How Restaurant Owners Can Create an Effective Marketing Budget

Your restaurant may serve fabulous food at unbeatable prices, but it’s all for naught if no one knows about it. That’s why restaurant owners need to create a marketing plan and give it a budget big enough to be effective while not so big as to squander your money.

The rule of thumb for restaurant marketing is 3% to 6% of sales. These are really guidelines rather than rules, but if you are outside the range, you should have a good explanation. If your restaurant is struggling, it’s all too easy to shortchange the marketing budget. Many good things can be done on a shoestring marketing budget, but don’t expect it to match the results of a well-funded campaign.

Throwing too much money into marketing is not only wasteful, it’s wrongheaded. The reason your restaurant is successful is because it’s a good business, and all that marketing does is make that success easier. You should be able to get your marketing message out on a 6% budget, although you might temporarily spend more for a short-term public relation campaign.

In all cases, it’s vital to measure your marketing return on investment (ROI), that is, the profit contribution of your marketing budget divided by marketing spending. The formula for marketing ROI is:

Marketing ROI = [Incremental Revenue Attributable to Marketing * Contribution Margin – Marketing Spending] / Marketing Spending

For example, suppose your restaurant undertakes an advertising campaign with a budget of $10,000 and shortly thereafter notices an increase in revenue of $50,000. This creates an ROI factor of 5.0. Now suppose the contribution margin (i.e. the  price of meal minus all associated variable costs for the meal) is 60% — that’s the incremental profit earned by each meal served, on average. Given the 60% incremental contribution and the $50,000 increment of increased revenue, we figure the margin ROI to be 0.60 x $50,000, or $30,000. Now subtract the marketing spending of $10,000 and divide the result by the same $10,000:

Marketing ROI = [$50,000 * 60% – $10,000] / $10,000 = 2,

This shows that every dollar spent on the advertising campaign generates $2 to net profits. In other words, it’s a good deal. If you spent appreciably more the $10,000 on marketing, your ROI would decline, making the investment less efficient.

Perhaps this sounds a little fancy for your restaurant, but it’s a good way to make sure you aren’t wasting your budget on inefficient marketing.

Other factors to consider when budgeting your marketing efforts include:

  • Spending less during the offseason and more during the busy season. There is no use investing heavily in marketing during months when all your customers are at the beach or the ski slopes.
  • Thinking imaginatively about promoting your restaurant through ads, websites, emails, signage, social media, brand awareness, and interesting web content.
  • Don’t let a sudden cash crunch stifle your marketing budget. Remember, IOU Financial is all about shoring up your working capital quickly and affordably. You can apply a loan from us to keep your marketing program chugging along on all cylinders as you work through your cash problems. Remember, those problems will only get worse if your customer volume dries up.

By committing to your marketing budget and continually measuring its effectiveness, you can ensure that you spend the optimal amount promoting your great restaurant. Bon appétit!

Bottom Line Boost — 6 Ways Your Hospitality Business Can Save Money

Running a food establishment to turn a profit can be a tricky combination of creativity pitted against hard-nosed dollar smarts.

Positioning a business in a high visibility location with plenty of passing foot traffic, parking and a steady stream of customers, is still no guarantee of success if its outgoings and overheads are hemorrhaging money.

The process to regain control of spending must begin with an internal review. This is done to provide insights into excessive expenditure and poor processes whilst identifying crucial areas where strategies can be implemented to metaphorically and literally ‘trim the fat’.

By addressing the following key sectors, a business can turn around its turnover, rein in costs and boost profits.

Begin with the basics

Cafes, restaurants and hospitality businesses all survive on the income from food and drink. This means implementing optimum menu competitive costing calculations while providing an adequate profit margin is vital.

Menu pricing should be set based on a food cost percentage formula which takes into account:

  • Stringent, detailed recipe costing
  • Associated overheads of running a business including:
    • Staffing
    • Leases
    • Utilities

Licensed premises should run a similar audit of their bar prices to ensure they are balancing affordability with healthy profit margins.

Reduce waste

A compelling study by the National Restaurant Association in the US found that restaurants lose approximately four to ten percent of food to wastage. The restaurant industry alone is responsible for trillions of dollars of waste each year.

This means that substantial savings can be made without affecting the quality of an establishment’s fare, through streamlined food preparation methods, effective storage systems and well managed procurement processes.

The good news according to researchers at Champions 12.3, is that for every dollar businesses spend in strategies to lower food waste, an average of $14 is saved in operating costs.

Begin with a kitchen audit:

  • Install a rotation system to ensure the oldest food gets used first.
  • Inspect food quality from suppliers to identify issues surrounding trimming and loss (e.g. high fat content of meat).
  • Check expiration dates as food is delivered to ensure you are getting the freshest possible produce.
  • Review food preparation techniques to identify strategies to reduce wastage.
  • Review food storage temperaturesto increase shelf life of refrigerated produce.
  • Clearly mark expiration dates so staff understand when to move dishes to the ‘specials board’.
  • Predict peak demand periods to optimise procurement processes.

Preparation and Portion Control

Are diners regularly leaving large amounts of food on their plate? Identifying dishes where portion size is excessive, can substantially impact recipe costs. This is equally true for sides such as salads and chips. Making these an optional extra can have the double impact of saving on food waste and minimise ingredients expenditure.

Consider the off-cuts accumulated during food preparation. Could these be incorporated into other recipes to make full use of each cut of meat or serving of fish? Dishes which lend themselves to this type of economising are:

  • Soups
  • Stir fry
  • Chowder
  • Casserole
  • Stew

Review the Menu

Making a conscious effort to save money requires staff awareness, involvement and commitment. Staff training needs to be instilled and regularly refreshed to:

  • Create awareness and understanding regarding the vital role of economy in a food service environment
  • Identify strategies to monitor storage and preparation methods to restrict food wastage
  • Implement techniques to encourage faster table turnover
  • Promote and upsell meals and extras
  • Encourage practises which lower energy and utility usage

Table Turnover 

Long delays in table turnover can be reduced by installing pay-at-the-table and pre-ordering technologies. These apps result in reduced demands on staff, a streamlined customer experience and increased table turnover rates.

Apps which promote themselves in this arena include:

  • Hey You
  • PayPal
  • Groupee (enables menu splitting)

Faster table turnover is of particular importance in cafes where lower priced products mean you may be relying on higher turnover than a restaurant. Moving customers along can be an art and requires some tact by staff. To avoid confrontation, at busier times it may pay to install written policies.

These written signs needn’t be confrontational and can even carry some subtle humor. An example may read:

‘In a crazy bid to turn a profit, Management kindly request non-diners to give up their seats to the hungry, when  seating demands are high.’

Before seating them, staff can politely ask customers whether they will be requiring a dining menu and if the answer is in the negative, direct them to the window stools. Alternatively, they can give a gentle reminder when directing them to a seat, that lunch dining begins at noon and their table may be required.

In the hospitality industry even small details can dramatically influence viability. Awareness, motivation and processes are the key factors to turning the fortunes of a food service business. If a single step such as reducing waste can result in significant savings, imagine the impact multiple cost-reduction strategies could make to your bottom line!

Should you need funding to implement any of the tips above helpful advice about growing your business and need financial help in realizing it, let us help! IOU Financial specializes in helping small business secure business loans of up to $300,000. Contact us today at www.ioufinancial.com to learn more.

Guest Post: About the Author

Danielle Ryans is a freelance writer based in Sydney, Australia. She loves that writing allows her to explore new topics and ideas, and is interested in business, travel, health, food and lifestyle. You can follow her on twitter here. 

Bad Restaurant Review? How to Remedy!

All restaurant owners know the value of customer recommendations and feedback in attracting new customers. Savvy restaurateurs ask customers to leave reviews on their websites and social media accounts to speed up business growth. However, sometimes, the reviews left are not positive, and can present the business in a bad light. What do you do that in that situation? Read on to learn how to remedy a bad restaurant review.

Don’t Ignore

The one thing you should NOT do is do nothing. Some business owners believe that bad reviews are just part of doing business, and figure out that enough good reviews will distract from the negative ones. Others believe that there is nothing to be done about bad reviews at all, but that couldn’t be further from the truth. All it can take is one negative review to prevent potential customers from giving your restaurant a chance.

Contact the Customer

The easiest and often more effective method to deal with a bad restaurant review is to contact the customer that left it. Most websites, such as Yelp and Facebook, will allow you to privately message the individual. If you can connect the name to a client database, you may be able to figure out the person’s phone number or email.

If you have a way to message the person, always take that as your first step. Always remember to be on the customer’s side, whether you find truth in their review or not.

Apologize for the fact that they had a negative experience at your restaurant, and state that your customers’ satisfaction is your number one priority.

Most people will agree to remove or upgrade their review with just a tad of personal attention from the owner. Knowing that you took the time to acknowledge their feelings will make all the difference!

Offer an Incentive

If you feel that the individual is not likely to update their review after your initial contact, consider offering them an incentive to do so. Be careful in doing this, as certain websites, like Yelp, have a policy that penalizes business owners who incentivize clients to remove reviews.

However, doing so in a way that doesn’t directly ask the customer to take this action is acceptable. State that while you cannot change the initial experience, you want to make things right. Consider offering them a refund or a gift certificate to give your business another chance.

This second step is almost always effective in changing a person’s perspective about your business.

Respond Publicly

If the individual refuses to remove the review after the first two steps, the only thing left to do is respond publicly. Although this won’t hide the initial feedback from online users, it will give them another perspective, and show them that the restaurant’s management cares about the business’ reputation.

Always remain professional, empathetic and kind. Apologize to the reviewer and state that you tried to remedy the situation to make it right. If you offered them an incentive, don’t be afraid to include that in your public comment. This will tell the readers that you care about the opinions of your customers and address problems.

You also have the option to hire a Public Relations (PR) specialist to provide you with a good direction in tackling negative reviews. If you need financial help to afford these services, or need other funds to grow your business, contact IOU Financial. We offer fast and easy small business loans up to $300,000 with an easy fast pre-approval  process.

 

 

 

Best Industry Podcasts for Restaurant Owners

As a restaurant owner, it is beneficial to stay on top of the latest news in your industry. Unfortunately, this business requires a big time commitment, and not many owners have the availability to network or even read restaurant-related news.

Most, however, would find it valuable to connect to relevant sources to help them run their business if they can do it on the go. Podcasts offer exactly that opportunity to restaurant owners, allowing them to hear experts in the field discuss topics of relevance to them that they can listen to during their commute, while exercising, or even planning meals for their restaurant. Here are the very best, hand-selected podcasts for restaurant owners.

Social Restaurant Podcast – Weekly Talk Radio for Restaurateurs

Nate Riggs, a NR Media Group owner and professional speaker, puts on a weekly episode in which the restaurant business is discussed. Each episode is 30 to 60 minutes, and features owners, operators, executives, authors, chefs and technology experts from the top restaurants worldwide.

Nate leads discussions about the latest trends, helpful technological advances and other topics of relevance to the food industry. The episodes features one-on-one interviews, conversations, commentary and advice on reinventing your restaurant!

Profitable Hospitality

Profitable Hospitality is a website designed for owners and managers of hospitality businesses, including restaurants and cafes. The founder, Ken Burgin, has been in hospitality for over 25 years, owning various restaurants, as well as serving as an advisor.

The site features a multitude of podcasts (over 250!) with restaurant owners, managers and chefs, among others.

Topics include:

  • Diversity
  • Menu customization
  • Targeting specific audience
  • Finances
  • And more!

Restaurant Unstoppable

Calling itself the #1 podcast for restaurant owners, these podcasts target independent restaurant owners. Run by Eric Cacciatore (like the chicken dish), the site started when he was a mere hospitality student to broaden his horizons. Now, he helps business owners learn the tips and tricks to expand and successfully run their restaurants.

He allows his listeners to hear advice from industry experts, as well as sharing their failures to teach others never to give up. He also provides actionable advice for getting funding, managing a team and marketing.

Secret Sauce

The secret is out—the site marketing4restaurants.com shares their take on the best marketing strategies to run these businesses.

The advice comes from the real world—monthly analytics of bookings and orders from actual restaurants. This helps the podcasts provide actionable and proven tips to help restaurant owners.

The reason this blog is helpful is because marketing for restaurants is unique from other industries, and you can learn the best and most cost efficient ways to grow your business.

Table Touch

Hosts Brandon Hull, founder of NextRestaurants, a marketing-focused restaurant resource on the web, and Randy Lopez, the founder of JaKE, a restaurant-industry marketing and PR agency, came together to create this podcast.

They invite leaders in the restaurant world to help listeners hear their opinions on:

  • Building a brand
  • Opening multiple locations
  • Sales
  • Holiday menus

If you hear some helpful advice about growing your business and need financial help in realizing it, let us help! IOU Financial specializes in helping small business secure business loans of up to $300,000. Contact us today at www.ioufinancial.com to learn more.

 

Four Proven Marketing Tips for Restaurants to Implement During the Holidays

The holidays are a joyous and busy time for many, but some restaurants owners see a decline in business during the winter months. One source found that as many as 61% of restaurants reported a decline of up to 20% in patrons and sales during this time.

There are a multitude of reasons that sales can be down, ranging from cold weather which discourages patrons from leaving their homes and times spent indoors with family rather than out and about. A holiday decline does not have to affect your restaurant, however, if you strategize with carefully crafted marketing holiday marketing tips to drive customers to your business!

Holiday-Themed Menu

People love to feel festive during the holidays, which is why adding a holiday-themed menu can draw people to your restaurant. Consider offering family-friendly meals that your patrons can eat in or take to enjoy at home. Offering family-sized meals makes it convenient for your customers to quickly order without having to deliberate on what items and amounts to get.

Add holiday-themed foods to your menu to appeal to your patrons’ palates! Holiday favorites, such as turkey, egg nog and stuffing are always a hit! Get creative with adding items and ingredients that your customers may not be familiar with to surprise them and keep them guessing!

Appeal to the smallest patrons by offering foods that can excite them, such as specialty-shaped foods (sandwiches shaped like Christmas trees!), holiday cookies and other treats shipped from the North Pole.

Holiday-Themed Activities

Help your patrons get in the spirit by adding a holiday feel to your restaurant. You can choose specific nights to throw special holiday parties which feature holiday music and a winter wonderland decor.

If you have a family-friendly restaurant, encourage your customers to bring their kids by planning a visit from Santa Claus, as well as arts and craft activities, such as making holiday cards. Advertising a free photo with Santa with every family meal can help your customers save on holiday photos and instead spend their money in your restaurant.

Holiday Specials

The holidays are an expensive time when most of us shop for gifts for family and friends. Help ease the financial burden your patrons may be facing by offering holiday specials and coupons that they will surely appreciate.

Consider tying in an exclusive discount with a charitable cause, which is always important to remember during the holidays. Ask your customers to stop by and leaved canned food for a local food bank or used clothes for a nearby shelter. In exchange for their donation, you can offer a discount on their food purchase or a free item (a drink or dessert) in addition to a paid meal.

Marketing

Once you figure out your holiday menu, decor, activities and specials, you need to share that information with your target audience so that they can be informed about what is going on at your restaurant. Consider the best ways to get their attention and how best to spend your marketing budget.

If your restaurant is located in an area with high traffic, putting up a large sign or poster may suffice. Otherwise, sending in-home mailers to your local patrons or sending out emails through your customer database can be effective.

To stand out from the competition, consider unique ways that you can grab your customers’ attention and encourage them to frequent your business. This can include funny holiday cards to make them laugh or bold online campaigns.

Should you need help to invest in marketing or making your restaurant holiday-friendly, IOU Financial is happy to help. We offer hassle-free small business loans of up to $300,000 in as little as 24-48 hours. Visit our website to get more details about how we can help your restaurant thrive during the holidays and all year round!

Tips for Restaurant Owners: How to Take Better Food Photos

What would you do to increase your restaurant’s profits by 30%? What if all you needed to do was snap a photo? That’s right, one study found that taking and sharing photos of food served at your restaurant can increase profit by as much as 30%! Unfortunately, most of us are not skilled photographers, and with the mass amount of competition online, it is imperative to improve your skills to grab your audience’s attention. Read on to find tips on taking better food photos!

Choose Natural Light

While professional photographers don’t go anywhere without fancy lighting, good old natural light is best for taking photos of food. This is because you want to show food as it truly looks without adding any yellow or orange hues from artificial lighting (no one is going to want to eat yellow rice or orange eggs!).

What’s the best way of getting natural light? Go outside! Avoid spots with direct sunlight as that will add shadows in your photo. Instead, try to take your photos on overcast days where just the right amount of sunlight peers through the clouds.

Need to take photos when it’s raining or snowing, and outside is simply not an option? Take photos near windows or a patio, allowing the sunlight to hit the plate from as many angles as possible.

Remove the Clutter

A professional photo only contains what the photographer intended the viewer to see. Look through the lens and remove any objects that are not required in your photo. You can leave objects that enhance the image, such as flowers, a fork and knife or a beautiful landscape; however, you want the viewers to concentrate on the food rather than be distracted by anything else. In fact, the best backgrounds for food photos are neutral, light or dark; avoid reflective backgrounds such as countertops.

Choose the Best Angle

Taking a photo of a plate or pasta, a smoothie or a sandwich all require different angles. The rule of thumb is to shoot from above when the food is on a bowl or plate as this provides the best view of all of the ingredients in the food and minimizes the background (unless you choose to zoom out and include more details in the photo). Drinks and foods with layers, such as sandwiches, lasagna and cakes, best shot from the side.

Focus on the Arrangement

When your restaurant patrons come into your business, they are hungry and don’t pay too much attention to how their food is arranged as long as it tastes good. However, when you want to attract new customers based on photos alone, arrangement is key.

Learn the art of food plating to carefully and aesthetically place the food so that it looks attractive. Consider what ingredients you can add to enhance the look of the food, such as bright spices, green spice leaves or bold sauce colors.

While you can take photos with your iPhone or a cheap camera, the best photos are made with professional cameras. If you need help in financing this expense, or want to truly invest in photo marketing and hire a professional photographer, IOU Financial is ready to sponsor this goal! We help small business owners acquire loans in 24-48 hours. Contact us today to learn more.

Is Your Restaurant’s Social Media the Best it Can Be?

Are you including social media as part of your marketing efforts to promote your restaurant?  Most business owners are aware at this point that social media is one of the best ways to create brand awareness and engage with their clientele. However, many don’t have the time or the skills to understand the best ways to utilize social media. Read the tips in this blog to fine tune your social media strategy to promote your business online.

Focus on a Limited Amount of Platforms

There are a multitude of social media platforms, which makes it difficult for restaurant owners to concentrate and devote enough time to each and every one. Instead of doing a poor job managing various social media profiles, focus on one to three of most important ones, which are Facebook, Twitter and Instagram.

Facebook

Facebook is definitely the most important platform to concentrate on because the site has 1.71 billion users around the world, each of whom has an average of 155 friends. Therefore, creating a Facebook Business page is essential.

Think carefully about what cover image you want to include; it can be an enticing and unique dish or a photo of your patrons having a great time in your restaurant. Consider what image you want your restaurant to reflect – family friendly, hip and trendy or business-appropriate, and then create a consistent look across all of your marketing strategies.

Facebook has tabs and sections that allow you to include text, photos and videos to promote your restaurant. This is the perfect place to share your menu items, photos of food, coupons and specials to attract your clients.

Twitter

Twitter has over 67 million users in the US alone; more than 20% of all Internet users have a Twitter account. This platform allows you to share tweets of 140 characters or less, as well as photos and videos. It’s advantageous to include photos because those tweets get read and shared more than those that only include text.


Twitter is great to announce new menu items, specials and coupons and ask followers to retweet that information. Twitter is popular for their hashtags, which are simply words or phrases that are relevant to your brand that your users can search for. These may include: #NYrestaurants; #Chinesefood; #LAcheapeats; #baconcheeseburger, etc.

Instagram

Since Facebook acquired Instagram, it is estimated that 95% of the time a Facebook user shares an image, it also gets posted on their Instagram account. Instagram allows users to post photos and videos only, although they can include a comment and tag their location (to your restaurant location).

It’s vital to use bright, creative and unique images that will stand out from the competition if you want to get noticed. Additionally, Instagram is big on hashtags too, so including them in the comments will help your posts get noticed and shared.

General Tips for Getting Better Results from Social Media

Whether you only decide to focus on one or all three of the platforms mentioned above, you need to utilize the following tips to get the best from your efforts:

  • Be consistent – The only way to build a loyal fan base is to be consistent in your marketing efforts. Posting a few times per week will keep your customers engaged with your business and aware of the latest happenings in your restaurant.
  • Time your posts – You may only have time to post after work, but by then most of your customers may be busy with other tasks. Evaluate when your posts get the most likes, comments and shares, and plan to post during those times so your content will get maximum views.
  • Create contests – Social media is a great way to get free referrals and advertising from your followers. To encourage them to share your posts with their network, create contests that will reward those who repost or retweet your posts with a free dinner!

While simply spending your own time to incorporate social media into your marketing strategy doesn’t have to cost a thing, investing into social media can provide great returns. Endeavours such as social media advertising, paying influencers to spread the word about your restaurant and hiring professionals photographers to create one-of-a-kind images can be costly. If you need financial help to invest in your business, contact IOU Financial. We can help you with a small business loan of up to $300,000 in 24-48 hours.

Why Restaurant Owners Should Think Carefully About Their Menu Design

There are many things to consider when you are planning to open a restaurant. You need to find the right space, hire employees and create the perfect menu. In the hustle and bustle of trying to get a new restaurant off the ground, one important step is often not given enough importance and is quickly completed at the last minute before opening. This step is menu design, and one that can have significant impact on yo

ur business. Read on to find out why!

Why is Menu Design Important?

While a menu can seem like a simple list of food and drink options offered in your restaurant, it is so much more than that! It is an internal advertising tool that every single patron of your restaurant, as well as online visitors, have access to. This document does much more than describe what people can expect to eat or drink, it “should communicate a brand, the vision, the ambiance and feel of the restaurant and the food and the experience a guest can expect to have,” according to one source.

What are Tips for Successful Menu Design?

Involve the Chef

While anyone in your restaurant can jot down the food and drink choices, it is only the chef that can transform a boring list into an appetizing and enticing experience. By highlighting special ingredients and local and organic products, the menu can provide more details to your customers.

When creating a menu description, focus on senses, such as the look, taste and texture of food when describing “the experience” in your menu. Use descriptive words that will bring the image of the items to life!

Finally, ask the chef to suggest pairings between food and drink options that can help your patrons have a more-pleasing experience (and help you push sales!)

Focus on the Image

Since a menu is typically a one or two-page document, it provides a small space in which to communicate your entire brand. It can be beneficial to employ the services of a professional menu designer to craft your menu.

Consider that the layout, fonts, colors, images and type of paper used in the menu – this will not only describe the food, but will also speak volumes about the type of restaurant (casual or upscale), food (Mexican or French) and environment customers can expect.

Add Value

One source suggests that there is a way to make a dish more enticing by highlighting its value. This strategy includes stating the geographic region where the item is from, such as:

  • Tuscan Olives
  • New England clams
  • Parisian baguettes

To differentiate yourself from the competition, highlight the exclusivity of the item by mentioning the very farm it came from, such as Sun Valley local eggs. You can also mention brand names if they are well-known and considered to be premium.

Whether you are opening a new restaurant, or simply reinventing your image with a new menu design, you may need financial assistance. IOU Financial can provide you with the help you need with a loan of up to $150,000. Contact us today to find out more!

Banks Aren’t Lending: Kevin O’Leary Interviews DaVinci’s Pizza Owner

Today’s small business owner can struggle for months with a bank to receive the smallest amount of financing. Kevin O’Leary understands small businesses and got involved with IOU Financial to ensure small business owners always have access to affordable capital!

O’Leary interviewed Jason, owner of DaVinci’s Pizza, who waited for months only to be denied by a bank for a loan. When Jason found IOU Financial – he was approved and funded in under a week!

If you are a small business and working capital is the only thing holding you back from expanding, give IOU Financial a call. We can help restaurants expand their seating area, retail stores grow their product line, doctors update their equipment, and so much more!

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