Tag Archives | Restaurant Marketing

Marketing A Restaurant During The Economic Slow-Down: 5 Surprising Restaurant Marketing Lessons From Olive Garden (Darden Restaurants)

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Restaurant Marketing Bootcamp

A quick story today with a critical take-away for your restaurant business, and an important announcement at the end.

Onwards to a story…

Last week I decided to pop in on the Darden Restaurants shareholder conference call. When a company like this is sharing what they do and why, and what they see going on in the market place, I sit up and listen. Nobody gets to be a 170,000-employee company by sheer luck. There is always a reason and a method.

Apparently, I wasn’t the only one listening to that call (manufactured laughter goes here). The next morning food-service & restaurant publications were super-prompt to announce that Darden was “finally” experiencing a slowdown because of the state of the economy (big deal).

And they entirely missed the point that I found the most important.

Yes, pretty much all of Darden’s concepts were down by about 3.7%, which is on par with the overall foodservice industry index. But… Olive Garden (one of Darden’s concepts) was doing extremely well.

Olive Garden grew 5% compared to the same quarter last year!

Not a single analyst noted this very remarkable fact — Olive Garden is doing well. In fact, so well compared to the rest of the industry, it deserves a look to understand what specifically they do and how they get to be so successful.

So here’s a list of 5 things that you should do in your restaurant to replicate the success they are experiencing (loosely based on the information of that conference call, with my interpretation):

1. When the economy is slow, step up your marketing.

When the cold winds of the economic slowdown come to the city, most businesses respond by canceling their advertising. They crawl into the shell and try to wait it out, hoping for a miracle.

Smart restaurant owners do the reverse. They ramp up their marketing: It’s so much easier to get heard in the market when everybody else is hiding. Smart restaurant owners also know better than to equate marketing to advertising: There are marketing methods that are more effective and less costly than advertising.

2. Stay on their minds.

Olive Garden uses creative advertising to remind their customers they are still here. They manage to stay at the forefront of their customers’ minds via TV ads.

As much as this approach could be good for a large company like Darden, however, such a stunt could be suicidal for a small restaurant: Running image ads on TV is a costly and arguably the least effective way to advertise. It is called “branding,” or more specifically, “macro-branding.”

The other, less expensive, and more targeted way to stay on your customers’ minds is called “micro-branding.” This includes a variety of ways to “touch” them, via email newsletters, event announcements, greeting cards, phone messages, and printed newsletters. Many of these tools are either free or inexpensive. And they are relatively easy to track. There is no excuse not to use them.

3. Create reasons for them to come in again and again.

Olive Garden keeps coming up with new items and specials, and they synchronize promotions with the release of the new menu item. You can do the same. And it’s easy to inform your list about new menu items. That is, if you have a list (see strategy #2 above).

Also, you can create many more reasons for your customers to come back — many of which may have nothing to do with the food (e.g. special events and “happenings”).

I’ll cover two more lessons in a separate post, tomorrow.

Now, the announcement.

We are running a 2-day intensive Restaurant Profit Bootcamp in Austin, Texas, on October 6 & 7 — see www.RestaurantProfitBootcamp.com. We can only accommodate 28 people (that’s 30, as allowed by the fire code, minus the two instructors), and 6 seats are gone as I’m writing this.

If you’re serious about becoming a true Restaurant Commando and receive a complete arsenal of tools to deal with any hostile market situation, you can’t afford to miss The Bootcamp.

Grand Opening? Soft Opening?

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grandopening

Lori, a reader from Florida, says she’s opening a restaurant (congratulations!) and asks this:

“What is the best to open this restaurant? Grand opening or soft? Have heard arguments for both…”

Well, let’s see…

The arguments for either one are missing the point. It’s not one versus the other.

Doing just the soft opening is silly. It like saying, “Well, let’s see if this whole restaurant thing is for me. If enough people find out about me, I guess we’ll keep on cooking.” You quit before you’d started. And when you did start, you did it with a severe handicap to your competition.

On the other hand, starting out with a bang and succeeding in attracting a lot of people fast could be as bad. Your kitchen may implode on the very first night. The logistics get intricate and the sparks fly when you have 50 four-tops sitting there for 2 hours waiting for their plates to come out. Ugly.

The correct answer is, you need a soft opening followed by a grand opening 3 or 4 weeks later. The soft opening gives you a chance to work out all the logistical kinks, train the staff, tweak the menu, and really understand who you want to attract as a customer. This way you are in a position to hit a home run on the night of the grand opening.

That’s why soft opening first, then grand.

Also, the idea that there can only be one Grand Opening for a restaurant ever is totally, utterly, absolutely false. You can — and should — have as many grand openings as you want and need. Once it gets too repetitive, you can call them “special events”.

And this is when the calendar becomes your biggest friend.

Which is what we cover in depth in the Instant VIP Clubs course.

Restaurant Coupon Marketing: The 2-For-1 Deal Is Dead

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Restaurant coupons are a double-edged sword.  Used the right way, they can get you a swarm of new guests. Used the wrong way, they will train your existing customers never to buy your food without a discount.

You can hardly surprise anyone with a 2-for-1 deal these days. You can hardly entice them either. A discount that is attached to an entree is like a vacuum cleaner sucking the cash out of your wallet. This is NOT the right way to run a restaurant.

Here’s the deal.

A discount is just one of the ways to create value for your customers. One of many.

Once you understand this, you’re on the right path to what my good friend Nathan Gilder calls “clever coupons.”

Here’s an example of a clever coupon:

“Free Homemade Brownie with Footlong Sub!”

Some guests have a weird craving for chocolate after downing one of our famous subs. Well… we give in… for the next three weeks you can get a free, delicious homemade brownie with any footlong.

This is a real one used by a restaurant owner who enjoyed an extra $1,225.87 in profit that month.

Clever coupons are the kind that:

  • create curiosity;
  • offer a bundled deal, never a blatant discount;
  • give away something that your customers want and that is NOT an entree;
  • require customers to do something to qualify for the special;
  • are unique and unusual.

Nathan has put together a Special Report entitled Using Restaurant Coupons and that’s where I found the example above. The report has several more outstanding examples in it. Go there now. See it for yourself.

(Note: There is a video of the new online coupon system. Watch it first, then request the Using Restaurant Coupons report using the form below the video. It’s yours gratis.)

D.I.Y. Restaurant Marketing Research

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We took them to the water.

We wanted to see if they would drink.

The first “beta tester” group of restaurant owners and managers had completed Week 1 of our Instant V.I.P. Clubs program and we were keeping out fingers crossed hoping the aha‘s, the revelations, and the excitement that had come out during the conference call would still be there, a few days later.

Will they actually take all the great information and the tools we’ve given them, and the ideas they have come up by following the process — and implement them in their businesses?

You never know what’s going to happen.

It’s a moment of truth in this game.

Our information is worth exactly as much as they will apply it in their business. Full stop. End of story.

Motivation is transient. Entertainment is worthless. The ooh‘s and the ahh‘s don’t count for anything. Only results do.

The first workbook is all about defining the restaurant marketing target.  Who are your customers? What do they want? What else do they spend money on? What are they passionate about in their lives?

Toni, one of our students, did an outstanding job in the virtual “classroom.” Yet she had some questions left. The kind of questions that nobody can answer for her, except… her.

And she did. Check out this note from her:

This morning there was a scheduling mishap and instead of trying to cover the cashier’s shift I took it as an opportunity to do some research. I found out as much as I possibly could about every customer that walked through the door. I recorded answers to the questions I would ask and observations that I made in my notebook that I kept under the register. I wrote down details like ages, how they looked, what they ordered, where they worked, if they used a coupon, marital status, whether they had families, what kind of hot sauces they like (if any), whether they were first timers or not, how they heard about us, who they were with, whether they were in a hurry, if they ordered to go, if they tipped (server thing), rated their enthusiasm and basically made a judgement weather or not they would be good candidates for our V.I.P. club. I encourage everyone to do something like this and keep a daily log of current customer traits. It was very informative and exact.

Amen, sister. You rock!

Now, is there something that Toni did and that you can’t? Nah, don’t think so. If you are too lazy, or too stubborn, or too “above it” to do what Toni just did, you have no right to be mopey about the state of your restaurant business.

Protected: One Burger, One Fry, And One Jay Leno

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Managing Food Cost Recession Style

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Two weeks ago, we talked about the futility of managing food cost by compromising quality, reliability, or supplier relationships. (See Food Cost: This Horse Is Lame. Stop Beating Her, Brother…“)

Here’s the deal: You shouldn’t be paying more for the ingredients than the other guy but you shouldn’t be spending the majority of your time checking prices either. Cost is just a part of management and not a whole other job.

It is easier to grow your revenues by 5%
using the right marketing tactics than it is
to bring your food cost down by the same 5%

I know it’s a stretch but… if you were to knock down your food cost by 5%, what would it mean to you in terms of profits? On a $100K monthly revenue and $30K in food cost, that’s  a respectable $1.5K in new profits. Not bad so far.

Alas, you don’t have to be a betting man to know that inevitably food cost will go up again, wiping out the savings you have worked so hard to create.

On the other hand, when it comes to marketing, you have 2 options:

  1. Get more new guests to check out your food, or
  2. Bring in existing customers more often.

The latter is much easier than the former. One good way to do that could be a V.I.P. Club. Not only can you get them to come in more often, you can get them to bring their friends too.

A V.I.P. Club that increases your revenue by the same 5% will put an extra $3.5K in your pocket — that’s $5.0K in extra revenue minus $1.5K in food to feed all the additional customers!  The best part is, you can do this again and again, month after month. Once a successful marketing method is in place, it works month after month, indefinitely, with little additional effort.

Now, which one would you rather have: A doubtful $1.5K once or a more likely $3.5K over and over again?

Protected: Managing Food Cost

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Plain-Jane Mundane Space-Age Restaurant Marketing

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We arrived late.

The tour bus had just left and it was the last one for the day.

So the only thing we could do at the Kennedy Space Center in Cape Canaveral was check out The Rocket Garden and a Shuttle prototype turned into an exposition.

Turned out, I didn’t need a tour. There was something that totally captivated me for the next hour: The old rockets.

They turned out to be so unexpectedly “plain jane” and low-tech. So… MUNDANE. The gloss of a picture in the book came off, and left a sheet of metal clumsily wrapped into a tube. All the attributes of a son-and-dad-school-project-finished-the-night-before-it-was-due (I’m talking from experience here) were present: rough edges, uneven paint, and mill marks everywhere.

They looked like they were made in a garage. And in a way, they were.

I found it difficult to imagine them flying… Even more difficult to imagine that someone would crawl into that tin bucket dubbed as “the cabin,” strap themselves to a big barrel of kerosene and go for a dangerous ride. Nonetheless, there they were, the artifacts of the glorious past, a testament to a courageous epoch.

Now think about your marketing.

Are you spending money on the looks? The only person that’s going to be impressed is you. Your customers won’t care.

Are you trying to make it fancy or make it work?

If you want results, then study other businesses’ ads. Start with those plane-jane all-text ones that trick you into thinking you’re reading an editorial. People who run these ads treat them like their sales force: If these ads don’t produce results they get immediately pulled. Just as a sales person who doesn’t sell gets fired.

The gawky machines that helped the man conquer Space didn’t need to be slick.

The ad that helps you to conquer your market won’t be a slick one either.

Do The More Successful Restaurants Offer Better Food Than The Ones That Are Not So Successful?

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Do the more successful restaurants offer better food than the ones that are not so successful?

Not necessarily. Or at least, not always.

Knowing how to cook is never a guarantee of success. And we all know of restaurants with “so-so” food and recipes that have managed to create a virtual monopoly in their markets.

One thing is certain though: If your product is bad, you can’t fix it with more marketing. The product needs to be at least “okay” or “good enough.”

The food is only a small part of the equation. Your customers have a number of “wants” and “don’t wants” when they visit you. The “don’t wants” are rather basic, really:

(a) They don’t want to get poisoned;

(b) They don’t want to be ignored or — worse — talked down to or yelled at; and

(c) They don’t want to wait too long.

The “wants” are a bit more elaborate, but they are nothing that you can’t provide if you’re running what could be the beginnings of a real business:

(a) They want their entrees hot and their salads cold;

(b) They want the wait staff to be helpful yet relatively invisible; and

(c) If they are dining with someone else, they want that person to commend them for suggesting your restaurant.

Notice that the grandma’s recipe from the old country or the fancy wallpaper on the wall don’t even enter the equation yet. Nor does it matter if your recipes are authentic, exciting, or were devised by Gordon Ramsey himself — unless and until you can fulfill the basic “wants” and “don’t wants” of your clientèle.

And if you’re saying to yourself, “Oh, but we’ve got it covered; these things never happen in my restaurant,” think again.

Even the best restaurants can’t deliver on all six items with any level of consistency. They recognize this fact and they work on it daily.

Which is what makes them the best restaurants around.

Hey, did you just say, “But my business is different!”?

Puh-leease!!!

Restaurant Marketing Formula

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Restaurant marketing is simple. Not easy — just simple.

Yet it may not always seem that way. Flipping through the pages of an industry magazine or listening to some “guru” talk about all the things you need to do every day — on top all the other stuff you’re already doing — can be frustrating.

There is no end to marketing and business management approaches, tricks, and techniques. The worst part is that oftentimes the new trick you learn will conflict with another one that has been working for you just fine. And when that happens, the big question is, where do you start? And most importantly, what actions will give you the biggest bang for the buck?

The answer to these questions is easy to find if you know the Restaurant Marketing Formula:

F + R + M = $$

Anything you do or will ever do to generate more profits in your restaurant business can be described by this simple formula.

F is your first-time guests.

R is your repeat or returning guests.

M is your profit margin.

That’s all there is to it:

F + R + M = $$

Let’s now look at each element in the formula in greater detail.

F: First-Time Guests

Many marketing books and seminars will get you focused on the “F” in the formula. Buying Yellow Pages ads, doing Val-Pack coupons or Internet marketing — all these methods address the “F” in The Formula. While it’s important to keep doing things that help the “F,” this is the hardest point to improve and typically the most expensive one to deal with.

You may make very little profit — or no profit at all — off your first-time guests. And that is okay, as long as you’ve got the other parts of The Formula right.

If you’ve been in business for a little while, chances are you’re getting enough first-time guests coming through your door to build a sustainable business.

R: Returning Guests

These are the people who dine at your restaurant regularly. Getting your existing customers to come more often is a lot easier and far more profitable than trying to find new guests. If you are like most restaurant owners, you have yet to realize the full potential of the R in The Formula. Creating a VIP Club, a membership program or a newsletter are great ways to dramatically improve the “R.”

Here’s the big issue with the “F” and the “R” in The Formula: Before you work on them, you need to get the basic business economics of your restaurant right. Otherwise, increasing the “F” and the “R” will only suck out your profits faster. If you’re losing money on every check, you just can’t “make it up in volume.”

M: Profit Margin

In the restaurant business, profit margins are thin and fragile. Any unwise marketing or business decision can completely wipe out your profits. A small shift in your staffing or food costs can significantly impact the amount of money you make from every check.

“M” is always the right place to start. You need to measure and manage the profit margin of your restaurant business, and you need to do that consistently and regularly.

Here at RestaurantCommando.com, we will provide a lot of tips, ideas, and tools to help you improve your restaurant’s bottom line. We’ll review this formula many times, and show you how to apply it to your business to create more bottom-line restaurant profits.