketplace.

You too can move past your profit tipping point by answering the seven big questions of business success.

Comments on this entry are closed.

Previous post:

Next post: