Tag Archives: marketing

Can I use coupons to build my business? It works for restaurants like Papa John’s.

Posted on March 2, 2008 by bodellconsulting| 6 Comments

In most cases, coupons are a path to disaster. Coupons undervalue your product, and getting customers to come in with coupons doesn’t give them a good idea of what type of value you really offer. You end up with customers that think your restaurant is a good value, “with a coupon”. Then, they wait til the next coupon to come out before they come back to your restaurant.

As far as chains that use coupons, they know something the average independent operator doesn’t. They have a sales history showing them how much of their sales are given away in the form of coupons. They track their discounts, and they price their coupon marketing strategy into their menu. If a pizza costs them $3.00 to make, and they need to make $7 gross profit for every pizza they sell, they know they have to make the regular price of that pizza $12 or $13 so they can send you a coupon and make you think you’re getting a good deal paying only $10.

How many people really pay $18.00 for a large pizza at Papa John’s? None. People wait until they have coupons. Sure Papa John’s makes money, but they know they’re not earning repeat, full price, customers by sending out coupons. They know how much money couponing is costing them, and they adjust their prices accordingly. They then use coupons as a “trick” to build value into their product.

Can coupons be used responsibly and still allow for a profit? Sure, if that is part of your marketing and pricing strategy from the get-go. Outside of that, coupons should only be used to promote items that earn you MORE gross profit than you need to make money AFTER the discount is applied. Even then, I suggest never offering a flat percentage discount, and only using coupons to promote package values, or to give freebies that are “extras” that won’t detract from the gross profit you’ll make by selling the rest of the meal at full price.

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How much should I budget for marketing in my startup?

Posted on February 4, 2008 by bodellconsulting| Leave a comment

It’s common for startup restaurants to budget an initial 10% of their sales to go toward marketing in the first few months. If no one knows who you are, it can take some $’s to get known.

After that, it’s more common to see 2-4% of your sales being directed toward marketing. As far as how to break that down, that depends on a lot of factors, including your ability to do much of the work yourself. The less you are in the business working, and the greater ability you have to design and print your own materials, the less of your sales you will spend on marketing. Different marketing mediums work differently for each business also.

No matter what you budget, you’ll want to focus your personal effort first on the most inexpensive marketing tactics, like shaking hands and giving out samples with menus to get your name and product in front of people. You’ll also want to concentrate a lot of effort on building your customer database. Marketing dollars spent communicating with anyone who has already been in your restaurant will most likely yield the greatest return on marketing dollars.

Of other factors that will determine how much you need to budget, your location, visibility, and accessability are the most important. A good location, combined with ease of access, and visible, well designed signage can go a long ways to drive traffic into your business, eliminating some of the need for costly marketing campaigns.

Your message itself will also affect how much you will have to spend on marketing too. If you have a good unique selling proposition, and use it effectively, you’ll have to spend less to get people in your door. If your concept is confusing to people, if you try to be too many different things to too many people, or if you fail to follow through with your USP’s promise, you’ll have a hard time filling seats no matter how much you spend.

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Unique selling point – vol. 2

Posted on January 31, 2008 by bodellconsulting| 1 Comment

See “Unique selling points – vol. 1
I hear all the time from owners and operators that companies like Applebee’s are successful because of their big advertising budgets. I say “bull”. Applebee’s, for example, is successful because of it’s branding. It’s the effectiveness of their marketing that gives them their competitive advantage, not the number of dollars they sink into it. Branding yourself is more than just employing millions of dollars worth of repetitive marketing. That is not why the marketing programs for chains work.

Branding yourself starts, the whole marketing program starts, with choosing a unique selling point, choosing that thing that makes you different. Here’s a clue for that thing; It’s NOT your food or service. If you’re running around telling everyone your food is better, you sound just like everyone else. That’s not unique, it’s the opposite of unique. No matter how much you tell everyone how great your food or service is, you’re not giving them any reason to come to you that all your competitors aren’t also giving them. Point of clarification: ALL YOUR COMPETITORS THINK THEY HAVE BETTER FOOD AND SERVICE THAN YOU, AND THEY TELL EVERYONE THEY CAN.

While there are people that will say a certain place has the best food, or the best service, these are only perceptions, and perceptions can be based as much on a businesses marketing as it can it’s product. Keep in mind, there are millions of people out there that think Applebee’s food is better than anyone’s, including yours. Is that an opinion based on any type of objective analysis or professional expertise? NO! It’s an opinion, most likely driven by emotion, the emotional bond Applebee’s has formed with that customer. Let’s face it, 9oz steaks and microwaved vegetables are NOT better than your food. No way. But…. to those people that go to Applebee’s religiously, it’s perceived as better, or at least a better value, and perception is reality.

So Applebee’s has millions of marketing dollars to brainwash their customers, and that’s why so many people think they’re the best, right? WRONG! It’s not the marketing dollars that create the perception, it’s the effectiveness of the message.

One thing Applebee’s did from the beginning, back in 1980 I think, they chose a unique selling point. They created a story or an image that separated them from their competition. Then they created a moniker to support it, and designed their store around that USP. Applebee’s markets themselves as “America’s favorite neighbor”. They sell their customers a sense of community, whether their customers recognize it or not. Notice the unpretentious design to the inside of an Applebees. The stained glass windows in the door. The fixtures that almost make you think of the nice old couple down the block. Notice how they make an effort to decorate their stores with photos and memorabilia from the city or region that the store is in, or when they can’t, other items you would expect to see in that nice old couples garage or house.

Applebee’s sells their customers a sense of community. They want to be viewed as that favorite neighbor on the block, that nice old couple down the street. By doing this, they attach themselves to an emotion present in everyone, the need for community, the comfort of being at a beloved neighbor’s house.

THAT is a USP. Notice, I didn’t once mention food or service anywhere. Food and service can also back up the USP, but it can’t BE the USP, because there is nothing unique about claiming you have better food or service than anyone. A USP separates you from your competition, it doesn’t lump you into the same group. Then, when you have built your concept effectively around a USP, you will begin to make that emotional connection to your customer that is stronger than any connection you can make with your food or service. If you’re really good at delivering on your USP, and you push it in all your marketing from your logo to your ads, you will effectively brand your restaurant as THE place to go when customers want to feel the way your USP claims you will make them feel.

Emotions are the primary reason for humans to make any buying decision. Big corporations know this, and they employ marketing companies that help them exploit this. Armed with emotion marketing, the quality of food and service becomes secondary, as people can be marketed into believing food and service is actually better than it is. As I’ve said many times, that doesn’t mean good food and service aren’t important, it just means they are a minimum requirement for being successful, not the primary reason for it.

Once again, it’s not the big ad budget that makes companies like Applebee’s strong. It’s the effectiveness of that marketing message.

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Stick to the news, Mr. Markel

Posted on January 15, 2008 by bodellconsulting| 3 Comments

Alex Markels a writer for US News & World Report made the following observations regarding the success of Chipotle Mexican Grill, a high volume fast casual concept.

A Tested Recipe: Five Ingredients
Five lessons for start-ups from Chipotle Mexican Grill
By Alex Markels
Posted January 9, 2008

It’s the food, stupid. Its hip surroundings and green ethic notwithstanding, Chipotle succeeds because its food tastes better than the competition’s. Customers pay an average of about $9 for the privilege.

Keep it simple! With just three menu items, Chipotle takes advantage of a straightforward production process that keeps costs low.

Fast is still important. As good as Chipotle’s burritos taste, customers won’t line up for them if the line doesn’t move quickly. And now they can preorder their food online.

There’s always room for improvement. Chipotle upgrades ingredients and processes. Example: ceo Steve Ells found that salsa tastes better when onions are cut by hand instead of by machine.

Embrace your “enemy.” Ells shrugged off investment bankers and venture capitalists in favor of McDonald’s to grow the business. The chain helped with purchasing and distribution, too.

I’d have to disagree with Mr. Markels first point. While Chipotle does offer better ingredients than Taco Bell and some other fast food, it can’t touch the quality of food put out by authentic Mexican fast food restaurants. I don’t taste the real chiles in the meat (though they’re certainly there in the sauces), and there are some authentic Mexican seasonings I don’t taste in the meat such as cinnamon. I still think their food is good, but I would put them barely in the top 50% of what’s available in my area and many others that I’ve been to as far as food quality goes. They only rank just above the other fast food chains, but below the fast food independents. I will say that their sauces suit my personal taste though.

I would replace “It’s the food, stupid” with two other reasons for success. “It’s the marketing” and “It’s the business model”. Chipotle’s concept design as a “fast casual” themed restaurant instead of “fast food” made it a market leader (once McDonalds gave them the money to go national). They gave customers a better atmosphere to eat Mexican fast food, and they were the first in the market, something that is very important to be a market leader. At the time, this gave them a unique selling proposition, something else extremely important to success.

They are also “masters of the promotion”, and find ingenious ways to attract people to their restaurant on less than well known “holidays” such as Tax Day, April 15th, where many Chipotles handed out mock tax forms called the “BurritoEZ”, which customers could fill out for a free burrito.

The “green” building practice is also a function of marketing, as well as their emphasis on the integrity of their purchasing practices, which get’s promoted in their stores.

Their business model is another huge reason for their success. The single most important aspect of achieving an incredible growth rate is having a business model that offers an incredible return on investment. Partnering with a company with “unlimited” resources like McDonalds doesn’t hurt either, but that partnership wouldn’t have happened if Chiptle didn’t already have a business model that made it a great investment, in a segment (Mexican) that was growing fiercely. Another good example of a company whose marketing and business model overshadow the food they are so proud of is Subway. When you can return an investors total investment in 2 to 3 years, you are going to have a lot more investors interested in opening your concept. In Chipotle’s case, instead of franchising, they attracted McDonalds as a business partner, whose capital grew them from 14 stores to 500 stores. The food didn’t facilitate that, there’s plenty of better fast Mexican food out there. Neither did demand for their product, they were a very small chain when McDonalds got involved. Brilliant marketing and an attractive business model is what made them in my opinion.

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You do have a customer database, don’t you?

Posted on January 15, 2008 by bodellconsulting| 1 Comment

Communication. In one form or another, it may be the most important thing that happens within a restaurant. Just like your employees, your customers need to know what is going on in your business. How do you communicate with them?

If there is one thing I try to get across to every business owner, it’s that no matter how great your product is, if no one knows about it, it won’t sell. This fact makes marketing your most important job as a restaurant owner. You have an obligation to yourself to build relationships with your guests, and to let them know, with plenty of notice, every special thing that is going to happen in your business. The most effective way to do this is by collecting contact information from your customers and building a customer database.

A customer database is made up of key facts about every customer that comes into your restaurant. Your database should contain first and last names and addresses of your customers at a minimum. Email addresses, telephone numbers, birthdays, and anniversaries can help you make easier contact with customers and tailor special offers to them. You may also want to know favorite dishes, dislikes, and what day you collected the information.

The biggest benefit of a customer database is giving you the ability to spend your marketing dollars on those most likely to come into your restaurant… I’m talking about those who have already been there. To many owners, spending their marketing dollars on people who already know about their business seems like a waste of money, but the truth is that the greatest potential for increasing sales lies with those who already know where you are located, what you sell, and how great a value it is. These are the people who take the least convincing. You already have a relationship with these people.

Think about it, if you were giving away free booze to attract people to your house for a party, who are most likely to come, complete strangers or people who have been to your parties before? Your business is no different. Convincing people to come back more often than they had already planned is much easier that attracting new people, whether it’s a house party or a restaurant.

By collecting information from your customers, you give yourself the means to invite them back more frequently, to try and make them regular guests. You have the opportunity to get them to come back when YOU want them back, not just when the mood hits THEM.

There are several ways to collect customer information. You can simply ask for it, hand out comment cards with blanks to fill in with their information, offer a signup for a “VIP” club, or collect information for a prize giveaway. You may also want to think about contacting other merchants in your area to see if they have customer databases they may want to trade with you. Someone who visits another business close to you is also likely to give you a try since they make regular visits to the area.

Once you collect your customers’ information, you have many options on how to use it. With email addresses, you have an almost free way to communicate with your customers. Not all customers have email though, and some that do may not respond to email advertising. Direct mail newsletters are another option you have to contact customers. Newsletters can be used as more than advertising, you can offer stories about your restaurant, your employees, and your customers. You may even want to start a “Customer/Employee of the Month” contest and publish the winners in your newsletter. Another option is good ‘ol fashioned direct mail offers. You can print a postcard with your latest offer or invitation to come to a special event. Since the people you are sending these print pieces to are familiar with your business, they are more likely to respond to your direct mail than a recipient from a mailing list you bought.

No matter how you communicate with your customers now, if you don’t have a customer database, you’re leaving money on the table.

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Unique selling point – vol. 1

Posted on January 13, 2008 by bodellconsulting| 1 Comment

Excerpt from a forum post to an Indian restaurant owner: 

A unique selling point stays away from claims about “better food” and “better service”. Those are minimum expectations of your customers, not reasons to choose you over your competition. Sure, you may be able to get that very small market of people looking for Indian food by being the only Indian restaurant around, but you’ll starve to death if you’re depending on that market. Your market must be bigger and transcend your food. Good food and service don’t make restaurants profitable. They’re not even a necessary ingredient though they help. Having good management systems and marketing, then consistently meeting the expectations of your customers whether high or low is what makes restaurants profitable.

I’m not saying all of those points aren’t important to the success of your restaurant, I’m just saying none of them provide your target market with a reason to go to your restaurant over the one down the road.

People DO NOT buy products, they buy emotions. A USP expounds on whatever emotion you are offering to your customers. Talking about your food, and your chef will win over a small amount of people, but the majority of people are looking to get some sort of feeling by visiting your restaurant, or in anything they do for that matter. If you market correctly, whenever they are in the mood to feel the way your restaurant makes them feel, they will think only of you, because your USP is truly unique. Now, you have to decide what feeling you want your customers to associate with your restaurant. Something unique to start. Then you do ONE THING (or more) that none of your competition does and give them that feeling you are selling them. Then, they’ll remember you and you’ll have a competitive edge on your competition. Then, your target market grows past people that just want great Indian food, to people that want to feel the way your restaurant makes them feel.

Think more along the lines of some of these feelings other restaurants sell:

“I’m selling stature, not food.”
Roll out a red carpet. Use crystal glassware. Real silver. Have a valet. Call every guest by name. Make sure the name of the restaurant suggests “stature”. TELL your customers visiting your restaurant will impress their friends.

“I’m selling speed. Not food.”
Offer fast service. Put a time limit guarantee on getting your product to them. Arrange your restaurant to cut steps out getting food to the customer. Have your restaurant’s name suggest “speed”. TELL your customers you are the fastest place in town to eat.

“I’m selling sex. Not food.”
Hire attractive waitresses. Dress your waitresses in short shorts and tight tops. Teach them to flirt. Name your store a sexually suggestive name. TELL your customers it’s the place to go to be waited on by beautiful women.

“I’m selling nostalgia. Not food.”
Collect memorabilia from a certain era or genre. Display it in your restaurant with stories about the pieces. Decorate the store in the style of the era or genre. Give your restaurant a name that suggests “nostalgia” for that era or genre.

“I’m selling accomodation. Not food.”
Encourage your customers to customize your menu items. Allow substitutions and many choices. Adopt a moniker that says you’re accomodating and market the heck out of it. Use a name that implies “accomodation”.

“I’m selling fun. Not food.”
Build a playground in your restaurant. Use cartoon characters and marketing partnerships with kids movies in your menu selections and marketing. Use colors in your restaurant that appeal to kids. Use a name that implies “fun”.

Well established brands realized long ago that only a few people come to them because they like their food better than any other restaurant. They know that people have to be thinking about you when they’re hungry to keep you at the top of their mind when they’re thinking of places to eat. They know that feelings and emotions create stronger memories and associations than any of the 5 senses.

What are you selling? If it’s food and service, don’t expect too many people to get very excited about it. They can get that anywhere.

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What makes a successful restaurant?

Posted on January 10, 2008 by bodellconsulting| Leave a comment

You won’t be able to find the answer as to what it is exactly that makes a restaurant successful in any forum. Without experiencing it for yourself, it’s tough to imagine that a restaurant is one of the most complicated businesses you can run. Most businesses are pretty simple. You buy a product, mark it up enough to cover your overhead, and hire people who can sell it effectively and count change, or you manage a warehouse, a sales team, a manufacturing line or a specific service your business offers.

A restaurant is so much more complicated than that. First, you are more than a retailer. You are running a warehouse. You have to have the same skills a good warehouse manager has, including a system for checking everything in and out of inventory, protecting your product from theft, knowing how to keep your vendors honest in their pricing and their service, tracking and recording all your purchases and usage. All of this for a 200 item inventory of PERISHABLE goods, not just pieces that can be stored indefinately.

You are also a manufacturer. You have to run several assembly lines at once, and fill the orders for your product faster than any manufacturing line ever has to. You’re not just making one product either. Usually, it’s at least 20, sometimes as many as 100 different products, all with the same employees. The parts for these products are also perishable. If your warehousing systems aren’t good, it can ruin the manufacturing of the products. If your products aren’t getting made efficiently, consistently, and cost effectively, the whole ship will go down.

You are also a delivery service. You have to have systems for delivering a product with a very short life span to the right place within a time limit, all the while doublechecking that the manufacturing of the product meets standards. The delivery systems inside your restaurant is even more important than any you might offer outside the four walls.

You’re running a sales team too. Your front of house staff have to not only be experts on your product, but also know how to sell customers your highest profit products. You’re margin for error on staffing sales personnel alone could sink you. Without effective sales staff, or staff with the ability to communicate work with the other systems in place, the whole system won’t work.

You are also a service provider. In addition to being your sales force, your front of house staff are also customer service representatives. The number of things that can go wrong within this entire complicated system are enormous. Your FOH staff have to make sure none of those mistakes ever effect the customer. That’s a big task.

You may also be a repair service and a custodian to your own building if you don’t want to pay someone else to do it. There is a lot of equipment in a restaurant to break, and a lot of square footage to keep clean. A breakdown in either of these operating systems could also ruin your business.

All this before we even make it to the management. Managers and owners in restaurants have to know how to run all these different types of businesses under one roof, in addition to being bookkeepers, expert marketers, graphic designers, realtors and human resource pros, while keeping up on legal issues from labor law to health codes, building codes and city ordinances. Not an easy task while you’re supervising a team full of low wage employees. It’s not easy finding managers with all these skills at the wages restaurants can afford to pay. It’s not even easy to have all these skills as the owner. With all the rest of this to consider, how can you even fathom how to price your product to pay for everything? Most owners can’t. They guess, or they use some bad math someone else taught them that doesn’t take into account the unique financial situation of their own restaurant, or the market they are competing in. Then they guess at what a good purchasing contract with their vendors is, they guess at whether their lease is a good one, and they bet on their food being SO good, people will line up at their door to get it.

A lack of experience in any one area of a restaurant can sink it. That doesn’t mean it will, many bad restaurants make money DESPITE the mistakes of their managers and owners, but that doesn’t make it a good idea to try. My advice to anyone opening a restaurant without experience is to use someone else’s. Either pay someone knowledgable to teach you what you don’t know, or open a franchise where all the planning is done for you and the operating systems are already in place.

If you are looking for reasons why restaurants fail, they are easy to find. There are a million of them. If you are looking for reasons why restaurants succeed, that’s a tougher task. I think marketing is the most important thing an owner does, but any one thing they don’t do in their business can counteract their greatest strength, even a natural knack for marketing.

Maybe after all this, you can see why I say that great food just isn’t enough. It’s only the minimum necessary requirement to running a successful restaurant. There is so much more.

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How should I go about marketing a New Year’s Eve event for a fine dining restaurant?

Posted on January 10, 2008 by bodellconsulting| Leave a comment

Have you taken advantage of your four walls and table tops to market this event? How about the wait staff? Price the event so you can offer five dollars for each reservation a member of your waitstaff brings in, guaranateed with a credit card. Market the event with table top print pieces and wall posters at your front door and in the bathrooms. Don’t forget to have an easy system for signup near the posters, and slips for the waitstaff that have spaces for all the information they need to collect.

If you have good day to day traffic in your restaurant, you should be able to fill up reservations by the wait staff selling them. You can also try radio spots. I don’t suggest radio for everyday advertising, but for special events they can work. Try a spot three weeks out, running in a good time slot for a couple days. Repeat the ad for several days start 4 to 5 days before the event.

Anyplace with a community calendar is a good spot to advertise also. Look to see if the newspaper is doing a specials New Years piece in the Entertainment section. Check for local magazine that the community looks to for entertainment information.

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