Secret Sauce - Strategy Lessons from Le Relais de l'Entrecote

Some years ago, I wrote a series of blogs on the principles of good strategy, with a focus on the importance of choice.

I said, at the time, “Good strategy is a complex of choices that are consistent, complementary, and mutually reinforcing. They are individually coherent and collectively powerful. Choice, properly framed, is recognisable by the yes / no answers to the implicit question posed: this market or that; these customers or those; this product or a different one … Choice always carries its corollary – all the options that were rejected in the process of choosing a way forward. The narrative of strategy is as much about what was excluded as what made the final cut.”[1]

LE RELAIS DE L’ENTRECOTE

I was reminded of this recently by an experience with my wife and daughter[2] in Paris. A friend recommended we eat at Le Relais de l’Entrecote where, as the name implies, we could expect a good steak dinner. The recommendation came with a warning, however: the restaurant doesn’t take bookings and most likely we’d have to queue to get in.

We found Le Relais down a side street off the Boulevard Saint Germain, and there was indeed a queue outside, stretching halfway down the block.  A quick, dismayed glance estimated some 50-60 people ahead of us in the line.

My first instinct was to turn tail and head back to one of the scores of half-empty restaurants we’d passed along the way, but instead we opted to queue and I’m glad we did, or we’d have missed one of the more memorable and enjoyable meals of the year. But it wasn’t just the food, the company, and the ambience – as a strategist I particularly appreciated the way the different elements of the experience fit together, like the parts of a well-crafted puzzle, to produce a seamless whole.

Outside

Even from our initial, unpromising position, the queue felt different, somehow:

• First, no sooner had we taken our place at the end of the line than more people arrived. Within minutes we were far from the last – clearly this was a destination with serious pulling power – which immediately validated our decision to stay.
• All around us there was a buzz of low-key excitement and anticipation, a sense of something shared – turning what might otherwise have been a mundane inconvenience into an event.
• Instead of the irritation or impatience one might normally feel, there was a sense of goodwill. People were smiling and laughing, glancing hopefully up the street towards the light spilling from the doorway; kids perched on bollards and window ledges to take a break from standing; strangers greeted strangers.
• The line moved forward slowly, but still it moved. There was no feeling of stasis or gridlock. Up ahead I could see people leaving the restaurant and those at the head of the queue being ushered inside.
• Someone was staffing the door, checking party sizes, and matching those going out with those waiting outside, bringing people in when places came free, even if it meant temporarily leapfrogging larger groups.

Time passed easily: we blew into our gloved fingers and stamped our feet in the cold night air, confident our time would come.

Inside

It took us about 45 minutes to get to the front of the queue, and then no time at all to be seated and served. The restaurant was large enough to explain the regular turnover of customers I’d observed from the queue, but not so large that it felt cavernous or impersonal. As one would expect, the tables were fully occupied and packed close together, but again, without feeling overcrowded or oppressive.

You don’t go to Le Relais for fine dining or cuisine minceur. There’s no Michelin star on the door, and you won’t find the latest innovations from some named chef. It’s not somewhere you’d choose for a business meeting, nor is it particularly cool or romantic: the restaurant would be a surprising and, most likely, poorly received choice for a marriage proposal. (On the other hand, it could work for a first date: there’s enough to talk about to fill even the most awkward silence.)

What it is, is a feelgood experience: you go with friends and family (old and young, if they’re prepared to queue) to have a good time, celebrate a birthday, or mark the end of a long week. This kind of no-nonsense, WYSIWYG (what you see is what you get) approach is the product of a series of choices that, in keeping with the principle of good strategy articulated above, is consistent, mutually reinforcing, and collectively powerful.  

THE PARTS OF THE PUZZLE

Speed

The waiters are trained to keep things moving. They are friendly, good-natured, and professional, and there is no overt pressure to eat and go, but the service is so quick that somehow you’re done and dusted in less than an hour. Within minutes of sitting down, the waiter has taken your order and the starter arrives. There’s barely a gap between courses and no struggle to attract someone’s attention for the bill: the waiter brings it to the table and clears away the dessert at the same time. Without quite understanding how it all happened so fast, you’re shrugging into your coat and making for the door. Behind you, the table is readied for the next group, and outside, the queue moves forward another yard.

Modular Format

All tables are the same size -a small, wooden square seating 2 people facing each other. To accommodate larger parties, simply add more tables in multiples of two: 2 tables for 4 people and so on. To optimise total available floor space, tables can be configured in different arrangements to fit the shape of the room, like the blocks in a game of Tetris.

Sweating the Assets

The combination of speed, modularity and the no-booking policy means that tables are never left empty while the restaurant waits for reservations to turn up, or the right party size to come in. This allows Le Relais to make exact forecasts of the number of covers (meals served) per night and maximise revenues from its principal asset: table space. Most restaurants have 2 seatings per evening – 3 at most – but Le Relais can turn over the same table up to 5 times a night.

Simplicity

Fast turnover of covers is a function of the absence of delay between arrival, service, and departure – made possible by entirely predictable orders. The waiters know what the customers will be eating before they arrive because … there is only 1 starter, a walnut Caesar salad, and only 1 main course on the menu: a sirloin steak cooked either rare or medium, and served with the secret house sauce and a side of pommes frites.

That’s it.

If you don’t like steak, if you’re vegetarian or vegan, you need to find a different restaurant.[3]

Efficiency

Predictability of demand (both the ‘what’ and ‘how much’) means the kitchen can work efficiently with no time lost waiting for orders to come through, and no yield loss at workstations which occurs when chefs switch between dishes. This allows a steady work flow, with the kind of just-in-time production you might find at a busy fast-food outlet, but at a far higher level of quality and experience.

Quality and Quantity

The kitchens are not only efficient, but the focus on a single dish means that the chefs are very, very good at what they do. The food is outstanding – melt-in-the-mouth delicious - and it arrives hot, fast, and abundant. The portions are more than generous: in a disarming, customer-delighting twist, you get two helpings for your money. As soon as you finish your main course (or think you have), the waiter arrives with a chafing dish containing the second half of your order, and fills your plate again

Economies of Scale

High turnover, and a limited menu enables Le Relais to take advantage of economies of scale which keeps down the cost of raw materials and drives an affordable pricing policy. This, in turn, is consistent with the specific dining experience the restaurant has chosen to provide, to meet and exceed the expectations of the target customer segment.

Value for Money

Le Relais de l’Entrecote prices itself in the mid-range: it’s not the cheapest steak on offer in Paris, but certainly not the most expensive either. However, the combination of affordability, quality and quantity means that it may well be the best value for money you’ll find, which is how the restaurant stands out - and wins - in a crowded field.

FOCUSED DIFFERENTIATION – THE SECRET SAUCE

Dinner at Le Relais, on a cold November Sunday, was a reminder that good strategy doesn’t have to be complicated or arcane, or set out to change the world: it can be as simple as delivering the perfect steak, time after time, to hundreds of people every day.

The Harvard Business School strategy guru, Michael Porter, describes two fundamental routes to sustainable competitive advantage[4]: cost leadership (i.e. providing the same products and services as competitors, but at a lower price), or differentiation, which comes in two broad flavours:

• Disruptive, innovation-led differentiation – think the iPhone and photography (a high risk, high reward strategy);
• Focused differentiation - continuing to work within recognised parameters, but finding a niche that provides unique value to customers (hard to get right, but very profitable).

Le Relais de l’Entrecote is a focused differentiator and that, ultimately, is its secret sauce.

It doesn’t try to compete on price and nor does it seek to turn the steakhouse business on its head: it does the same thing as its competitors – only better.

[1] The Principles of Good Strategy

[2] Thanks to Emma, for suggesting this blog.

[3] Admittedly, there are a few more options for dessert, but these are also based on a limited palette of simple ingredients: chocolate cake, fresh raspberries, Chantilly cream, crème brûlée. 

[4] Competitive Advantage, Free Press, New York, 1980.