Poke thoughts. Relatively easy entry business. Can occupy very small square footage. You might have the best Poke business in the area but every mom & pop that goes into a very small location that requires much less capital to open and is operated by the owners and that might even not be quite as good as your business is a deterrent. Every poke bowl they serve is one you will not be selling. People do not belong in the business will take the leap and they take a little away from what you are doing. I eat poke once in awhile and by nature I watch all the poke places opening up. Some are good and some not so good but they all take a piece of your business. I would ask how you can differentiate from all those guys in a significant way? It would seem that you have to be able to answer that question or maybe you should not do it if you cannot identify that differentiation. In the example of the yogurt craze it was also an easy entry business in terms of capital and required product knowledge. Everybody was jumping into it. Many people who did had no business doing it because of lack of experience, not enough capital or whatever. A small restaurant could install a yogurt machine and they became competitors with the least amount of capital required and virtually no increase in fixed costs to the restaurant. Good operators are often disdainful of these small mom & pops and/or an existing restaurant adding a yogurt machine but every yogurt they sell is one that operator will not sell. In the case of poke there are some in our area that I will not patronize because of “that feel” that they are not very good at what they are doing and when it is fresh fish I am not taking any chances. Yet they are open and apparently making some money. A particular one I have in mind is just the husband and wife operation only. Not great food wise to my taste but they are attracting a reasonable amount of business. I know their rent is pretty low. Obviously they have no labor factor. Not a great location but they might survive because they are really nice hard working people. I also notice a number of poke businesses for sale.
In my opinion, with these types of easily duplicated businesses, there is a time to get in and a time to get out. I had a business that among other things, made fruit toppings that we sold to a small local area yogurt chain. The woman that owned it was very sharp. Her installations were very professional and she was achieving strong sales. Then one day she told me she was going to sell. I asked her why when she was doing so well. She said there were to many people coming into the business and it was time to move on. She sold and the company lasted about two years more and during that two years some of them had to close.
Lots of great points. Thank you gmac!
You are right in that the barriers to entry are very low in Poke. But then it occured to me, isnt it same for burrito, taco, pizza place?
So compared to Burrito, Taco, Pizza shop, what is the concern with low barrier to entry, with regards to Poke shop…
Is it that Poke is niche food and hence could have more players than the market can support, compared to Pizza shop, or is it something else?
This shop has been here for 2 years and I see there are few poke shops opening few blocks away. But the sales at this shop have been stable at around 700k. I wonder, if it is people from around 1 block from this shop who come here for lunch, and any other poke shops opening 2 blocks away dont effect this shop. I wonder. I dont know.
As for differentiator. I cant immediately say what is the differentiator here with the shop as is. This was among the first poke shops to open 2 years back and have lots of great reviews. I dont know if I will keep this shop as is, or just use this location and put a poke franchise in there, then I will be relying on the franchise’s differentiator. Pokeworks franchise has 40 stores opened and another 30 stores in the works. Then we have a regional franchise with 7 to 8 stores. So I have to think about that too. The good thing about franchises is that the cogs are low, you get training, and support, but with the royalties and fees, you effectively end up spending as much as independent shop.
I have been thinking a lot about froyo. and I think my gut tells me that Froyo failed cause it was dessert option and discretionary spend, which ppl may or may not do once week. To spend $5 to $10 on yogurt is a lot of money.
While I see Poke, as a legitimate lunch/dinner option especially for the office crowd and everyone has lunch and dinner everyday.
I dont really know how healthy can sweet stuff toppings be with froyo, but poke with rice and fish, seaweed etc, does seem very healthy to me.
But the growth may not continue. At least as far as this store is concerned, in the past 2 years, I am sure everyone has tried it out and made up their minds. So I am also keeping a buffer for 10% drop, in my valuation (god forbid that happens)
