Still Time to Make One More Bad Decision?
Does Waffle House also have a focus strategy? I think so. They do not try to appeal to everyone. Someone admitted on my Twitter feed that they went to a SEC school and have never visited a Waffle House, which I believe is a crime in some states.
Capital Thinking • Issue #234 • View online
I love Waffle House. And not just because watching someone fry an egg while smoking reminds me of my dad.
I’ve seen a gun five times in my life, three of those were in Waffle Houses. There’s definitely a dangerous feel to them. Even the sign looks like a ransom note.
There’s always a letter out, occasionally it’s the ‘W’, so it reads ‘AFFLE HOUSE.” Eh it’s 2 am, let’s go to the Affle House.
Their slogan should be: ‘It’s 2 AM; Still Time to Make One More Bad Decision.’
You go in there and everyone’s drunk. You know everyone’s drunk in Waffle House because they have pictures of the food on the menu.
How drunk do you have to be to not remember what a waffle looks like?
‘Oh yeah, it’s like a plaid pancake.‘
-Jim Gaffigan
A Dozen Business Lessons from Waffle House
There are many best practices and rules in business.
At least one of these best practices or rules is broken by an innovative business. If a business does exactly the same things as its competitors, it is not going to be financially successful. It is that difference which can create a moat for a business.
Harvard Business School Professor Michael Porter writes:
“If there are no barriers to entry, you won’t be very profitable.”
In other words, if there is no impediment to new supply of what a business sells, competition among suppliers will cause price to drop to a point where there is no long term industry profit greater than the cost of capital.
Waffle House does some things differently than its competitors, one of which is never closing.
The myths that have been created about this “open 24 hours” policy include stories about Waffle House restaurants having no locks on doors or that the keys to each restaurant are buried in cement outside the building.
Offering food service all night has proven to be a profitable source of differentiation for the Waffle House. One of the co-founders once quipped that a great attraction for Waffle House for customers is that if you ever see one, it is open.
No one ever asks: “I wonder if the Waffle House is still open?”
“Differentiation and lower cost combined with the scope of activities for which a firm seeks to achieve them lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation and focus. The focus strategy has two variants, cost focus and differentiation focus.” - Michael Porter
When represented graphically it looks like this:
The business of the Waffle House has become quite large, but since it is privately-held, analysts are only guessing about the profitability of the business.
One recent guess that appeared in The New York Times was that Waffle House: “had sales of a little more than $1 billion in 2015.”Other revenue estimates for the company are similar. But they are guesses.
“There are three types of companies,” explained Bryan Elliott, analyst at Robinson-Humphrey, in the September 19, 1988 Atlanta Business Chronicle.
“There are public companies that trade stock and have to share information. Then there are private companies that don’t trade stock but are somewhat open about their operations and numbers. And then there are the companies that won’t even acknowledge that they exist. And that is Waffle House. They are a very, very private and tight-lipped company.”
*Featured post photo by Jon Tyson on Unsplash