What’s Your Product? The Implications of Offering Goods and Services

Brian

Image: Seamstress

A Question

Why is this business so damn hard?!

An Answer

Because it is. There’s a famous quote describing golf that goes like this: “Golf is a game whose aim is to hit a small ball into an even smaller hole, with implements singularly ill-designed for the purpose.” If you don’t play golf, you probably think it’s stupid. Come to think of it, if you do play you might also think it’s stupid.  But you definitely know it’s damn hard! Because it is. It’s built hard. It’s maddening and frustrating and tough to be good at. It spawns a few tortured souls who become obsessed with the pursuit and even fewer who are any good at it. Like running restaurants. And bars.

A Product

The product makes it hard. Simply put, a product is anything that can be offered to a market that might satisfy consumer wants or needs. Some industries seek to satisfy customers by offering goods. Others offer services. Most offer what’s commonly referred to as a mixed product that includes some combination of goods and services. Our product at restaurants and bars is mixed.

A product offering that primarily includes goods is relatively easier to manage. Not easy, but easier. Goods are physical products that have form and weight. They are therefore tangible. Traditional goods can be held by the consumer and have their characteristics well evaluated before purchase. They tend to be homogeneous and are rarely faulty because they are produced in mass under strict control. Bottled water is a good. In your restaurant or bar, your food and beverages are goods…just not exactly like bottled water. We’ll get to that in a minute.

A product offering that includes services is a little more difficult to manage. This has everything to do with the nature of services, as described by the four characteristics below.

  1. Services are intangible and difficult to assess, meaning that they have no physical form and can’t be held and evaluated well before purchase. The main means of evaluating services is word-of-mouth. You might ask your father to recommend a good accountant. You might go to Angie’s List to find a reputable contractor. You might check Yelp in an unfamiliar city to find a good Mexican restaurant.
  2. Services are inseparable, meaning that the service consumer must take part in the delivery of the service. As the result of this proximity, the consumer can have an effect on the outcome of the service encounter. In order to get a professional shave, I have to be within arm’s reach of a barber with a razor. If I move around a lot while I get shaved, I’ll get cut…bad.
  3. Services are variable. The quality of the service product is largely determined by the acumen of the provider. You have some servers in your operation who are great and some who are not so great. The great ones deliver great service. The not so great ones, not so much. Put another way, if I had any money to invest I’d give it to Warren Buffet, not Bernie Madoff.
  4. Services are perishable. They are created and consumed when purchased. As such, they cannot be inventoried; they cannot be produced now and saved to be consumed later. Let’s say a blizzard hits New York City. The actors in a Broadway play were at the theater early and are ready to perform at show time. The Mayor declares a state of emergency and shuts down the roads and trains. No one comes. The actors can’t perform the show and save it for the audience for later, when the weather gets better. The performance “perishes.”

Our Product

A product offering that includes goods and services is referred to as a mixed product. A mixed product offering is most difficult to manage because the creation and delivery of goods and services are different processes from the other, and therefore require different skill sets and expertise that mostly have nothing to do with each other. Imagine that barber making you eggs benedict while he shaves you…all the while making interesting light conversation and smiling agreeably. Your bar staff do that all the time, every day.

And it gets worse. The goods and services delivered in bars and restaurants are delivered simultaneously, meaning that the employees and departments responsible for the delivery of each need to rely upon each other for information and cooperation in order to deliver the thing for which they are responsible. Cooks and bartenders need orders from servers for each diner in the dining room. Servers and bartenders need properly prepared and accurate dishes from the kitchen. Servers need their drinks from the bar…NOW! Delivering a quality mixed product is tough. Simultaneously delivering goods and services that are intertwined can seem nearly impossible.

And it gets even “worser.” As you read through the list of service characteristics above, it may have occurred to you that all but one could be applied to the goods you provide. Meals and drinks are certainly tangible. Beyond that, they more closely resemble services. For instance, cocktails are ordered, created and consumed at your bar during an encounter between a customer and a bartender. The customer has to be there. That makes delivery of the good inseparable, and gives the customer influence over the outcome. The bartender might be good or might not be. That makes the quality of the good highly variable. Bartenders need patrons at the bar to buy their cocktails; they can’t make drinks and save them for later. That makes them perishable. 

The Implications

It’s a tough business. Maybe understanding why makes that easier to accept…or maybe not. At least understanding can provide a strategy to attack the damn thing. Your services need to be approached and managed like services. You need to hire staff with the right skills, personality and temperament to deliver great service. They need to be flexible, empathetic and committed to guest satisfaction. You need to train them and constantly coach them up once you have them. You might be doing that already. What you probably aren’t doing is managing the delivery of your goods in exactly the same way. You’re probably not looking for that same skill set from the staff that produces your goods. You should be. Your product is a mix of goods and services that all act like services. Your bar, kitchen and service staff need to understand and to have the skills and training to be able to deliver.

You'll have the opportunity to learn directly from Brian Warrener at the 2016 Nightclub & Bar Show in Las Vegas. He will be presenting 2 breakout sessions, "The Future of Flavor Trends" and "How to Un-Screw Your Bar." Use code SAVE30BARNEWS to save $30 on your pass when you register!