In this episode, I tell Sears’ innovative origin story, the pivotal moment that caused its demise, and the lessons for restaurateurs.
3 Top Takeaways
- Innovate or die. To illustrate this, I draw a parallel between Sears and Amazon. Sears was in ‘maintenance mode’ whereas Amazon was in ‘innovation mode.’ With the full adoption of digital from other industries, and the dawn of direct-to-consumer technologies, restaurants can accelerate their growth by going into ‘innovation mode.’
- Direct-to-consumer technology makes it accessible for smaller players to do what the bigger players are doing. For example, omni-channel advertising campaigns in your local market, selling products anywhere in the world, marketing attribution (so you know what’s working and what isn’t), etc.
- What used to win was big and loud (i.e. billboards, television). What wins today is small, personal, fast, and nimble (i.e. omni-channel advertising that you can measure, SMS marketing, etc.).
The Sears Origin Story
Hello and welcome to the very first episode of the Guest Getter Podcast. My name is Kyle Guilfoyle and I thought I’d start this episode by sharing a story with you that I believe illustrates the crossroads that bars and restaurants are at right now in 2021.
And you might be surprised to hear that it’s not a story about a restaurant at all, but rather a retail giant…
Let’s go all the way back to 1886, Richard Sears, a railroad agent Red Northwood, Minnesota started selling watches as a side business. One year later, he moved to Chicago and met watchmaker Alvah Roebuck, and the two started up their catalog business selling watches and jewelry. They operated under the name Sears Roebuck.
At the time, the catalog and direct mail order business was fairly young. The first catalog ever was made just 20 years earlier, selling flannel through the mail in 1861.
And as you can imagine, it was a much slower time.
So the two men started their business in a way that was innovative for their time.
The Making of a Market
Now, riding on the back of the industrial revolution, the two men championed sourcing and manufacturing, many, many more kinds of products. They expanded out of the jewelry niche and started producing and selling all kinds of household goods and clothing. In 1897, Sears Roebuck launched its very first general merchandise catalog — basically a print version of a mall or a Sears store.
At the time, most Americans lived in rural areas. The general merchandise catalog gave Americans in small towns and on farms, access to mass produced goods that cut their costs and allowed them to make their homes in ways they probably had never imagined possible before.
And voila! A market was created: The sellers of products made in factories was connected with the buyers of those who lived in rural America (aka most of the country).
This helped facilitate urbanization in the United States: because factories were thriving, they needed more and more people to work at them. So people started flocking to cities.
The First Sears Store Opens
Fast forward to 1925: Sears opens its first retail store beside one of its factories and their stores spread like wildfire. As you can imagine, they started putting mom and pop shops out of business.
By the time 1945 rolls around the company is impeccably positioned capture the American buying surge that happened on the heels of World War II and sales reach $1 billion.
(For context, that’s about 14.6 billion at the time of this recording in 2021)
As time goes on, Sears…
- Launches the Discover credit card…
- They offer Allstate insurance at their stores…
- And even start one of the first home internet services along with IBM and CBS…
In other words, they go in many directions and add overhead to an already overhead-intensive business.
A Pivotal Moment: Sears Cancels Its Catalog
By the time we get to 1993, many of Sears customers were in cities and just a short drive away from their stores, so Sears decides to discontinue their catalog. At this point, they were also losing about $150 million every single year. And so they also shutter underperforming stores.
Now this is a crossroads that I would like to draw parallel to between Sears and many restaurateurs –> because at the same time in 1993, Jeff Bezos was huddled up in a dinky little office building what becomes the most valuable company in the world — Amazon.
Let me break it down a little bit more: Jeff Bezos was singularly focused on championing the medium of the future, selling a single product category (books at the time). Sears, on the other hand, instead of singularly focusing on migrating their catalog business to the internet. Sears was just trying to maintain the complicated and capital-intensive business mess that they’d created.
To be sure Sears was exceptionally well-positioned to champion the internet, but they chose ‘maintenance mode’ instead of ‘innovation mode.’
(Which you may notice is at odds with how they started).
in 2018, Sears goes bankrupt, bringing this almost 130 year old giant to its grave.
And at the risk of oversimplifying this, I’m going to distill it down to one thing:
Bezos focused exclusively on digital innovation and Sears focused exclusively on maintaining an overhead intensive operation.
What do so many restaurateurs and managers do? They’re often in maintenance mode (aka Survival Mode).
It’s an overhead intensive business.
Margins are slim.
It’s hard to see the forest for the trees.
And this was exactly the kind of place Sears was in.
And before you dismiss it and say, “Oh well that’s way different” or “restaurants are this way by nature,” I want you to look at Domino’s and Chick-Fil-A – food service businesses that are digital first.
(In fact, Domino’s touts itself as being a digital company that happens to sell pizza. From 2010 to 2017, Domino’s share price outperformed the growth of tech giants, including Apple and Amazon.)
Now I’m not saying you have to become a chain or anything like that.
(You might even hate Chick-fil-A and think it under values the industry)
The Direct-to-Consumer Revolution
But ultimately success leaves clues. And there’s a specific reason right now at this time in history that you do not need to be a chain or have massive budgets to play like these bigger players.
It’s because we’re in the midst of another revolution that most haven’t quite woken up to yet: direct to consumer or DTC.
We now have ready access to the tools. We can go straight to the consumer. Just a decade ago, it would likely be a cost prohibitive investment to reach people online, sell stuff online, have accurate advertising attribution and a number of other devices that the most sophisticated businesses in the world have been using for quite some time.
But not anymore.
What used to win was big and loud, billboards, TVs, radio, etc,
What CAN win now is small, fast, personal and nimble.
The Promise of The Guest Getter Podcast
This podcast will help usher your restaurant bar and food service business to harness digital, to get guests profitably, to not get taken out, but instead become a dominant force in your market to grow and to ultimately use the tools at your disposal to generate more profit and have more freedom in your restaurant business.
I believe that a business of any kind can become a prison of our own making (something I’ve suffered from myself), or can become a vehicle to freedom.
And that brings me to my why for creating this podcast and this business I’ve always been happiest when helping ambitious people master the tools that could help them become more free in some way.
For example, I co-founded the Nimble Bar Company in 2017 to help bartenders get more freedom in their skill and improve their freedom of time and money.
While building The Nimble Bar Co, I fell in love with marketing and the power and potential that it brings to every business. So piggybacking off the skillset I had built, I started working with a wide range of clients in 2018 — from bigger projects like helping software companies achieve nine figure exits to smaller projects like helping a restaurant achieve its first profitable and attributable sale from a Facebook ad.
With Guest Getter, I’m going back to my roots and doubling down on the industry that raised me: bars and restaurants.
My mentor Dan Sullivan has a concept called the Four Freedoms. He helps entrepreneurs achieve freedom of time, freedom of money, freedom of purpose and freedom of relationships. These Four Freedoms will serve as filters for content on the guest getter podcast. We’ll be asking, “are we helping restaurant tours achieve these freedoms somehow?”
Turning your food service business into a vehicle to freedom instead of a prison of your own making.
We’ll be exploring alongside expert practitioners, successful restaurant tours, food and beverage innovators, lateral thinkers, and some of the best marketers in the world.
Who is Kyle Guilfoyle? A Brief Background.
Now that you have some context as to what this podcast is and why I’ve created it, I’ll give you a little bit of my own background.
I had an unconventional childhood in London, Ontario, Canada, where I lived with my mother, ‘pseudo’ grandpa, grandma and aunt (at various times). They all played a role in my upbringing.
In August 1998 I Wake Up in a Ditch
When I was 10 years old, a bike ride turned into waking up in a ditch with paramedics on either side of me.
The last thing I remember before ‘moving in’ to the hospital for 4 months was reaching up to paramedics gasping, “I can’t breathe.”
I had lost control of my bike and was hit by a transport truck.
I have fond memories binge-playing N64, wheelchair races in the hospital lobby, and going to Toronto Maple Leafs games in box seats.
Beyond some scars and a fighting spirit, this experience left me with another lasting gift: an opportunity to ‘Make-A-Wish.’
I wished for a computer. This ignited the spark of possibility for me and would eventually become a gateway drug to entrepreneurship.
Someone Knocks on my Granny’s Door
When I was 11 years old, someone knocked on my grandma’s door and asked if I would be willing to shovel their driveway for 10 bucks.
The idea that I could get money from someone I didn’t live with to go to the movies or do whatever I want was awesome — I was hooked.
I started going from door to door, with sheets of paper that said I would shovel their driveway in the winter.
And in the fall I would do the same for raking their leaves.
I was also learning how to make websites. I would get up every day before school and read books on Photoshop and Macromedia Dreamweaver (a website builder at the time).
My First $1,400
When I was 12, my aunt was a bookkeeper for a number of small businesses. None of those small businesses had websites. And so I made their websites. I was blown away when one of them actually gave me a check for $1,400.
Unfortunately I wasn’t a very smart business person. And I went ahead and spent that money on a bass guitar, amp and a PlayStation — instead of reinvesting in my business.
As you can probably guess I was stuck doing everything myself because I didn’t, it never even occurred to me that I could like build a team or, you know, pay other people to help me.
And so doing that at a young age became very tiring, frustrating, and lonely.
In 2003 I Get My First Restaurant Job
So as soon as I was old enough, I went and got my first restaurant job as a host when I was 15 years old.
I sucked at first having had a manager once tell me, “Kyle, if you don’t put some pep in your step, this isn’t going to work.” I eventually fell in love with the buzz and hustle of working in the restaurant. I ultimately worked every part of it from the dish pit and the line to the bar.
I was also a choral singer and I loved harmony. And when I was about to graduate high school, figuring that if there was ever a time to pursue a career in music early on would be the best time to do it. So I went to McGill university for voice performance, and I did a master’s of music at the University of Toronto.
My Own ‘Crossroads’
As time went on, I was on two parallel tracks: I was performing behind the bar and I was performing on stage as a singer and it came to a crossroads where I had to pick just one.
Music was hard for me. I wasn’t a great reader of music. I had a neurotic warmup process and ultimately it started feeling like a chore.
I found performing behind the bar much more fun, rewarding, and lucrative.
So that’s what I did for quite a while.
But I believe 99% of bartenders have shelf lives.
(The only exception I can think of is my partner, Nate).
And I reached my bartending expiry date around 2017.
In 2018, I Turn What I Know About Bartending Into a Course
So I decided to marry my entrepreneurial spirit with the skill I had developed as a bartender and turn it into a bartender training methodology — this methodology now underpins our courses and consulting at The Nimble Bar Co.
While building Nimble, we’ve made just about every mistake you can think of — from starting the business like a media circus to running up our expenses without the profit to back up our logic.
It’s been tuition to an education that I wouldn’t have had any other way (or maybe I would, but I’m in denial).
I’m happy to say that today we’ve helped over 150 in-person students and over 6,000 online learners make bartending easier and more fun.
Where We’re at in 2021
Now in 2021, the food service business industry is at a pivotal moment. COVID has changed things. And for me, it’s a rare opportunity. Not only to continue helping bars and restaurants with their performance inside, it’s an opportunity to help them outside, help them market themselves, help them remind people while they’re there, cut through the noise, become a dominant force in the market, turn into guest acquisition scientists, engineer their guest journey, and so much more that will lead them to greater freedom of time, money, purpose, and relationship.
I’ll wrap it up there for today. I want to thank you so much for tuning into this very first episode of The Guest Getter podcast.
If you have feedback ideas or would like to be a guest on the show, email me at email@example.com.
Thanks again. Happy guests getting and we’ll see you next time. Cheers.