Welcome to the 52 new subscribers who joined this week!
Each week I help founders & marketers spark their creativity by sharing a new product idea & how I'd launch it.
Today's product idea - tip-less restaurants - already exists around the world but is absent here in the U.S. It's been tried in U.S. but never (that I know of) successfully. Keep reading to learn how I think it could work.
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First, a few updates from me:
Can you answer 3 questions about how you're enjoying or not enjoying the newsletter? Takes just 30 seconds! I want to make the Looseleaf Cannon the best thing in your inbox each week.
I'm 3/4ths of the way done with Ship30for30. Here are my best screenshot essays of the week:
The skill you can cultivate that's more powerful than a Harvard diploma
- Hint: you do it daily, but can improve at it by intentionally practicing.
Why just committing to something matters more than what you commit to
- There aren't any winning tactics, just one winning strategy: focus.
The most important lessons I learned homeschooling
- Among them, optimizing for interesting, & choosing your own path.
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Now on to this week's product idea: Tipless - a restaurant without tips.
Here's the value proposition:
- Customers get to rest easy knowing that their servers are getting paid full wages & that the menu price is what they'll actually have to pay.
- Employees get more stable earnings & get to focus on their job without stressing about tips from any individual customer.
How I'd launch:
- Coincidentally, now's a great time to start Tipless, as the easiest way to launch would be to buy a restaurant that recently closed. You'd have access to their personnel, building, menu, & equipment, for pennies on the dollars, which would let you focus the majority of your energy on what differentiates you: compensation innovation, crafting a brand, & building hype.
- With Tipless, there's a lot of potential to create pre-launch hype. A closed restaurant reopening tip-less is at worst interesting, & at best an amazing story any journalist would love to pick up. Use helpareporter.com to find journalists to pitch the topic too or who are already looking for stories on a given topic. I'd also email the editors of food & lifestyle blogs, & city or tourism magazines. For reporters it's a win-win. They get a good story, you get free press.
- As a bonus, here's a starter list of slogans to improve on & test: "Just like that cheap bar from your study abroad, we don't charge tips", "Everything but the tip", "We dare you to try tipping our waiters", "Everything included: taxes, tips, & satisfaction". The point is, "no tipping" restaurants are new to most Americans, making it easier to catch people's attention.
How I'd scale:
- To create a sustainable long-term advantage, I'd focus on becoming a thought leader on the topic of fair pay & treating employees fairly. Whereas many restaurants might adopt "no tipping" as a feature, I'd embrace it as part of my identity & make it our "Why". Ideally, I'd be speaking at conferences & writing articles about the importance of equitable employee treatment & make it central to our "About us" page, which by the way, is the most visited non-home page on a website. Customers shouldn't be able to visit Tipless' website or the restaurant without becoming gleefully aware of our "no tipping" & why we don't do it. Dominate the space & become the go-to restaurant people associate with fair pay, & ethical business more broadly.
Why Tipless would work:
- Don't underestimate how much free marketing you can get by just being different. When 99% of restaurants expect tips, not collecting them is truly a unique experience. Restaurants rely on word-of-mouth & unique experiences cause people to talk.
- Restaurants here in Chicago are packed to capacity (partly due to restaurant closings, partly due to capacity restrictions). Without a reservation, it's almost impossible to find a place to eat on a weekend. Once Tipless fulfills COVID safety guidelines & masters the pivot to online & take-out, it would be packed, even without its "no tipping" differentiator.
Why Tipless might not work:
- Eliminating tipping isn’t completely brand new, so will the idea actually get people excited? I hope so. For previous restaurants, not charging tips has been a feature rather than a part of their identity. Only by leaning in to no tipping can Tipless harness its full benefits.
- You'd have to offset no tips by increasing prices, which risks customers ordering less or not returning. Tips exist because they're a proven way of making prices seem lower than they are & guilting customers into paying more. Tipless is a bet that transparency & fair pay will make for a more satisfying experience.
- In the past, when some restaurants eliminated tipping, they discovered that their servers actually preferred making tips. To mitigate this risk, you've got to both increase employee pay & introduce alternative performance-based bonuses. One option could be having a pay-what-you-want dessert where the server keeps any amount above a certain minimum.
- Relying on one differentiator can be risky. If all Tipless' competitors suddenly abolished tips, what would keep customers coming back? By buying a recently closed restaurant with a proven, you benefit from real food expertise & a proven menu. But will this be enough?
Question for you: how can you get more exposure by embracing being different? (in your career, business, or hobby)
That's all for this issue! As always, respond with the biggest challenge you're facing & I'll try to help if I can.
Cheers,
Luke
P.S. Can you answer 3 questions about how you're enjoying or not enjoying the newsletter? Takes just 30 seconds! I want to make the Looseleaf Cannon the best thing in your inbox each week.
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