Piqued Demand

I was happy for them at first, before I saw it with my own two eyes.

Christmas eve had gotten away from us. Still no set meal plan as we headed to evening church services and limited options available. Our group quickly settled on takeout from our favorite Chinese restaurant, just a short distance from our home. Their food is always hot and delicious, and the service impeccable – food always waiting when we arrive.

Gave them a ring as we strolled out of church. The first attempt went directly to voice mail. Unusual. Usually two rings or less and we had a cheerful voice on the other end. Second call went through on four or five rings. A familiar voice, but strangely frantic, apparent chaos in the background. Glad for the order and food would be ready in forty minutes. FORTY MINUTES???? We were used to ten, but it was Christmas eve. I had a newfound sense of just how many people have seen A Christmas Story in the thirty-plus years since it originally ran in theaters.

It was one of those “soft” demand attributes that the average econometric modeler cannot capture until observed or experienced in person. The ice cream stand on the beach on the 4th of July. I was blind-sided, feeling sheepish at my narrow field of vision, but more than anything thrilled for our friends, whose restaurant we had visited regularly for at least ten years, but never on Christmas eve. Our friendly, gracious, hard-working purveyors of Szechuan fare were having “that moment”. Santa showed up early!

I have no hard data to support this, just ten years of patronage….my guess is that this establishment does 75-80% of its business on takeout. It occupies a tiny bay in a retail trip center, with a very limited eat-in seating arrangement. Probably 6-8 tables, which on most of my visits are at 25% capacity. Many times, no one is seated at all, just a few people in line at the register for pickup.

My heart sank for them when I arrived. Every table was occupied. Only one had food on it. There were about a dozen people standing, waiting for takeout, in no real semblance of a line, just wound around tables in any open floor space. I stepped outside to wait, instinctively knowing that my 40 minutes was probably a light estimate, and I was maybe 20 minutes into it. I was not in a hurry and perfectly content to hang out and text some Yuletide wishes to friends. Once separated from the action, the scene took on a fishbowl quality. I found myself intent on processing what I was observing. It seemed such an unusual, exaggerated business problem of meeting peak demand. Selfishly, I felt a little reassured as I surveyed faces and body language. I was not the only one who was stunned by the extraordinary demand. How could we all be so naïve? Ralphie Parker. Humph. His family had the Chop Suey Palace to themselves!

I settled down on the sidewalk bench under their neon sign. “Open”. Missing: “Danger Zone”. I had certainly completely whiffed on this one, but was this the first time the owners had experienced a Christmas eve of this magnitude? From a people perspective, the owners seemed to have anticipated it. Every family member I had ever seen working in there, at any point over the past ten years, was in the restaurant. Was it possible that one of the stoves was out? I did not wander back to the kitchen to see if all the burners were hot. Knowing what THEY knew about Christmas eve, did they have a “Plan B” for a malfunction of any kind?

To me, there was a lot at risk for our friends. Big upside if they make it through the evening. Yet, a calculated gamble on the goodwill and trust they had built with clients over years. The downside was significant. I am no saint, but I had enough compassion to ride through it without complaint, although a bit disappointed when I got home and found two items missing. But that was not the universal experience. Sighs. Heads in hands. Pacers. Out for fresh air and back in – multiple times. One guy apparently from Missouri demanding an audit on his order of $95 before he left the restaurant. The teenager who brought out the food squirmed but nonetheless accounted for everything. Probably made me overly gracious on my own order. It was a chaotic scene.

I will probably not do Christmas eve there again, but I will certainly be back on our normal routine. I am not so sure about others. My guess is that there is an inverse relationship between client tenure and defection rate. On my next visit, I will ask if given the opportunity – “what happens here on Christmas eve?”

For now a few quick thoughts on matching demand to capacity at peak times. This is an exaggerated example but the lessons are the same for any predictable demand surge.

Client connection. Over communicate with your clients in advance of the big day. If retail, in-store notices at a minimum, well in advance of the big day. But why take the risk that your clients may forget, or not come in during your promo window? Capture client information throughout the year and email or direct mail every single client, offering coupons even if key cutoff times can be met to level demand on the big day. Great opportunity to thank them for all their patronage throughout the year. If your clients can tell you what they need in advance, you have a great chance of being prepared.
Operational Excellence – shorten cycle times by modularizing production of popular items. Have it halfway ready to go before the big day. Lean on suppliers for just in time delivery of key items wherever possible. Offer incentives to staff for WOW-ing clients during wait times, or for exceeding typical production targets.
Excess capacity. Is there any part of your delivery process that can be temporarily expanded to adjust for the spikes? Personnel, floor space, storage space, equipment? All of it is extra expense, but do not forget the additional revenue.