5 ms·

How Chipotle, Pinkberry, and others win big by doing just a few things well

41 points by bpung 17y ago

steve_mobs 17y ago
This is a typical exapmle of market focus and niching based on focusing on core competency.
petervandijck 17y ago
Sure, and other companies win big by doing lots of things. Still worth restating though that doing 1 thing well can work great.
- toby 17y ago
  Like most 37signals articles, this presents a platitude backed by two examples. There are thousands of companies that succeed with the opposite strategy, and thousands that do something simple and fail. It's not even clear that Pinkberry succeeded because of its small product offering or due to some other factor. In fact, the first time I heard about it, a fan was raving about the incredible selection of toppings to choose from. A whole economics thesis could be dedicated to a controlled study of which strategy is actually preferable. This being the internet, simple narratives tend to win over rigorous results.
  - asher 17y ago
    Can you suggest any way of gaining a broader perspective? Both companies mentioned in the article are B2C and highly visible. They may have "visual punch" outweighing their "economic punch". How can we get a broader, more realistic picture of what's really happening in the economy?
Readmore 17y ago
I'm starting to feel like this advice isn't so great anymore. Everyone is trying to do less and what we end up with is a million little apps that do one thing really well, which is great, but you're still dealing with a million separate apps. The iPhone wasn't just a really great phone, it was a phone, an iPod, and an 'Internet Communicator' but because those things were combined in such a great package it really spoke to people and made it something they would want. Of course the App Store is what is driving the popularity now but that is still because customers can come to one place, the iPhone, and get tons of different uses out of their one device. I think we're starting to enter an era where users are more interested in packages of functionality that are easy to use and work really well over a bunch of tiny solutions. Maybe I'm wrong, but I know that I prefer products/applications that let me do lots of things reasonably well in one place instead of getting the 'perfect' thing for each problem I have. What do you think?
- gcheong 17y ago
  I don't think the problem is the number of features really but maintaining the simplicity or ability to access the features you need. For any given product there are probably a core set of features that everyone wants and beyond that each additional feature pleases some other slice of the customer group but before you add that extra feature you should probably consider what that might cost you in terms of maintaining the simplicity of access and ease of use of your core features.
- proee 17y ago
  You may need to factor in the "minimal viable product." A few years ago, an mp3 player could be consider enough for a high-end (read non-knockoff) product. However, fast forward a few years and you now need a mp3 player, video player, and app store driven device. So I think you need to factor in the minimum requirements of the device (or foodchain) and then execute with the highest level of quality.
duh 17y ago
It's no surprise 37signals is based in Chicago (I just did a whois) if they think Chipotle does Mexican food "well".
- whye 17y ago
  Chipotle's specialty, San Francisco burritos, aren't Mexican, they are northern Californian :) http://en.wikipedia.org/wiki/San_Francisco_burrito http://en.wikipedia.org/wiki/San_Francisco_burrito
- jrockway 17y ago
  Chipotle is a national chain that is highly-profitable. Consider it the Starbucks of Mexican food. Not as good as the "local" place, but consistently okay everywhere you go.
  - duh 17y ago
    Why consider it the Starbucks of Mexican when it's owned by McDonald's, a better example than any of the companies mentioned thus far.
    - roedog88 17y ago
      Adding more weight to your point, I read that McDonald's divested their stake in the Chipotle chain, giving the reason that they wanted to focus on increasing revenue at their own restaurants.
    - notirk 17y ago
      McDonald's bought into it early, expanded it, then spun it off as an IPO. They don't own a majority stake (if any of it) anymore.
      - blasdel 17y ago
        They got involved because the first Chipotle was right near the McDonald's corporate offices in Denver -- the executives were eating there so much, they bought into the company!
eam 17y ago
In-N-Out in California reinforces this very well.
- brown9-2 17y ago
  Same thing with Five Guys (not sure if they've spread beyond the East Coast). Very simple menus seems to be a hot trend recently.
  - oconnor0 17y ago
    They've recently made it to Colorado.
    - spicyj 17y ago
      Really? I don't see any on http://www.in-n-out.com/locations.asp http://www.in-n-out.com/locations.asp, and none came up when I searched for various cities.
      - _pius 17y ago
        They're talking about Five Guys.
  - aaronblohowiak 17y ago
    In-N-Out is older than most of the HNers
  - chronomex 17y ago
    There's a Five Guys in the Seattle area too.
zach 17y ago
Taco Bell has at least fifty menu items (not to mention their multi-brand restaurants). In-N-Out has, well, burgers, fries, shakes and soft drinks. Okay, In-N-Out does a great job. But a Taco Bell kitchen is about the same size, yet produces a substantially larger menu. How do they pull it off? Middleware. At In-N-Out, they make food out of potatoes, buns and refrigerated beef. At Taco Bell, they make food out of ingredient bags which are processed and packaged off-site. In-N-Out is something that a chef can respect -- Taco Bell is not. But it's worth pointing out that In-N-Out can thrive only because their market doesn't demand a wide-ranging product. Sometimes markets move in that direction, and the artisans -- who cannot abide using middleware, who want to make everything to their high standards -- have a hard time competing.
- mikeryan 17y ago
  But every In-N-Out I've ever been to has a line out the door. Taco Bell may have a larger menu but I doubt they have anywhere near the per-store revenues or profit margin of an In-N-Out.
  - whopa 17y ago
    > But every In-N-Out I've ever been to has a line out the door. That could also be explained by the fact that there are far less In-N-Out locations than Taco Bell, so one store has to handle demand from over a larger area than Taco Bells. If In-N-Out has the same density of locations as a Taco Bell, the per-store revenues will be quite different.
    - zach 17y ago
      Right -- they have a line out the door because that's how their artisanal revenue model works -- producing their specialty in great quantity. The many Krispy Kreme franchises in In-N-Out's territory had those kinds of lines out the door once too, but went bust when the lines got short. Kogi BBQ is the epitome of this model -- they have unfathomably long lines and few locations, but spread their resources around by being mobile.
    - mikeryan 17y ago
giardini 17y ago
I tried Chipotle once: I'd rather eat a piece of rug. But maybe if they get everyone to try it _once_ as I did, that will define success?
- aaronblohowiak 17y ago
  i think chipotle is delicious. it is the mcdonald's of mexicali
  - spicyj 17y ago
    Somewhat literally: McDonalds holds a huge stake in Chipotle. Except Chipotle is way healthier and works better than most fast food joints.
    - whye 17y ago
      I'm not sure I'd describe them as healthy, exactly. They do place a strong emphasis on using good ingedients, but portion sizes are huge -- a chicken burrito is more than 1,000 calories. http://www.msnbc.msn.com/id/21838237/?pg=6#TDY_20WorstFoods http://www.msnbc.msn.com/id/21838237/?pg=6#TDY_20WorstFoods
    - jfarmer 17y ago
      Healthy? You might be surprised: http://www.chipotlefan.com/index.php?id=nutrition_calculator http://www.chipotlefan.com/index.php?id=nutrition_calculator Depending on what you get, I suppose.
    - jonknee 17y ago
      McDonalds holds no stake at all in Chipotle. They did a ways back, but spun it off onto its own through an IPO and divested all shares.
- wtallis 17y ago
  Chipotle's meats (particularly the steak) can be quite bad at times, but the rest of their stuff is pretty good, and their chips are great. I haven't been to a Taco Bell since a Chipotle opened up in my neighborhood, despite the Taco Bell being quite a bit cheaper and only two blocks further away.
wglb 17y ago
This was also true for Domino's Pizza back when they began to take off like a rocket: a very limited menu, and low delivery time.
eswat 17y ago
I'm not so sure that the Nintendo Wii should be considered as a good example for this sort of thing anymore. They had won big with the Wii, turning profits on each console sold while the competition lost with each sale. But now they're facing the problem with the Wii being abandoned in households rather quickly and the decrease in software sales that brings. DS aside, can Nintendo really be considered as a company that does few things well when the longevity of 1/2 their flagship lineup is in jeopardy?
- axod 17y ago
  >> "But now they're facing the problem with the Wii being abandoned in households rather quickly and the decrease in software sales that brings." First I've heard of it, can you point to anything to back that up?
  - eswat 17y ago
    Here are some software sales stats for the past 3 years. The Wii has shown strong sales so far but has plateaued this year: http://www.gamasutra.com/php-bin/news_index.php?story=25740 http://www.gamasutra.com/php-bin/news_index.php?story=25740 (though it could be due to lack of meaningful choice this year in comparison to last year, not due to abandonment) Admittedly my remark about the console being abandoned quickly was a hasty generalization. I took into account some reports from 2007 that questioned the longevity of the Wii and had gathered the percentage of people in Japan that used the system frequently. That and experiences my friends and others I know online have had with their Wiis. http://games.ign.com/articles/827/827313p1.html http://games.ign.com/articles/827/827313p1.html
asher 17y ago
"Simple" as a discussion-starter? Great. "Simple" as a universal prescription? Maybe not. Chipotle thrives on its simple offering; Cheesecake Factory thrives on its deep menu. Larry Ellison fought against the "best of breed" concept to promote a unified Oracle Applications. A Cheesecake Factory style package. The argument for "complex" is that once you've earned the trust of a customer, you can provide the spectrum of products/services that customer needs. You can be counted on to pick up all dropped balls. (But maybe there is a completely pointless complexity - proliferation of marginal features - which we can simply avoid.) The only reliable guide is complete focus on the customer's needs.

41 points by bpung 17y ago

This is a typical exapmle of market focus and niching based on focusing on core competency.

Sure, and other companies win big by doing lots of things. Still worth restating though that doing 1 thing well can work great.

toby 17y ago
Like most 37signals articles, this presents a platitude backed by two examples. There are thousands of companies that succeed with the opposite strategy, and thousands that do something simple and fail. It's not even clear that Pinkberry succeeded because of its small product offering or due to some other factor. In fact, the first time I heard about it, a fan was raving about the incredible selection of toppings to choose from. A whole economics thesis could be dedicated to a controlled study of which strategy is actually preferable. This being the internet, simple narratives tend to win over rigorous results.
- asher 17y ago
  Can you suggest any way of gaining a broader perspective? Both companies mentioned in the article are B2C and highly visible. They may have "visual punch" outweighing their "economic punch". How can we get a broader, more realistic picture of what's really happening in the economy?

Readmore 17y ago

I'm starting to feel like this advice isn't so great anymore. Everyone is trying to do less and what we end up with is a million little apps that do one thing really well, which is great, but you're still dealing with a million separate apps. The iPhone wasn't just a really great phone, it was a phone, an iPod, and an 'Internet Communicator' but because those things were combined in such a great package it really spoke to people and made it something they would want. Of course the App Store is what is driving the popularity now but that is still because customers can come to one place, the iPhone, and get tons of different uses out of their one device. I think we're starting to enter an era where users are more interested in packages of functionality that are easy to use and work really well over a bunch of tiny solutions. Maybe I'm wrong, but I know that I prefer products/applications that let me do lots of things reasonably well in one place instead of getting the 'perfect' thing for each problem I have. What do you think?

gcheong 17y ago
I don't think the problem is the number of features really but maintaining the simplicity or ability to access the features you need. For any given product there are probably a core set of features that everyone wants and beyond that each additional feature pleases some other slice of the customer group but before you add that extra feature you should probably consider what that might cost you in terms of maintaining the simplicity of access and ease of use of your core features.
proee 17y ago
You may need to factor in the "minimal viable product." A few years ago, an mp3 player could be consider enough for a high-end (read non-knockoff) product. However, fast forward a few years and you now need a mp3 player, video player, and app store driven device. So I think you need to factor in the minimum requirements of the device (or foodchain) and then execute with the highest level of quality.

duh 17y ago

It's no surprise 37signals is based in Chicago (I just did a whois) if they think Chipotle does Mexican food "well".

whye 17y ago
Chipotle's specialty, San Francisco burritos, aren't Mexican, they are northern Californian :) http://en.wikipedia.org/wiki/San_Francisco_burrito http://en.wikipedia.org/wiki/San_Francisco_burrito
jrockway 17y ago
Chipotle is a national chain that is highly-profitable. Consider it the Starbucks of Mexican food. Not as good as the "local" place, but consistently okay everywhere you go.
- duh 17y ago
  Why consider it the Starbucks of Mexican when it's owned by McDonald's, a better example than any of the companies mentioned thus far.
  - roedog88 17y ago
    Adding more weight to your point, I read that McDonald's divested their stake in the Chipotle chain, giving the reason that they wanted to focus on increasing revenue at their own restaurants.
  - notirk 17y ago
    McDonald's bought into it early, expanded it, then spun it off as an IPO. They don't own a majority stake (if any of it) anymore.
    - blasdel 17y ago
      They got involved because the first Chipotle was right near the McDonald's corporate offices in Denver -- the executives were eating there so much, they bought into the company!

eam 17y ago

In-N-Out in California reinforces this very well.

brown9-2 17y ago
Same thing with Five Guys (not sure if they've spread beyond the East Coast). Very simple menus seems to be a hot trend recently.
- oconnor0 17y ago
  They've recently made it to Colorado.
  - spicyj 17y ago
    Really? I don't see any on http://www.in-n-out.com/locations.asp http://www.in-n-out.com/locations.asp, and none came up when I searched for various cities.
    - _pius 17y ago
      They're talking about Five Guys.
- aaronblohowiak 17y ago
  In-N-Out is older than most of the HNers
- chronomex 17y ago
  There's a Five Guys in the Seattle area too.

zach 17y ago

Taco Bell has at least fifty menu items (not to mention their multi-brand restaurants). In-N-Out has, well, burgers, fries, shakes and soft drinks. Okay, In-N-Out does a great job. But a Taco Bell kitchen is about the same size, yet produces a substantially larger menu. How do they pull it off? Middleware. At In-N-Out, they make food out of potatoes, buns and refrigerated beef. At Taco Bell, they make food out of ingredient bags which are processed and packaged off-site. In-N-Out is something that a chef can respect -- Taco Bell is not. But it's worth pointing out that In-N-Out can thrive only because their market doesn't demand a wide-ranging product. Sometimes markets move in that direction, and the artisans -- who cannot abide using middleware, who want to make everything to their high standards -- have a hard time competing.

mikeryan 17y ago
But every In-N-Out I've ever been to has a line out the door. Taco Bell may have a larger menu but I doubt they have anywhere near the per-store revenues or profit margin of an In-N-Out.
- whopa 17y ago
  > But every In-N-Out I've ever been to has a line out the door. That could also be explained by the fact that there are far less In-N-Out locations than Taco Bell, so one store has to handle demand from over a larger area than Taco Bells. If In-N-Out has the same density of locations as a Taco Bell, the per-store revenues will be quite different.
  - zach 17y ago
    Right -- they have a line out the door because that's how their artisanal revenue model works -- producing their specialty in great quantity. The many Krispy Kreme franchises in In-N-Out's territory had those kinds of lines out the door once too, but went bust when the lines got short. Kogi BBQ is the epitome of this model -- they have unfathomably long lines and few locations, but spread their resources around by being mobile.
  - mikeryan 17y ago

giardini 17y ago

I tried Chipotle once: I'd rather eat a piece of rug. But maybe if they get everyone to try it _once_ as I did, that will define success?

aaronblohowiak 17y ago
i think chipotle is delicious. it is the mcdonald's of mexicali
- spicyj 17y ago
  Somewhat literally: McDonalds holds a huge stake in Chipotle. Except Chipotle is way healthier and works better than most fast food joints.
  - whye 17y ago
    I'm not sure I'd describe them as healthy, exactly. They do place a strong emphasis on using good ingedients, but portion sizes are huge -- a chicken burrito is more than 1,000 calories. http://www.msnbc.msn.com/id/21838237/?pg=6#TDY_20WorstFoods http://www.msnbc.msn.com/id/21838237/?pg=6#TDY_20WorstFoods
  - jfarmer 17y ago
    Healthy? You might be surprised: http://www.chipotlefan.com/index.php?id=nutrition_calculator http://www.chipotlefan.com/index.php?id=nutrition_calculator Depending on what you get, I suppose.
  - jonknee 17y ago
    McDonalds holds no stake at all in Chipotle. They did a ways back, but spun it off onto its own through an IPO and divested all shares.
wtallis 17y ago
Chipotle's meats (particularly the steak) can be quite bad at times, but the rest of their stuff is pretty good, and their chips are great. I haven't been to a Taco Bell since a Chipotle opened up in my neighborhood, despite the Taco Bell being quite a bit cheaper and only two blocks further away.

wglb 17y ago

This was also true for Domino's Pizza back when they began to take off like a rocket: a very limited menu, and low delivery time.

eswat 17y ago

I'm not so sure that the Nintendo Wii should be considered as a good example for this sort of thing anymore. They had won big with the Wii, turning profits on each console sold while the competition lost with each sale. But now they're facing the problem with the Wii being abandoned in households rather quickly and the decrease in software sales that brings. DS aside, can Nintendo really be considered as a company that does few things well when the longevity of 1/2 their flagship lineup is in jeopardy?

axod 17y ago
>> "But now they're facing the problem with the Wii being abandoned in households rather quickly and the decrease in software sales that brings." First I've heard of it, can you point to anything to back that up?
- eswat 17y ago
  Here are some software sales stats for the past 3 years. The Wii has shown strong sales so far but has plateaued this year: http://www.gamasutra.com/php-bin/news_index.php?story=25740 http://www.gamasutra.com/php-bin/news_index.php?story=25740 (though it could be due to lack of meaningful choice this year in comparison to last year, not due to abandonment) Admittedly my remark about the console being abandoned quickly was a hasty generalization. I took into account some reports from 2007 that questioned the longevity of the Wii and had gathered the percentage of people in Japan that used the system frequently. That and experiences my friends and others I know online have had with their Wiis. http://games.ign.com/articles/827/827313p1.html http://games.ign.com/articles/827/827313p1.html

asher 17y ago

"Simple" as a discussion-starter? Great. "Simple" as a universal prescription? Maybe not. Chipotle thrives on its simple offering; Cheesecake Factory thrives on its deep menu. Larry Ellison fought against the "best of breed" concept to promote a unified Oracle Applications. A Cheesecake Factory style package. The argument for "complex" is that once you've earned the trust of a customer, you can provide the spectrum of products/services that customer needs. You can be counted on to pick up all dropped balls. (But maybe there is a completely pointless complexity - proliferation of marginal features - which we can simply avoid.) The only reliable guide is complete focus on the customer's needs.