The Red Iguana faced a dilemma that most restaurant owners might eat a real iguana to have; there were too many customers. After being featured on the Food Network’s Diners, Drive-ins and Dives, popularity soared to the point where customers would wait 90 minutes for a table for dinner. Long-time customers told the owners that they didn’t like the long waits.
So, what do you do when you need to accommodate more customers? You expand production. In this case, the Red Iguana decided to open a new location. Their big decision was where to locate the new restaurant?
The conventional wisdom preached by the industry experts said that the second location should be located a good distance from the first location to avoid cannibalizing the existing business. A location farther away would also expand the geographic coverage of the brand by introducing it to new customers.
They opened Red Iguana 2 a mere two blocks from the existing location, despite the advice from the experts. According to the Times article, the owners explained to their consultants and financiers that their daily anecdotal evidence was that they had a large customer base that was no longer coming in “because we had gotten too busy, too crowded, too successful and that they would indeed fill the new restaurant,” Mr. Coker, one of the owners said.
The owners' counterintuitive decision proved to be correct. Annual revenue has grown to more than $6 million today from $4 million in 2009, and both restaurants are regularly full.
Here’s the point: The owners listened to, and acted on the expressed needs of their customers, despite the contrary recommendations of the industry experts. And by doing so, they succeeded.
So, back to the question:
Who should you listen to? Your customers, or the consultants?
A) Listen to your customers, and ignore your consultants.
B) Listen to your consultants.
C) Ignore everyone, and go with your gut.
D) Listen to the consultant who advises you to listen to your customers.
What do you think?