A 2% increase in sales is the same as a 10% decrease in costs. Building sales via modernized marketing systems, increased enthusiasm among guests and media, and optimizing performance creates more sustainable growth and margins than slashing costs ever could.
The restaurant industry is an incredibly complex one. Add marketing to the mix (which is complex, in and of itself), and that challenge is magnified. In the past decade alone, media has evolved to a point at which it would be nearly unrecognizable to the restaurant chains of 2007; and thus it can be hard to tell which marketing tools, channels, and strategies are optimal for each foodservice system.
Creating a business with longevity isn’t about creating great ads or writing catchy jingles, it’s about defining the brand and reflecting it at every touchpoint, enculturating the staff so they become ambassadors for the brand, and developing competitor-proof relationships with your guests.
Strategic Restaurant Marketing
Learning how to market a restaurant is both an art and a science. There are several components of successful restaurant marketing. This isn’t an all-inclusive list, but some top strategic restaurant marketing issues include:
Restaurant Branding: 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 the place you hold in the customers’ or prospects’ mind relative to the competition (the cheaper choice, the higher quality choice, etc.). Effective positioning involves incorporating your Unique Selling Proposition (USP) 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 38k stores globally to install char-grilling pits.
Restaurant Market Research: Restaurant marketing doesn’t happen in a vacuum. Effective 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. Nobody 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 Engineering: The menu is the single most important piece of marketing in a restaurant. Every six to twelve months, you’ll want to conduct an analysis of your menu. This will include profitability analysis and a competitive restaurant 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 as part of Restaurant Marketing: 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.
Marketing Budget for Restaurants: Based on franchisee contributions to marketing, most restaurants stay within a marketing budget range between 2.6% and 7.6% depending on the category. Some are trying harder to leverage marketing and assign up to 60% more than the average for the category.
Types of Restaurant Marketing
There a myriad of different tactics that can be employed for a successful restaurant marketing strategy. We outline some of those here:
Only 6% of people in the U.S. and Europe trust traditional marketing, taking their cues from user-generated content instead. But viral engagement can’t be faked; it has to come from authentic connections between brands and consumers, such as:
Local Store Marketing and Neighborhood Marketing are basically the same thing. It’s a marketing philosophy that seeks to build competitor proof relationships with customers and employees without a reliance on mass media advertising. unless your one of those 100 restaurant companies that’s doing hundreds of millions of dollars in sales per year, you can’t afford not to focus on Local Store Marketing over advertising
Allocations to local versus national campaigns vary depending on the segment and type of restaurant. Pizza, sandwich/burger, and fast-casual chains tend to reach consumers through local marketing. In contrast, casual dining, family dining, and coffee/bakery budgets mostly go toward national programs.
MarTech is the convergence of marketing and technology. Marketing budgets in this area increased seven percentage points between 2017 and 2018, showing that CMOs are devoting more resources to ensure that the brand is reflected at every touch point — including digital ones. Though most restaurant chains are developing digital initiatives, many are not yet taking full advantage of the potential gains of modernizing their marketing efforts.
Affiliate Marketing for Restaurants
This is effectively paying affiliates to send customers to your business (via referrals, purchases, etc.). Affiliates typically get 5-15% of revenue from the sales they generate. Affiliate marketing allows the company to get to a broader audience with a performance-based spend. Affiliates can improve the company’s reputation (“reputation by association”).
One case study of this is when delivery platform Caviar was paying a commission of 8% to its affiliates. With annual orders per customer estimated at at least $140/year, and an average order size of $30, the return on investment could reach 58x (sales-to-investment ratio, conservatively).
Article Marketing for Restaurants
A branch of content marketing, article marketing consists of publishing articles to advertise the business. It can be done both online and offline. One of the biggest benefits of article or content marketing is that it is a relatively inexpensive way to promote a business and allows companies to increase brand awareness and SEO visibility that improves the website rank.
Starbucks, for instance, has a “stories” section on its website, where articles are published covering the community, social impact, and coffee.
Behavioral Marketing for Restaurants
This includes studying people’s behavior and developing advertising and offers based on it. Ads can be targeted to predefined categories such as geolocation, new/repeated visitor, past purchases, occasion. Primarily for restaurants, behavioral marketing would be focused on increasing frequency and/or check size.
Cause Marketing for Restaurants
Supporting a good cause and advertising about it helps rally support for the cause while also creates awareness for the brand. One of the biggest benefits of cause marketing is having a positive impact on brand loyalty, employee engagement, and press coverage. It can also generate new visits.
In 2015, sweetgreen embraced the cause of food waste. The company included in the menu a salad made entirely from food waste (leftovers of ingredients) and donated half of the proceeds to City Harvest. For Autism Awareness month, White Castle promoted $1, $3, and $5 puzzle pieces and donated part of the proceeds from slider-scented candles.
Celebrity Marketing for Restaurants
Engaging celebrities as spokespeople, brand icons, and endorsers helps build brand awareness, legitimacy, and therefore increase sales, and multiply the effect of a campaign or promotion. Endorsements need to be targeted carefully, there needs to be a considerable overlap between the celebrity’s audience and the brand.
As the “destiny” of the brand and celebrity are somehow tied together, there’s also a risk involved for the brand on the break of scandals (for instance, Subway and Jared were very closely aligned, so negative press on Jared personally reflected poorly on the brand overall).
Channel Marketing for Restaurants
Companies partner in marketing a jointly-developed product or their complementary products. This resource sharing can help bring in an audience that is unique to each of the partners and increase sales for everyone involved.
Restaurant Marketing Trends
Not only do the number of channels available for marketing grow every year, as social media platforms pop up overnight and then disappear just as quickly (still miss you, Vine!), but new technologies, like narrowcasting, smartphone apps, and self-ordering kiosks, all demand their own approach. Unfortunately, most restaurant marketing departments haven’t seen a thorough upgrade since 2009: the equivalent of walking around with an iPhone 3G in your pocket.
An Example of How Marketing Has Shifted: Psychographics Versus Demographics
Understanding this simple truth is key to unlocking a distinguished and differentiated appeal (that translates into outsized market share and enterprise value growth). Almost every restaurant chain can compete in terms of price (at least one loss-leading day of the week), and every restaurant promises good food and quality service.
But to really harness a brand’s full potential, chains must dig deeper to understand intent, not just assumed behavior or predisposition (e.g. psychographics over demographics). Sentiment and intent are often lost in antiquated attempts at audience segmentation analysis. In other words, see them for how they see themselves (and communicate definitively where their values and those of your brand intersect).
There are all kinds of rules of thumb that can be applied to successful restaurant marketing, including:
Restaurant Marketing Budgets
Based on franchisee contributions, the largest chains allocate an average 3.9% of sales to marketing. Quick-service restaurants are the category with the highest average spend, allocating a median of 4.6% of sales to marketing efforts. Casual dining is at 3.5%, and fast-casual restaurants at 3% of marketing spend. Though this data is specific to large chains in the U.S., we’ve seen similar numbers across numerous clients globally.
As the battle for diners intensifies, top restaurant chains are paying even closer attention to their marketing efforts. Some of the largest pizza chains — such as Papa John’s, Domino’s, and Little Caesars — have the heaviest spend, reaching more than 6% of sales.
The allocation of restaurant franchisee contributions to marketing also varies across segments. Coffee/bakery systems have the lowest rates, with franchisees adding an average of 2.6% of sales to corporate coffers, while pizza franchisees contribute an average of 6.5% of sales.
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 restaurant’s 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 3:00 PM – 5:00 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 3:00 PM – 5:00 PM. Restaurant marketing can’t change behavior; it can only influence existing behaviors. Spend your restaurant marketing dollar where it will have the best return for your restaurant.
New Trial vs. Frequency, Check Average, and Party Size
The majority (somewhere in the range of 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. Most new trial efforts are spent against mass media advertising, which is costly and has a dismal return on investment. New customer acquisition is 7–10 times more expensive than building restaurant sales through increased frequency, check average and party size.
How to Measure the Effectiveness of Marketing in Your Restaurant
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 restaurant marketing and increased sales, your marketing isn’t working.
Be Different, Not Just Better
Regardless of age, income, education, culture, race, or background, we are all conditioned to notice what’s different. That’s just one more reason to focus on being “different from,” instead of “better than” competitors – betterness is subjective, differentiation is objective. Brands and individuals should focus on communicating their differences, not similarities.
The fact that marketing a restaurant is not easy is part of 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.
Performing periodic, top-to-bottom audits of restaurant marketing objectives, strategies, and activities pays off in the long term. However, it can be difficult to narrow the focus. Those who perform marketing audits shouldn’t just be able to answer “What are we doing?” but also “What should we stop doing?” and “What will we need to do in the future?” You can learn more about how we can help here.
Aaron Allen & Associates is a leading global restaurant industry consultancy, helping clients around the world solve their most complex challenges and achieve their most ambitious aims.
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