7 Restaurant Business Predictions for 2011

As we bring in the new year, we are going to take on a risk of predicting what the near future has in store for the restaurant business. While we want to be right in our analysis, we hope that some of these predictions don’t come true as they mean it will be harder for a restaurant owner to make money and to keep the money they make in their restaurant business.

Restaurant Business Prediction #1: Daily Deals

With the success of the Groupon business model, more and more entrepreneurs jump on board and start their own versions of “daily deals”. Unfortunately for Groupon, they don’t have a “secret sauce” to help them defend their turf from the onslaught of this new competition. (However, their market is far from being saturated). Fortunately for a restaurant owner like you, there will be even more Groupon-like marketing options available to you.

Whichever “daily deal” or “group coupon” company you decide to work with, remember that they are in the business of making a profit for themselves, not for you. (The same is true about newspapers, TV, Yellow Pages, and any other advertising media). It is your number one job to make sure your restaurant business turns a profit.

To make a Groupon campaign work for you, be organized and prepared. Here are some quick tips:

* Have enough food and staff to serve any increase in business
* Don’t go with it unless you can at least break even on every check (because if you’re losing money, you can’t make it up on volume; any repeat business is the gravy)
* Train your staff to handle the “moochers” just like your best customers (to minimize the risk of getting bad reviews on Yelp, UrbanSpoon and other review sites)
* Train them how to do upsells and how to collect customer contact information table-side (to have a chance to follow up with them and invite them back)
* Get first-time guests on your email newsletter
* Enroll them in your VIP Club or Birthday Club
* Have a follow up / bounce back campaign thought out and in place to bring the new guests back in

More information on how to work with Groupon and other “daily deals” companies is available here.

Restaurant Business Prediction #2: Local Search and Geo Targeting

The Big 3 search engines (Google, Yahoo, Bing) keep coming up with new and better ways to deliver geo-targeted results. Local small businesses (especially those in the hospitality and foodservice industry) are where it’s at when it comes to providing a better user experience to an online user.

A few years ago, the Internet was thought of as a “global information super-highway” that allowed someone in England to check on the status of their shipment from China to a client in Canada. While this is still true, the Internet has changed into an everyday tool to help a local mom decide which cafe she’s will stop at when she takes Little Johnny to his soccer game or which movie she’ll go to on a Tuesday night with her girlfriends.

Independent restaurant owners are generally slow to embrace marketing technology. Many still don’t even have a website. And now just having a website for a restaurant business is no longer enough: It has to be optimized for local search. Get on this now before everyone else and their dog is on there. Early adopters will make the most money.

Restaurant Business Prediction #3: Mobile Marketing

The new waive of Internet users no longer use a computer to go online. They can — and do — go online from their cell phone. They call them now “smart phones” and even that is a bit of a misnomer: It’s anything but a phone. Chances are, your smart phone has more smarts than your 3-year old computer.

What does this all mean to a restaurant business? It means that if you were late to hop on the train called “website” and “email marketing”, then the new train called “mobile marketing” is going to choo-choo away from you even faster. Build a mobile version of your site and do that now. Google has been reported on some occasions to NOT show “traditional” sites in their mobile search at all, so the sooner you get there the more you will benefit.

And as you are collecting your patron’s emails and mailing addresses, it’s time to start collecting their cell phone numbers too.

Restaurant Business Prediction #4: Inflation and Higher Food Cost

The currency is being created out of thin air by The Fed and all the other central banks around the world at an unprecedented speed. As more currency (not to be mistaken with “money”) enters the circulation and starts chasing the limited supply of goods, the inflation kicks in. Where the inflation will be the most visible is the price of gas, utilities, and the food cost.

I’ve met restaurant owners who purchased their business several years ago and “inherited” everything — staff, menu, decor, pricing, clientele — from the previous owner. They are not ready for these fast-pace chances in their business costs. As the inflation get bigger and faster, food cost management will become a matter of survival and not just a “best practice”. Be ready to tweak recipes, portions, and menus much more often than you have in the past.

Restaurant Business Prediction #5: More Regulation

The governments of all levels are broker than broke. Incessant hand-outs, giveaways, and bailouts require more currency coming in in the form of taxes. While the federal government can ask The Fed to print more dollars, local or municipal governments don’t have that option. Their response is going to be more regulation, strict enforcement of bylaws, permits and licenses, more bureaucracy, and the complete abandonment of reason in their dealings with local businesses. A story comes to mind of a businesses owner who answered the door to find there two IRS inspectors serving him a notice to pay $0.04 in back taxes plus $200 in fines. Brace yourself up for more insanity.

Restaurant Business Prediction #6: Brand Management

Yelp, TripAdvisor and a multitude of other review sites have the power to both put your on the map and to destroy your business. Your restaurant’s brand management is likely to become your headache or at least a priority in the coming year. If you’ve taken the time to build a VIP Club and turn your guests into raving fans, they will become the army to defend you from blackmail campaigns by an unscrupulous vendor or competitor. Also, if you thought mess ups in your dining room were costing you a lot, now they can cost you the entire business.

Restaurant Business Prediction #7: Social Media

Love it or hate it, social media is here and it’s here to stay. Facebook is already responsible for one click out of every four in the US and they are growing bigger. The “ugly duckling” Twitter may not appear very elegant but it has produced solid marketing results for a number of businesses. Foursquare is consistently growing its user base in many metropolitan areas. And lest we forget YouTube that gets a comparable amount of traffic to that of the big almighty Google.

While many early attempts to use Social Media in restaurant marketing were primarily experimental and didn’t produce any long-term results, these tools are now going mainstream and we are likely to see a number of reliable and repeatable marketing tactics to emerge. Become a friendly and smart user of social media and you will increase your trips to the bank.

READY TO TAKE YOUR RESTAURANT BUSINESS SERIOUSLY?

Say "enough's enough" to half-empty dining rooms, humdrum shifts, and wondering which half of your marketing budget was wasted.

73% of teenagers and adults are walking around with a smartphone (iPhone, Android, or Blackberry) in their back pocket. They use is for everything: Playing games, checking emails, texting their friends and ... googling your restaurant's website. If your website is not mobile ready, you're missing out on a lot of walk-ins. Download our Restaurant Commando's Mobile Readiness Checklist.

Watch this quick video about how to set up a Birthday Club that practically runs on an auto-pilot. This is going to be the easiest, fastest money you will ever create in you restaurant business.

About Restaurant Commando

RestaurantCommando.com is the #1 online information resource on guerrilla marketing methods for independent and multi-unit foodservice operators. Restaurant business is not easy, but doggonit, it can be simple if you follow the right business recipe.

Brand Management, Food Cost, Geo Targeting, Groupon, Inflation, Local Search, Mobile Marketing, Restaurant Business Predictions, Social Media, Yelp

7 Responses to 7 Restaurant Business Predictions for 2011

  1. john grisell January 1, 2011 at 5:19 PM #

    Our business is turning in a marketing market. Are there to many cafes?

  2. Neil Cohen March 4, 2011 at 11:26 AM #

    Alex,

    Great article. I have been working on social search for restaurants lately and you’re right. All they talk about is Groupon. Groupon i s a bit of yesterday and local search, mobile and, most importantly, Facebook is the future. Diners spend most of their waking hours on their phone or facebook, or both. And search on FB is purely based on the number of fans, so get them now, while it is easy.

    Check out the demo site I have put up.

    http://www.facebook.com/pages/The-Palace-Squeeze-Page-Demo/115545678521552

    A restaurant can get a visit, an email and a fan in one fell swope for next to nothing.

    Neil

  3. David H March 11, 2011 at 4:08 PM #

    Alex,

    I would have to agree with almost all of these. Have you considered that restaurants will have to become more creative to capture the email data from their consumers to direct market at a lower cost. I worked with a company at http://www.restaurantgiveaways.com that allows restaurants to post a giveaway for free and gives them an option of downloading the participant data. Cool idea and the data is permission based. Both the consumers and the restaurant gets something out of it. Just my 2 cents. What do you think? Once they have the data, it is a much lower cost to market.

  4. Ra?unovodstvo March 14, 2011 at 3:39 PM #

    Alex – nice article
    David – great idea. And how does this work in practice? I mean what kind of a positive percentage are you getting?

  5. Alex Makarski March 14, 2011 at 5:18 PM #

    Well, we’ll see in December how accurate this thing is. It’s mid March and I’m still feeling pretty confident in it. But hey, a lot can happen in 9+ month. We’ll know soon.

Trackbacks/Pingbacks

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    [...] heard of and have never visited your restaurant before. Such a campaign can pretty much put your restaurant business on the [...]

  2. Restaurant Marketing Tips | How To Market A Restaurant With Groupon - January 4, 2011

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