The Case for Independent Restaurant Marketing Cooperatives & Why You Might Want to Join

Each month, executives for large corporate restaurant chains pore over research and hunker down at strategy sessions in hopes of aggressively growing the number of units and per-unit revenue within the evolving restaurant marketplace. They continually review trends to target the largest cross-section of diners. And they are writing really big checks for national advertising campaigns.

If that is not competitive enough to local independent eateries, the chains promote themselves as local "neighborhood" restaurants. You know them as those pseudo-homey "more coffee, hon?" units that are popping up on the corner of State and Main in every town. Some of the best corporate players are not only leveraging their economies of scale, but also trying to play on your turf. And speaking of turf, you might want to ruminate on this: A recent press release from a large national chain acknowledged that the company anticipated a greater than 30 percent increase in their advertising budget to convey their multiple messages to the consumer.

...Perhaps the strongest mathematical argument for independent restaurant marketing co-ops is based on the presumption that most independents budget only about 3 percent of their sales for marketing efforts. Frankly, this is not a great deal of money in itself; however, when pooled with other businesses it can have some leverage to finance events and programs that would be out of reach as individual enterprises.

Among the messages was their "neighborhood" branding that was planned in the more than 120 new restaurants set to open in the prospective year. They promoted themselves as a local family sitdown eatery, a title typically reserved for the independents. (See "Whether You Join a Co-op or Go It Alone, Always Leverage Your Strengths," below.)

The ever-changing and competitive business of supplying food to the eager masses is an industry in which the strong seem to get stronger, and the independent single-unit concept without major financial backing (which is generally the rule) is challenged to get increasingly creative to effectively compete. Enter the marketing cooperative.

Taking a Lead From Growers

A marketing cooperative (or "co-op") is loosely defined as a business or organization run by a group of like-minded independents, who then collectively sell their products to consumers. This style of promotion and sales was traditionally designed for those farther up the foodservice distribution chain -- regional independent farmers and producers, who wanted to pool their resources to drive consumer demand for their products. We have all seen the commercial ads on television promoting product categories such as California cheese, Florida orange juice, or cotton. Producers found more strength in numbers and were able to accomplish collectively what they could not achieve as individuals. With marketing cooperatives you are able to attain the benefits of a large corporate presence.

In recent years, small, independent restaurants have taken the growers' lead, and banded as their own marketing cooperatives. Not unlike the farmers, their goal is to create a group that could create consumer awareness that would be unattainable for them as individuals. Now they could hire fancy advertising agencies and buy full pages in the metro newspapers, and prime-time regional spots on television. They could hire a small staff to manage co-op administration and purchasing, i.e., a dedicated marketing department. In essence, they could begin to create a presence in the regional marketplace that rivals the chains by agreeing to promote themselves as a group. This united front provides a heady opportunity to position yourself like the big boxes, with the hope that you'll share equitably in the rewards.

In theory, and often in practice, this is the case. That said, not every successful independent is smitten by the idea. (See "The Potential Pitfalls of Marketing Cooperatives" on this page.) Nevertheless, marketing co-op proponents can be downright evangelical about their value. "The marketing efforts are all positive," says Tracy Voight, owner/partner in three restaurants in Houston, and a member of the Houston Originals. "Bringing up awareness of independent versus chain can only help. There is no downside to that."