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PiDGiN As Business

A Roving Review

by Joseph Jones

Iron Cage Open
Iron Cage Open
Cryptic But Revelatory Tweet
Cryptic But Revelatory Tweet

Also posted by Joseph Jones:

 
In a foodie review that appeared less than a week ago, PiDGiN attained a grade of C. (See Consistency below for citation.) That grade converts from a system of stars ranging from 0 to 4, or F to A. Two stars look mighty like a C.

This review takes an outsider stab at evaluating PiDGiN as a business, with no final grade. The primary point that emerges is location. Why would this restaurant choose such a contentious location, when a spot two blocks away on Water Street would have been so much more appropriate? The answer to that question seems to lie in an adventurist notion of exploiting maximum differential to reap outsized risky profit.

Early on, in a momentary event on the sidewalk in front of the restaurant, a local resident passerby offered up this memorable aperçu with a wide grin: "You want edgy? We got edgy!" So far, edgy has included an abusive customer shoved up against the wall in handcuffs, and a picketer doused with bear spray.

On to business. How does PiDGiN stack up as a business proposition? Does it have potential to become a classic case study for a B-school?

Excerpts from a book on the restaurant business —

        Brian Cooper, Brian Floody, Gina McNeill. Start and run a restaurant business.
        2nd ed. North Vancouver : Self-Counsel Press, 2005

— provide a framework for comment on the particular case of PiDGiN at 350 Carrall Street in Vancouver. Extensive direct observation over a three-month period has been supplemented by additional research.

 
Venture

We do not recommend that you choose a fine-dining concept for your first venture into the restaurant industry, unless you have had extensive hands-on experience, in both the front and back of the house, in several well-run fine-dining operations. (9)

Presumably chef Makoto Ono supplies the front-and-back extensive hands-on experience of PiDGiN. In the past five years or so Ono has hopped from Beijing to Hong Kong to Winnipeg to Vancouver. It seems clear that yet another hop could be no big deal. The skin he has in this current game could be little more than his rep. Operator Brandon Grossutti has come straight in from about eleven years of experience as a programmer-analyst with Wolverton Securities. Perhaps his acquaintance with venture capital will prove less transferable to this circumstance than was supposed.

 
Local Folk

Area demographics. Do they meet your customer profile? Will the population base support your restaurant? (70)

On 14 February 2013 PiDGiN released a statement in response to ongoing protest that included this sentence: Over the course of the last 7 months of building PiDGiN we have supported and created a dialogue to integrate ourselves within the community. Exactly one week earlier, a more tentative Brandon Grossutti was conversing out on the sidewalk, saying "Maybe we should have reached out the folk at the Carnegie." (See also Consistency below.)

 
Location Location Location

Place is an extremely important factor in your marketing plan. Where are you located? (156)
Desirability of surroundings. Or can your operation be the catalyst that will transform a traditionally undesirable location into a new "in" spot? This takes courage and usually would need a seasoned operator with a history and a loyal clientele willing to follow him or her to the new location. (70)
The entire meal is a performance event that can take several hours. Location is not usually the key to the [fine-dining] restaurant's success, since customers will often go out of their way to come to such a destination restaurant. (8)

Seasoned operator? See under Venture above. Local restaurant history? Neither Ono nor Grossutti has that. Loyal clientele willing to follow? Loyalty looks like a function of history.

 
Exploiting Margin

Positioning on the street in relation to other complementary businesses. Are you on the fringe of the "prime" location or in the heart of that district? (70)
Perhaps being just outside the prime real estate location will allow you to operate at significantly lower overhead and yet still be within the catchment area. (71)

Prime Gastown lies just two blocks to the north. The social distance represented by those two blocks has likely provided a tempting opportunity to take advantage of a significant gap between lower rent and higher priced dining. The nature of the relationship between tenant and location owner remains a matter for speculation.

Grossutti's connections to speculative financial trading have already attracted critical attention. One footnote to that coverage is Grossutti's cryptic tweet of 27 June 2011 [see graphic], which provides linkage to a Reuters story about how

        Broker-dealers won additional time from federal regulators to comply with new rules
        banning "naked access," where brokers rent their IDs to unlicensed high-speed traders.

To an entrepreneur, disparities translate to simple opportunity for financial exploitation — whether through fancy programming that has capacity to outtime the market, whether through fancy presentation that has capacity to outstrip social-geographic context.

The jackpot of possible reward is seen to justify assuming the risks of offending other parties, such as regulators or existing local communities. In the first instance, it appears that regulators did step in to shut down the activity.

 
Service Staff

It has always amazed us that so many restauranteurs, after spending a fortune to design and build the restaurant of their dreams and hiring the finest chefs to develop a menu that expresses their dreams, will then hire inadequate servers. All your careful planning and preparation will be wasted if your service staff are incapable of expressing your dream to your customers. (137)

As of 21 February 2013, weeks after opening, PiDGiN was looking for a bartender. Most of the rest of the staffing seems to date back to a one-day hiring blitz on 12 December 2012 at the Hive. Timeline suggests that far more attention has been paid to chef and decor than to staffing.

 
Public Relations

A good public relations campaign is one of our favorite marketing strategies. With or without a professional, a public relations campaign can get you the kind of press coverage that most restauranteurs just can't afford to buy. (148)

Brandon Grossutti of PiDGiN has taken a consistent position that the protest outside his restaurant generates priceless free publicity, and that business is good.

"It is only going to make business better," he [Grossutti] added of being cast in the spotlight over the protest group’s concerns about the gentrification of the streets around Hastings and Carrall. [John Colebourn. Gentrification protests continue outside DTES eatery, but Pidgin owner looks to positives. Global News (20 Feb 2013)]

Lawyers are often involved in legal situations where clients want protests of their businesses stopped, whether that means putting pressure on a city to enforce existing bylaws, or attempting to obtain an injunction against protesters. But the Pidgin case seems to be a counter-intuitive example, where protests may actually help the business succeed. [Tony Wilson. Downtown Eastside eatery is a bold entrepreneurial move. Globe and Mail (26 Feb 2013)]

"Business is great," Mr. Grossutti told Postmedia this week. [Tristin Hopper. Vancouver police plan to arrest at least one of the city's serial anti-gentrification protesters. National Post (18 Apr 2013)]

 
Consistency

Consistency: Naturally, customers expect a menu item to look and taste the same each time they order it. (165)

A recent review of PiDGiN closes on this note of inconsistency:

One day, the humpback shrimp, lightly cured in citrus, was fresh and snappy. Another day, it was warm and slimy.

 
Rejigging

Prix fixe: set menu for a fixed price; this concept has evolved into the "meal deal" or "combo," standard in fast-food outlets. (126)
Consider your hours of operation. Can they be extended or altered to bring in more revenue? (156)

A 12 April 2013 report says that PiDGiN is "introducing a series of prix fixe menus to be shared in pairs starting at $35.00 per guest." (No drinks included.) Does this marketing move signal a step down the ladder of aspired-to class? Besides that, PiDGiN is "debuting a late-night menu" and making plans to extend hours past midnight. To go by the pictures, the basic meal deal could leave a diner looking hard for the food that came along with the taste.

 
Menu

If your menu is formatted in only one column, bear in mind that the top item will attract the most attention. … Place your most profitable dish at the top of the list. The second item in the column is the next most favorable position. In a long column, the bottom line is also a favorable position. (128)

There is no question that the top item has attracted the most attention. No question. That's daily pickles 5. A paper-mache pickle has become the mascot of the daily protest, The People's Pickle tells the ongoing story, and "pickle" has to be first cousin of "picket." Are those menu pickles the most profitable dish? Only the proprietors know why their menu has the structure that it does.

 
Scale

We will be focusing on the development of a mid-size, 60- to 150- seat, owner-operated, table-service restaurant. (xiv)

A report from 11 August 2012 specs PiDGiN at 1808 sq ft that are to encompass "a stylish 66 seater with a 10 seat bar." The facility thus lands at the lower end of the mid-size spectrum. Call that welterweight?
 

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