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ErmannoLelli
#ELConsulting - Guidelines 

Restaurant Business in developing markets. . The secrets, the strategies, the dreams, the games, finance, all you need to know.

Pioneers, Followers, Professionals, and Magicians.



Who are they and where your business is? 

The food and beverage industry is a dynamic and ever-evolving landscape, where success is not solely determined by the quality of cuisine or the ambiance of an establishment. It also hinges on the ability to understand and navigate the market adoption curve.

This curve represents the different stages through which consumers adopt new products or services, and it holds the key to unlocking the journey of success for restaurants.

By comprehending this model and leveraging its insights, restaurateurs can position themselves strategically and capitalize on emerging opportunities.

A few years ago, studying technology and innovation with BU’s Questrom School of Business, could learned the “adoption curve” and I realized that it could be used in a very identic way, for the F&B business.

Using the model of the “product adoption curve”,(widely used in products and market analysis)  we will introduce you to the 4 main stages of Market adoption in a new country, related to the Food and beverage industry, with a special focus on restaurants and bars and SMEs, small and medium Enterprises.

Understanding the Market Adoption Curve

In the classic “market adoption curve”. We have innovators, adopters, majority, and late majority

We will use the same structure with 4 new actors.

Innovators = Pioneers

Early adopters = Followers

Early majority = early Professionals

Late Majority = late Professionals

Laggards = Magicians

The similarity of those entities do not always align, but in some cases, they are perfectly identical.

You can contextualize your experience and further improve the scenario.

Here is the new curve, “F&B business adoption”

When a country is a new market, and there is no F&B offer whatsoever, the first peoples which will start to open restaurants and F&B concepts are the “Pioneers”

Introduction

In the ever-evolving landscape of the food and beverage industry, understanding the stages of market adoption is crucial for success.

Each stage represents a different segment of the market and their willingness to embrace new offerings.

Stage 1: The Pioneers

When a country is a new market with little to no F&B offerings, the pioneers are the first to open restaurants and F&B concepts. These individuals often do not come from the industry but recognize the lack of options and seize the opportunity. 

Pioneers typically have limited resources but benefit from a favorable economic landscape, including low rent, low food costs, and low staff salaries. They succeed by being the first to provide a specific cuisine or concept in an untapped market.

Pioneers are driven by the assumption-based business model (without data analysis)  and often adopt a family-style concept. 

They rely on self-funding and only seek external investments when the market starts yielding positive results. The pioneer stage is characterized by a lack of competition, low infrastructure, and mid-to-low development. 

Characteristics of Successful Pioneers in the Food and Beverage Industry

Successful pioneers in the food and beverage industry share common characteristics that contribute to their triumph in navigating the market adoption curve. Firstly, they possess a deep understanding of their target audience. By conducting thorough market research and identifying the needs and preferences of their customers, these pioneers can tailor their offerings to meet and exceed expectations.

Additionally, successful pioneers are not afraid to take risks. They embrace experimentation and are willing to push boundaries to create something new and exciting. This willingness to innovate sets them apart from their competitors and attracts early adopters who are seeking novel experiences.

These innovators set the foundation for the growth and expansion of the food and beverage industry in the market.

Stage 2: The Followers

As pioneers pave the way, the market starts to grow, attracting followers who aim to replicate their success. 

Followers have more resources compared to pioneers and believe they can improve upon existing concepts. 

They are typically wealthy individuals who may not come from the industry but are the first to employ professional staff, often recruited from abroad.

Followers can be divided into early followers and late followers. 

  • Early followers operate on assumption and vanity-based* business models, 

  • while late followers have more resources and may form business conglomerates. 

At this stage, the market is still relatively new with low competition and developing infrastructure. Rents and salaries start to rise, but it becomes easier to find experienced staff. 

Late followers may introduce external financing, attracting private investors to support their growth.

Finance method:

The late followers introduce finance to the game as they use external resources and sometimes need to manage polls of large private investors.

The late followers' stage is also fertile ground for Ponzi schemes and other financial schemes on a small scale.

In the late-followers stage, it is proven that there is a stable and high demand, but the market starts to be saturated, Now is the Time for the Professionals.

* A vanity-based business concept, is based on the needs of an entity to sustain, create or amplify, its importance or fame within a community or a market. Typical of privately funded businesses.

Stage 3: The Professionals

When the market becomes saturated and only experience guarantees results, professionals enter the scene. 

Early professionals are individuals with extensive industry experience who have risen from the follower stage. Late professionals often include international brands seeking to establish a presence and gain market share.

Professionals enter the market when demand is verified and stable. They operate on data-driven business models and rely on external sources of financing. In this stage, the market is verified, but profit margins are low, competition is high, and infrastructure is developed. 

Professionals focus on maintaining quality and differentiating themselves from competitors through innovation and efficiency.

Finance method:

Always from external sources.

Due to the rise of all the costs and the lowering profit margins, the late-professionals stage has an incredible rise of financial-based business models.

Those entities, that create F&B concepts sometimes even without a real profit need, are what we call: The Magicians

Stage 4: The Magicians

In a market that is over-saturated with high rents, salaries, and intense competition, the industry becomes risky for savvy investors. 

This is the stage of the Magicians, large private companies, or mixed entities that acquire assets for financial purposes. 

The magicians do not prioritize profitability within the food and beverage sector but leverage their assets for broader financial strategies.

Magicians own multi-billion-dollar structures and may operate in various industries beyond F&B. 

Magicians may overpay for assets and have a disregard for industry standards, creating false values and bubbles.

The market in this stage is verified but highly competitive and low-margin. The focus is on finance-based business models, and professionalism within the industry may decline.

Magicians, Pioneers, professionals, and followers, can actually coexist together creating a varied and rich landscape; however, if the government does not control the financial part of the industry, a large bubble can develop based on reloaning, real estate structures, assets management, and similars, this may cause serious damage to the industry and to the entire SME and retail sector.

Conclusion

Understanding the different stages of market adoption in the food and beverage industry is essential for businesses aiming to thrive in new markets.

Whether you are a pioneer introducing a new concept, a follower looking to improve upon existing offerings, a professional maintaining quality and efficiency, or a magician leveraging assets for financial purposes, navigating the market adoption curve requires adaptability, innovation, and knowledge.

What do you think about it?

Which stage is your market at? 

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