We hope that every sentence in this Beginner’s Guide to Restaurant Marketing is reiterating the same point: Marketing is essential to any restaurant business. You could be serving the best food in town, but your business will fail if no one knows about it.
If you invest in marketing, you will grow your business. But how much should you invest in marketing? And how do you make sure that every marketing dollar goes to good use?
This article will dive deep into the subject of restaurant marketing budgeting. We’ll consider how to get the best return on investment for your budget, how to track ROI, and how to know if your ROI is in line with industry standards. We’ll cover the basics of budgeting for your restaurant marketing strategies, and we’ll also look at what percentage of your overall restaurant budget should go to marketing.
Some of the topics we’ll cover are:
- The Basics of Restaurant Marketing Budgets: We look at restaurant industry best practices and discuss the percentage of your budget that should be dedicated to marketing.
- Market Your Restaurant the Right Way: Find out how to prioritize your restaurant marketing efforts.
- Key Restaurant Marketing Budget Areas: Marketing your restaurant can be a wide-ranging undertaking involving various channels. Here we explore which ones to focus on.
- Restaurant Marketing ROI: Make the most of your restaurant marketing. In this section, we go over how to calculate ROI to make the right decisions.
- Restaurant Marketing Hidden Costs to Look Out For: Avoid unwelcome surprises. Here we discuss some of the hidden costs affiliated with restaurant marketing.
- What Every Restaurant Should Be Doing to Succeed: To plan ahead, establish a calendar for your marketing efforts.
The Basics of Restaurant Marketing Budgets
Gourmet Marketing recommends keeping your restaurant marketing budget to within 3-6% of your sales. It should go over 6% only on special short-term occasions, such as during the holidays or when launching a new food item. During those times, the goal is to increase revenue and take your marketing budget below 6% again.
Marketing should also follow your business’s seasonal trends. It’s okay to spend more during busy seasons and reduce marketing expenditure during slower ones.
Besides seasonal timing, your restaurant’s trajectory also affects its marketing. A new restaurant might invest in a grand opening and PR events to boost its presence. One that’s been around a while might want to focus on promoting new menu items or building customer loyalty.
For your restaurant marketing strategy to succeed, it helps to try different marketing channels and compare their effectiveness. Take a look at the other chapters in this guide to see how many channels there are to choose from. Options include digital advertising, social media marketing, direct mail, signage, and much more.
Consider the value that each channel brings to your business. Each will have its own expenses, which vary widely depending on type. Of course, you don’t want to break the bank with your restaurant marketing! Your marketing should generate more sales, but higher revenue shouldn’t come with a ton of added expenses.
Market Your Restaurant the Right Way
Make sure your budget is trackable, so you always know where your marketing dollars are going. If you’re not tracking your expenses, it’s very possible that your marketing is inefficient and overly costly. The best approach is to start slowly with whatever type of marketing you choose and grow your strategy over time.
A good way to keep your restaurant’s marketing budget low is by being creative and constantly assessing what’s working. With so many ways to market a business, you can spend less money by choosing inexpensive platforms like social media. As you reach more people, reassess your marketing on a regular basis. You don’t want to bore your audience with the same message over and over. Don’t just set a marketing campaign and forget about it.
Before settling on a marketing budget, make sure you’ve set your goals and objectives for your campaigns. The 70/20/10 model developed by TM Trademark Creatives may come in handy: Invest 70% of your budget in marketing techniques that have worked for you in the past, 20% in techniques you have tested in the past, and 10% in methods you’re trying for the first time.
One of the biggest mistakes restaurateurs make is putting all their budget into what they’ve always done. While this may seem like a sure bet, it limits your reach and ability to explore other areas. Set aside money to test new approaches and continuously grow in areas you haven’t explored before. If something completely new works well in the 10% bracket, upgrade it to the 20% bracket for your next marketing budget.
Key Restaurant Marketing Budget Areas
Below is an example of where a restaurant might invest its marketing resources. Of course, every restaurant is unique, and your restaurant’s marketing may involve completely different channels. But here are some possibilities to consider:
- Social media budget – Social media is an excellent way to engage with customers, raise brand recognition, and promote specials. Although you can do free organic posting on your restaurant’s social feeds, paid ads or boosted posts will generate greater awareness. In your budget, factor in the frequency of ads/posts, your audience size and reach, and any costs affiliated with creating imagery and copy.
- Search engine ads – Google and other search engines should bring traffic to your restaurant’s website. One way to increase that traffic is through paid ads. When budgeting for this channel, check the value of the keywords you intend to use and the frequency with which they are searched.
- Email marketing – With email marketing, the goal is to engage with your client base to build customer loyalty and drive repeat orders. Plan your marketing budget based on your email list size and how frequently you’ll be emailing them. (If your online ordering system has built-in email marketing automation, this is not an expense you will have to budget for.)
- Sponsorships and community events – Increase your restaurant’s local popularity by giving back and sponsoring local events. Your budget for this channel will be guided by your brand values, customer reach, and desired level of engagement.
- Print ads and direct mail – These are most suited to hyperlocal restaurants. You could drop off menus in residential areas or send out direct mail to keep customers engaged. While budgeting, consider the design and printing of the files and mode of distribution.
- Video ads – Video is a great way to showcase what makes your restaurant unique. In your video marketing strategy, bear in mind the costs of production and distribution.
Restaurant Marketing ROI
Before you market your restaurant, you need to understand ROI (return on investment) and how it will affect your efforts. How much value will the money you invest in marketing bring to your restaurant business?
ROI is a performance metric for the revenue and profit attributed to your business activities. For example, if you launch a direct mail campaign for your restaurant that costs $2,000 and earns $8,000 in revenue, then your ROI is 300%: [(8,000 – 2,000)/2,000]*100.
So how is ROI calculated?
The calculation of ROI involves two components: the amount invested and the amount returned. You divide the amount returned by the amount invested and multiply by 100 to get the ROI percentage.
In the example above, the amount invested was $2,000, while the amount returned was the total earned ($8,000) minus the amount invested ($2,000): $6,000. Using the formula, the percentage ROI comes to 300%, indicating that the direct mail campaign had a very high return for your restaurant.
What Is a Good Restaurant Marketing ROI?
The return on your investment for marketing a restaurant will vary from one channel to another. Your online marketing may earn you a 4:1 ROI, while your direct mail campaign only earns at a 2:1 ratio. The difference could result from a wide range of factors, including the message and time of year.
For a restaurant marketing ROI to be considered good, it should be at least 200%. Although a break-even ROI may seem okay since you haven’t incurred losses, consider the time spent on implementing the campaign.
When it comes to marketing, many restaurants aim for an ROI of 500%. If a restaurant spends $2,000 on online advertising, it will aim for $10,000 in revenue and $8,000 in profit. Hyper-relevant restaurant marketing campaigns have the capacity to produce an even higher ROI.
Tracking Your Marketing Budget ROI
Although tracking the ROI of your restaurant marketing strategy is vital, it’s not easy. The biggest challenge is determining where sales came from and which marketing efforts, if any, they resulted from.
If you send out a direct mail coupon offering 25% off a burger, and a customer uses that promo code, you can use this information to:
- Track the coupon usage
- Tally up the total revenue earned from the discount
Let’s say 1,000 people were offered 25% off burgers using the code. If each meal costs $10, the total revenue would be $10,000. (If you’re selling other items like drinks and sides, the total revenue would be significantly higher.) Assuming the cost of sending out the direct mail campaign is $1,000, then the ROI is [(10,000 – 1,000)/1,000]*100, or 900%.
Another way to calculate ROI in this example would be to tally the total of all guest checks for the month that used the promo code. This total would include all other menu items that were ordered alongside each burger, like sodas and sides. The process would still be the same: calculate the total revenue generated, minus the cost incurred.
Restaurant Marketing Hidden Costs to Look Out For
As with any other business, marketing a restaurant is subject to hidden costs. It’s important to identify them when creating your restaurant marketing plan. The earlier you do, the more successful your marketing plan will be.
Some common hidden costs in restaurant marketing are:
- Web Development – It’s almost impossible to succeed in marketing without an attractive, user-friendly, and responsive website. Apart from the cost of building a website, you will also incur several behind-the-scenes expenses. These include fees for hosting your website, buying a domain name, and subscribing to a website-building platform. It’s easy to neglect or forget these expenses, even though they can add up.
- Contests and Loyalty Programs – Some restaurant owners overlook the costs that come with giveaways and discounts. If your restaurant runs a loyalty program by offering the fifth meal free, you need to account for that fifth meal’s cost as a marketing expense and budget accordingly. The same should also apply to other discounts and contests.
- Direct Mail Campaigns – Because of their personal touch, direct mail campaigns are great for promoting upcoming events or sales. However, the costs of running these campaigns can be substantial if left unchecked. Make sure you have a clear understanding of how much you’re spending to get the word out.
What Every Restaurant Should Be Doing to Succeed
At this point, it’s clear that the success of a restaurant marketing campaign depends on proper planning. You need to forecast your budget and determine how you’ll gauge and track success. For everything to work as intended, start by developing a 12-month restaurant marketing calendar. This will give you a roadmap of what to accomplish at what time.
For new startups, a shorter restaurant marketing calendar may work just as well. You might plan a shorter time frame of three or six months as you learn the market and what works for you. The purpose of a calendar is to help you establish a budget for your marketing efforts in advance and improve it based on market conditions. You might consider consulting with a digital agency to ensure that the campaign and tactics you’re using align with your restaurant’s overall business plan.
Restaurant Marketing Budget FAQ
Restaurant marketing budgets are as varied as restaurants themselves. Small restaurants that manage their marketing in-house could spend nothing more than the time it takes to post to Facebook. Mid-sized restaurants that work with local marketing agencies might pay a monthly retainer of several thousand dollars, while a multi-location establishment with multi-channel marketing might spend tens of thousands of dollars on marketing every month. Although forward-thinking marketing does take time and investment, there are ways to optimize your spend on a tight budget, such as PPC digital advertising.