Sunday, July 18, 2010

Copycat Chains

I'd like to be a venture capitalist who specializes in founding chains that copy the business idea of other chains. Not too long ago, I was introduced to Cold Stone's, an overpriced ice cream shop (on the order of $4 for a cone) that hand-mixes toppings such as sprinkles, M&M's, and oreo cookies into ice cream. I just recently discovered another chain called Maggie Moo's that uses the exact same technique. I'm not sure that Maggie Moo's copied Cold Stone's directly (it was founded slightly later), but I don't think two stores came up with this same idea independently. Another case of mirror-image chains are Cici's Pizza and Stevi B's, both of which feature excusively fixed-price buffet meals. Stevi B's is a little more open about copying Cici's (well, they don't mention Cici's by name, but they admit to copying someone, and Cici's seems the most likely).

These little stores jump out at me because I have only learned about them recently, but the same goes for larger chains, such as Lowe's and Home Depot, or Staples, Office Depot, and Office Max. If you were led into one of these stores blindfolded and then had the blindfold removed, you would probably not be able to tell which one you were in until you eyes lighted on some reference to the store's name inside.

I'm not saying these copycat stores don't add value. Often they take the original concept and improve upon it, in the way that Papa John's consciously sought to create a better Domino's, or Ryder a better U-Haul. Ironically, the original chain often ends up copying some of the improvements of their competitors, with the result that the stores evolve in tandem and remain very similar. I'm just thinking that the original idea, and most of the implementation, are the most important components, and copying them would be easier than coming up with them in the first place. Of course, copying is no guarantee of success, but at least you know that the market is there.

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