Restaurant Marketing
Restaurant marketing is both an art and a science
that is shrouded in mystery for far too many restaurant owners.
Unfortunately, many advertising sales people don't want you to know
what's really working. They want you to think that the television spots
your competitor is running with them will be the answer to all of yours
sales-building challenges. Not so. This brief report seeks to outline
some of the restaurant marketing techniques and principles that are
working in successful restaurants around the country.
Let's get started with some of the most frequently asked questions
restaurant owners ask when seeking a better way to market their
restaurants.
What are the keys to great restaurant marketing? There
are several components of successful restaurant marketing. This isn't
an all inclusive list, but some top strategic marketing issues include:
BRANDING: There has been lots of hype over the last
few years about branding. We're all being told we need to do more
branding and a better job branding, but no one has really stopped to
explain what a brand is and how you build it. A brand is a promise.
It's what customers, employees (Internal Customers), vendors, the media
and all other key constituents come to expect in dealing with your
restaurant. Brand-building is closing the gap between what you promise
and what you deliver. A strong brand is one that has alignment between
the promise and execution. It's not something that happens when you
advertise, and it's not that people recognize your logo or recall your
advertising.
POSITIONING: Positioning is an underleveraged
restaurant marketing component. Positioning is the place you hold in
the customers or prospects mind relative to the competition (the
cheaper choice, the higher quality choice, et cetera). Effective
positioning involves incorporation of your Unique Selling Proposition
(U.S.P.). The USP is the one thing that only you can claim. It's a
point of differentiation that the competition either cannot or does not
claim. An example is Burger King versus McDonald's. If Burger King can
convince you that a flame-broiled burger tastes better than a fried
burger, they've won the war because McDonald's will never go into all
14,000 stores and rip out fryers to install char-grilling pits.
DUE DILIGENCE: Restaurant marketing doesn't happen
in a vacuum. Effective restaurant marketing must be built on a
foundation of fact and knowledge about the market, your competition,
your customers, your Internal Customers, financial history, marketing
history, the industry, and outside forces that will impact your
business. It's a lot to worry about, but restaurant marketing has to
factor these considerations into the overall strategy. Not even
Coca-Cola can afford to market to everyone all the time, so effective
market research and due diligence can help you be more effective in
your restaurant marketing efforts.
MENU MIX: Every six to twelve months, you'll want to
conduct an analysis of your menu. This will include profitability
analysis and competitive menu analysis. To keep your menu fresh,
relevant, and profitable, you'll need to know specifically how each
item on your menu is performing and also how it stacks up next to your
top competition. Think of each item on your menu as a tenant leasing
space and it has to earn its right to the space you've granted it.
TRAINING: Marketing, human resources, operations
and training are inextricably connected. You've heard before that great
marketing will just kill a bad operation faster. That's because if you
send people into an operation that is performing at a B- level or
below, people will have a bad experience and your money would be better
spent on operations improvement rather than marketing. Training is a
vital component of restaurant marketing for this reason. Your training
will have to go beyond just employee orientation. You'll need an
ongoing program that constantly improves and evolves your staff
competencies. It's also a good idea to include a restaurant marketing
component in your training program so that you have a staff of
ambassadors to help your sales-building efforts.
There's only 4 ways to increase sales for your restaurant:
Sales-building is so much easier when you know how it works. And
fortunately, the methodology is much easier with the following
definitions. Every effort you could make to build sales falls into one
of just four categories. Every promotion, advertisement or offer will
push one of the following four buttons:
NEW TRIAL: These are first-time customers buying
from you for the first time. They will establish their opinion of your
company during this first purchase and decide what percentage mindshare
to award you in the future. New trial is the most expensive of the four
sales-builders as acquisition costs are typically 7-10 more costly to
execute than the other sales builders. However, it is impossible to
increase frequency, check average or party size without customers to
start with. After a customer base has been established, however, it is
advisable to focus considerable efforts on the sales-builders listed
below.
FREQUENCY: Is how often existing customers return
to you for future purchases. Frequency is generated by developing
enduring relationships and loyalty among customers. While it is rare to
disagree that frequency is important, an alarming number of businesses
fail to appropriate the needed mindshare and resources to developing
successful programs. Consider that the average Pizza Hut loyalist
purchases a pizza every 30 days. If Pizza Hut can get this group to
purchase just one more pizza in those 30 days, they'd double their
sales. So why do they blast the airwaves versus developing more
successful frequency programs, such as bouncebacks, loyalty programs
and the like? You've got me.
CHECK AVERAGE: Often refers to the total purchase
for each transaction. In this instance, however, we are referring
primarily to per person check average - the amount each guest or
customer spends at purchase. Check averages can be built through price
increases, suggestive selling programs, effective internal
merchandizing, and through add-ons or upgrades to name but a few
techniques. You'll want to make sure that the increase in check average
remains consistent with your overall positioning strategy.
PARTY SIZE: As the name would suggest, Party Size
refers to the number of people in each party. Do customers primarily
visit alone, in groups of 2, groups of 5 or more? Whatever the number,
you'll want to devise programs that encourage customers to bring more
of their friends with them for each visit. Examples of programs include
bus drivers eat free, birthday clubs and refer-a-friend tactics.
Encouraging party size turns customers into advocates and enlists them
as part of your sales-building team.
When asked what was the single most important event in helping him
arrive at the theory of relativity, Albert Einstein was reported to
have said, "Figuring out how to think about the problem." Use the above
definitions help you better frame the challenge of growing your sales.
How much should we spend on marketing our restaurant?
There are several rules of thumb and ratios in the restaurant
industry and there are some for restaurant marketing as well. A typical
restaurant should allocate 3% - 6% of sales to marketing. It's also a
good idea to allocate this money proportionally to your sales volume.
Meaning, if July is your busiest month, you should spend a
proportionate amount on your restaurants marketing budget in that
month. Fish where the fish are biting. Some restaurant owners look at
slow periods and think that's when they need to spend money to drive
sales, so they spend a big chunk of cash trying to build a happy hour
business and forgo building on top of their busy periods. Fact is,
there is a reason people aren't coming in from 4:00 PM - 6:00 PM and
you'll be sending valuable marketing dollars down a black hole if you
try to build this period. There are nearly one million restaurants in
the United States and probably only 2% of them are busy from 4:00 PM -
6:00 PM. Marketing can't change behavior; it can only influence
existing behaviors. Spend your marketing dollar where it will have the
best return for your restaurant.
How do most restaurants market themselves?
It's sad really, but 80% - 90% of restaurant marketing budgets are
spent against new trial - getting a new customer to visit for the first
time. This is the least effective place to spend your money. The
majority of new trial efforts are spent against mass media advertising,
which is costly and has dismal return on investment. The fact is, new
customer acquisition is 7-10 times more expensive than building
restaurant sales through increased frequency, check average and party
size. But restaurant marketing isn't always about what's most
effective, more often, it's about what everyone else is doing.
Restaurant operators see that their competitor is on television or in
the yellow pages or on a billboard and that they should be too. They do
this without regard for what's working. Restaurant owners have to wear
so many hats that sometimes they just do what's easiest - they write a
check for mass media advertising and hope for the best. Mass media is
often more about feeding ego than driving sales. It's also impossible
for most companies to compete in a toe-to-toe battle with the big guys.
Subway spends $290 million per year on television. They can do that
because they are a multi-billion dollar enterprise - a title less than
100 restaurant corporations in the world can claim. The question you'll
have to ask yourself is do we want to jump off the bridge just because
so many other people are?
Who is doing a great job marketing their restaurant and what works about their restaurant marketing efforts?
There are several examples of companies large and small that are
doing a great job. I'll give you some examples of each. On the larger
side, Starbucks is doing an awesome job. They spend more money on
training than they do on advertising. They do a great job with their
internal merchandising and their menu is very focused. They don't spend
money on mass media and instead focus on a core product line and
flawless execution. They are now the fastest growing take-out operation
in history. A great example of a regional chain that's doing an
impressive job with marketing their restaurants is Firehouse Subs. They
have strong internal merchandizing, training and culture programs. They
also have a very impressive direct mail program. They send out
quarterly saturation mailers offering a free sandwich with no strings
attached. The mailers draw double-digit responses and drive equally
impressive comparable store sales improvements. Research showed that
70% of the people that redeemed the cards became loyal customers
visiting with a much higher frequency than the industry
average.Examples of successful independent restaurant marketing abound.
Charlie Trotters is world-renowned, but you've probably never seen a
billboard or television spot for them. Charlie Trotters does an
incredible job with promotion and positioning the namesake chef as a
culinary expert. When you visit Chicago, you want to go to his
restaurant just for that reason - not because of any advertising he has
done.
What are some examples of good restaurant marketing tactics?
There are literally thousands and thousands of marketing tactics
that you could employ to lift sales at your restaurant. This causes
many restaurant operators to think that there is a silver bullet out
there that they need to find. There are no silver bullets. One hit
wonders may be out there to give you a big spike in sales, but those
are rarely sustainable over time. Great marketing is about solid
operational execution, effective positioning and the cumulative results
of marketing inside the four walls of your restaurant and in the
immediate trading area - not taking over the airwaves.That being said,
some good examples of successful restaurant marketing tactics are email
marketing, bounce-backs, affinity marketing programs, publicity through
event marketing, partnerships with other local retailers and, of
course, internal merchandizing such as bathroom signage and menu
merchandizing.
How do I measure the effectiveness of our restaurant marketing?
If you cannot prove the dollars you spend persuade people to do
business with you, you should not advertise. If you can't see a direct
relationship between marketing and increased sales, your marketing
isn't working.One piece of analysis we have conducted for Clients is to
compare the variances, period over period, for sales and marketing
expenses. We look to determine a correlation. It's amazing how
frequently we find that there is absolutely no correlation between
sales and marketing. The graph here is an actual Client chart that
shows this relationship. This was an independent restaurant operation
that had a steady period over period sales increase of around 8%. The
other line represents their advertising expenditures. As you can see,
there is absolutely no correlation between the two lines. For this
independent operator, that represented about $150,000 in advertising
dollars that could have gone straight to the owners back pocket
instead. This restaurant owner had solid operations and he wouldn't
have felt any change in his sales volume for at least a couple of years
by canceling his advertising. The advertising wasn't working. After
some modifications, we ran the analysis again and found that each
dollar spent had a direct impact on sales and showed a positive return
on investment that could be measured. Before the measurement wasn't
there, so it was hard to say with absolute certainty if the advertising
was working. The poor marketing was masked by the increases in sales,
but one had nothing to do with the other.
The fact that marketing in not easy is part its competitive advantage.
Effective restaurant marketing isn't easy. It takes a lot of careful
research, analysis and testing. It's also ever evolving, which makes it
even more difficult to master. The most difficult part is that
restaurant owners are in the restaurant business, not professional
marketers. But don't be discouraged. It's not all gloom. The fact that
effective restaurant marketing is difficult to master is what can give
you the competitive advantage. Resist the temptation to change
everything at once or to go it all alone. You can start small and build
your marketing competencies over time. In the beginning, do simple
programs so you can execute them well and measure the results. And if
you're not sure if your current marketing is working, save your money
until you can prove the dollars invested persuade customers to buy more
and buy more often.
Aaron Allen is Founder/CEO of Quantified Marketing Group,
an Orlando based strategic marketing consultancy that specializes in
the foodservice and hospitality industry. He can be reached at aallen@quantifiedmarketing.com