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How to Create a Marketing Budget for Restaurant Owners

How to Create a Marketing Budget

The restaurant industry is known for passion, inventiveness, hospitality, long hours…and low profit margins. With so many restaurants reluctant to break the bank by spending their limited marketing budgets in the wrong ways, it’s worth taking a closer look at how today’s successful restaurants are budgeting their marketing dollars.

We talked with several successful restaurateurs and restaurant marketing experts to find out more about how to create a marketing budget for restaurant owners and implement the best marketing tactics to deliver a good marketing ROI.

Scott Ward, owner of Tap House Grill

We try to maintain a marketing budget of around 5 percent of revenue, a number that’s pretty common in the restaurant industry. But, it does tend to vary based on the time of year. For instance, because we are a gastropub that celebrates a large variety of craft beer selections, we tend to increase our marketing budget during the NFL football season. We also see a large push of customers during the summer months, so instead of diminishing our budget during our busy season and pushing when business is slow, we try to capitalize on that success to continue increasing our awareness and popularity. We understand our customers and the habits they have when dining out, so we try to tailor our marketing strategy around them.

One thing we’ve always done at Tap House is taken a very aggressive approach on building a large social media presence, because that’s where our customers are — using social media for just about everything. Typically we post information to social platforms once a day, sometimes twice a day depending on our specials and the traffic we see. In addition to posting daily specials and promotions across our social channels, we’ve also utilized LinkedIn and Facebook advertising. One specific example of this was during the Christmas season. We ran a promotion that for every $100 spent on Tap House Grill gift cards, the buyer would receive an additional $50. That went over really well for us, which in turn brought us a greater following on one of our most successful marketing platforms.

At Tap House, we’re big on leveraging our customer email subscription list. We include promotions in some of our email campaigns and in others we create engaging themed events (some of which revolve around things happening with our local sports teams, others around holidays). We find that our patrons enjoy the creativity of our occasions – it can make a Monday or Tuesday night feel like a weekend and a perfect time to stop in for a burger and a drink. 

Nat Milner, owner of Gabriela’s Restaurant and Tequila Bar and Elizabeth’s Neighborhood Table

My best advertising is my last meal. The golden rule of retail applies: if you do something nice for someone they will tell a couple of friends; do something bad and they tell everyone they know. We put the best effort we can into assuring that everyone leaves happy.

My restaurants are based in New York City on the Upper West Side of Manhattan, which is a unique situation. There are more than 500,000 people who live within a few miles of my Upper West Side restaurants. That means my number one focus is local advertising – I prioritize the budget for anything that is local in nature. Local gives me the best bang for my buck. Anything that blankets the city is too wide a reach and is usually unaffordable. I focus my efforts on outreach in the neighborhood, such as local online news, local publications, local blogs or E-zines like this one.

Additionally, I advertise in the playbill at the theater a few blocks away. We do tons of charity events and try to get our name into school fundraising efforts, church groups, community groups, non-profits and more. These are our neighbors and I believe that if we support the neighborhood, the neighborhood will support us.

I use Facebook local advertising to try to reach people as they pass nearby. Plus we try to use our storefront to promote whatever we have going on. Lots of people walk by and enjoy the new board messages.

I am currently reworking my websites, blogs and MailChimp issues. Email blasts and blogs are important. I’m trying to do more to generate content and be a thought leader, which is part of why I wanted to do more things like be interviewed in this article!

I do not do any of the other “deal” sites. I tried a few in the past but they are never worth it. You have to sell your soul to do it.  And it’s not seamless, either. They are simply too expensive and they are the land of low-end ethnic delivery. I dumped Open Table as well. Anyone who is taking a percentage of your restaurant’s sales to do something starts off with a big negative in my book. Restaurant margins are very slim as it is, so why give a significant portion to them? From my experience, working with deal sites turns the wheels and makes people at my restaurants work harder, but it doesn’t increase our profit.

Katie McCaskey, owner of George Bowers Grocery

My husband and I own an independent, one-of-a-kind neighborhood restaurant called George Bowers Grocery, now in its eighth year. We absolutely reject commonplace marketing ploys on Facebook and Yelp (although we have profiles on both). These sites have their place but not for marketing dollars or time.

Instead, our marketing budget is spent two ways: first, by investing in media relations. Mentions in news articles and blog articles like this one provide an inbound link to our site that helps increase our search visibility. This is important because a good deal of our customers are tourists searching for a place to eat in Staunton, Virginia.

Second, we market to local customers the “old fashioned way”: by working hard to provide a superior experience that generates word-of-mouth. Our sandwiches are stacked high and served in an 1880s school building – two notable traits that separate us from the rest.

Linda Duke, founder of Duke Marketing – consultant for multi-location and franchise restaurant organizations, author of Four Star Restaurant Marketing Cookbook – Recipes for Restauranteurs

After 25 years in the restaurant industry, I’ve learned that the last thing any restaurant operator wants to spend money on is advertising. Typically, a restaurateur wants to open the doors and be successful from day one with word-of-mouth and without any advertising. However, with so much competition for consumers’ dining dollars, and so many advertising and communication vehicles available, restaurateurs are finding they need to advertise, but don’t know how or how much to spend.

Understanding one’s existing guests by capturing their email address, contact information and creating a loyalty eClub is an important priority to implement. Keeping existing guests informed with an email news club and creating a loyalty program to encourage their frequency is very cost effective. Any restaurateur can ask guests to fill out a slip and opt in to their eClub. Typically, something is offered as incentive, such as, “Enter our eClub and get a free entrée.”

Another priority, after gathering existing guests’ information, is to create a promotion that will break through the clutter and develop something relevant to advertise. An Enter To Win contest or anniversary event, which guests must come into the restaurant to enter, can drive new trial and adds new eClub members. An integrated approach to getting the message out about the contest and Enter To Win will be most effective, such as print advertisement in the local newspaper, invitations, a press release announcing the event, signage and balloons, posts on Facebook and bag stuffers and flyers passed out, to name just a few.

Email data collection and e-blast software is available online with services like Constant Contact, Fishbowl and others, which makes it easy to create and blast emails to guests in the club and track results. Other new technologies for handheld smartphone devices are being created, such as brand applications that guests can download and earn points each time they purchase. Not only can restaurateurs track how many guests downloaded their app, but they can see how many times they return, what they are purchasing and can push messages out through the same technology to invite those fans in with offers.

Michael Shepherd, 4-time World Pizza Champion and Pizza Restaurant Consultant

Everybody wants to increase their sales. It’s getting really, really hard to get in front of customers. Direct mail still works. It’s one of those old-school methods that still does the job. With Every Door Direct Mail®, it’s getting more and more economical to get out there to the vast population… to target specific ZIP codes and carrier routes.

Sam Williamson, Tony Macaroni Glasgow Restaurant

When discovering how to create a marketing budget for our website, we were advised to create regular blog posts that our diners would enjoy reading, and to try and build an engaged audience. Yeah right. It quickly became apparent that our customers didn’t want to read what we were saying, so we decided to put our customers at the forefront of our marketing.

We invested in a plugin for our website that would search for the latest posts from our Instagram followers and display them on our restaurant pages. When our customers use our hashtags, the plugin picks this up and shows their pictures on our website. Not only has this taken far less work than writing regular blog posts, but it has also encouraged our customers to follow us on Instagram and use our hashtags. This does require some minor moderation to make sure that the posts are relevant, but it has been a much better investment than paying for writers.

Are you a restaurant owner? What are some great marketing ideas or marketing tools that have worked well for your business? Or are you a restaurant customer who recently decided to patronize a certain restaurant because of a creative new promotion or offer? If so, leave a comment and let us know.

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Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.