This is the first post of a multiple part series that will take a look at the issues surrounding the marketing of a new restaurant and offer some much needed guidance for those of you who are either in the process of opening your own restaurant or are seriously contemplating it.

Part 1: Restaurant Marketing Myths and Bad Best Practices

The usual process goes like this: a location is obtained, menu created, hiring done, build-out completed, then a couple weeks before the opening, everyone gathers to talk about how to market the business. This usually results in a reactive plan that focuses explicitly on tactics and short-term opportunities and results in a cheap and ineffective campaign which has to be revisited every week based on sales and traffic in order to come up with even more and better activities to engage in because it’s just not working good enough.

Which is why THE biggest consideration facing operators when they are opening a new restaurant is the issue of marketing the business.  You cannot afford to pay for the same ground two, three, four times or more over the course of your first year in business. The problem is compounded by marketing advice from every dark corner of the internet as well as family and friends who just have to throw their ideas into the mix. Let’s first take a look at some of the more dangerous myths and even more dangerous “rules of thumb”.

It takes 3 years to start making a profit.

Maybe this was true 20 years ago, but successful operators today are making a profit from the first day they open for business. The recession has recalibrate every expectation everyone ever had or will ever have – this includes investors.

This doesn’t mean you don’t need a reserve to help out with unforeseen operational expenses during the first 90 days, but it does mean you need to see a positive cash flow before your first P&L. With the proper strategies in place and great execution during the planning phase, this can and should be accomplished.

I need to hire 300 to find 50 who are good enough.

Only mediocre managers still believe in this process. Not only is this going to be an expensive proposition, it sets the stage for future hiring in which the standards set during the opening are the ones used to hire future staff as well. And the lower you set the bar in the beginning, the harder it is to raise it later on.

The biggest problem with this process is that the people you hire will be your marketing ambassadors during the opening and beyond. Do you really want 250 people spreading negative word-of-mouth about the “really dumb management who fired me 30 days after hiring and training me” at your business during it’s most critical phase? Hopefully, you’re also going to utilize the new staff to help you market your business to your online and offline community. So they definitely need to be “A” level talent.

The third point about hiring during the opening is that the people you hire will be marketing to every person who walks in the door once they’re open. This is the biggest marketing ‘campaign’ you will ever create and it needs to be executed flawlessly.  You cannot afford to have people on your floor or in your kitchen or behind your bar who you know will not make it past the first 90 days. Again, this takes a great talent management strategy and knock-it-out-of-the-park execution. Do this and your results from future marketing efforts will be much greater as well as much easier to execute.

It’s 30 days until the open, how are we going to market the restaurant?

This one I’ve seen happen way too often. It gets down the the final 30 days before the opening and you still haven’t paid any attention to marketing (in fact you didn’t even budget for marketing did you?). This is actually 5 months too late. You need to start marketing your restaurant six months prior to the open. There is actually plenty to be done during this time to create buzz, excitement, educate your community about your business, establish yourself as part of the community etc. The list is actually very long. This is one of the main reasons a marketing strategy is critical to your success and why you should start to create your marketing strategy as soon as you decide that you’re going to open a new restaurant. Why? Because every single decision you make starting now, will either add to or detract from your ability to successfully market your business. Including, but not limited to:

• Menu
• Location/Lease
• Hiring
• Community Involvement
• Operations

The process starts with analyzing your market for information on what it needs/wants and how you can best take advantage of any areas of opportunity. This process should have answered several questions (about the type of concept and guest experience)  that could be successful,  in order to be able to begin creating a strategy for your marketing efforts.

• Who is your guest going to be?
• What do they value?
• Which businesses do they also do business with and how can we create a mutual and natural affinity that adds value to our experience?
• Where do they get their information?
• How do they communicate? Who do they communicate with? About what?
• What’s important to them in terms of experience? What do they value? What do they not value?
• Which guests will be the most important influences in our community? (This is not the mayor!)
• How do we introduce ourselves to our community in order to begin building relationships? How do we support those relationships and continue to add value to them in a meaningful way?
• How do we create emotional bonds with guests through our guest experience?
• What can we do to engage our community six months out? Four? Two? 30 days? Beyond?
• Many,  many more.

It’s all about location, location, location.

No. It’s all about context, context, context.

This one makes my brain explode as fast as any of the ‘rules-of-thumb’ that have lingered around forever, because we hear it every day. “We chose this location because of all the traffic that goes by it every day. We’re sure to get noticed now. Besides, we got a good deal.”

Hey, no problem. But your target market is on the other side of town and there’s three similar concepts on the same street as yours. You forgot to ask some very basic questions.

1. Where is my target market located?
2. How do you reconcile the issues of  ‘convenience’ and ‘ proximity’ to your target market in terms of building a guest experience based on meaningfully differentiated value?
3. What can you afford? Does it make sense to up your investment in a more expensive location in order to realize a greater marketing potential? Can you locate in the center of your target market or is the edge good enough?
4. What can you not afford? Can you compensate for a better, yet more expensive location, with increased effectiveness of some other aspect of your marketing strategy? (Private dining room(s), dedicated carry-out, delivery,  premium pricing, etc…)
5. What is the relative location of the people you will hire in relation to this location?
6. How do differences in zoning or local ordinances impact your marketing from each location under consideration?
7. Many, many more.

We need to come up with a killer discount or promotional offer in order to attract potential guests.

Seriously, this is the last thing you should do. It sets the stage for the guest to define for themselves, your guest experience at a much lower value level than you designed or need to execute in order to be successful.

If you open with a BOGO for example (Buy One Get One), then guests will define you as just another overpriced restaurant that needs to discount in order to make up for a lack of a meaningfully differentiated guest experience. This makes you and your experience a commodity and not worth the price you printed on your really expensive menus. It also attracts the discount seekers and they really have no relationship to your target market.

Positioning is critical in this stage and offering discounts or promotions to attract guests, undermines the validity of your original positioning. This defeats any effort you make to establish trust or value. Besides, discounts don’t work to build long-term success and there are much better and more effective ways to influence new trials than giving away your margins.

What other ‘myths’ or ‘best bad practices’ have you encountered, or are encountering right now?

Stay tuned for the next installment.

Guests like them if the rewards are generous, easy to understand, and accumulate quickly.

Restaurants, cafes, clubs and hotels like them because they can attract new guests, increase the spend of existing customers, help prevent guest defection and enable you to build a database.

1. Rewards: Award points for purchases. Points can be exchanged for rewards, unrelated to the brand. Use this type of program when you want your program to also serve as a new guest acquisition program and to differentiate your brand from the competition. This is especially useful if you have a limited product line and don’t have unlimited options of products and services.

Restaurants and service companies use this system where their product lines are limited. Administration can be complex – it needs special equipment, cards and database systems to optimize the benefits of a program. Members will also expect to be able to track and redeem their points online.

Examples: American Express card users accumulate points they can then use for gifts, travel, or transfer to an airline Frequent Flyer program. A restaurant program would allow points to be used for rewards with others eg the Chicago-based Lettuce Entertain You restaurant group offers a wide range of travel, wine and spa packages as rewards for members of their Frequent Diner program.

2. Rebate: Awards a gift certificate redeemable for the next purchase, when the guest reaches a certain spending level. When you have a wide selection of products, this reward program can be used to motivate new incremental purchases. It can also be used to increased store traffic. Department stores use this method to build additional sales from existing guests.

Examples: a simple form of this are the popular Coffee Cards — your card is stamped every time you buy a daily coffee: once you have 7 (or 10 or stamps, you receive one free. Very simple to administer. Clubs and casinos use this method where members and card-holders have a swipe card, and can accumulate points from their gambling expenditure and apply them to food and beverage purchases.

3. Appreciation: When guests are asked whether they would rather have cash or a reward, they will always take the cash. But in giving away cash, you diminish the value of your brand. So offer a rebate when the result will be incremental visits and sales. Offer an appreciation reward of your own company’s products and services in exchange for accumulated points.

The goal here is to increase guest LTV (lifetime value), not to acquire new guests. It can also be used as a device to get good guests to sample more of your other products and services. Airlines, hotels, phone companies use this to accumulate points for additional services within their own brand. Seat upgrades, free tickets, hotel stays at different locations, etc.

Examples: At Cafe Troppo, we had a Frequent Diner’s Club that offered a free Dinner for 4 voucher once a certain level of spending was reached. This encouraged customers to spend up, and kept the rewards in-house – they could only be redeemed Monday to Thursday. They were also likely to bring guests who had not visited before.

4. Partnership: Rewards a guest’s accumulated purchases with a partner’s products or services. Your primary goal is to acquire new guests where you have a partnership arrangement to use the partner’s extensive guest database. Airlines use this frequently when they give you points for renting cars and sleeping in hotels.

Examples: A restaurant could offer rewards to the clients of a Realtor, hairdresser or other local business, in return for that business promoting you to their customer list.

5. Affinity: Once a guest climbs the loyalty ladder and reaches advocate status, your brand is firmly planted in their minds. An affinity program offers special communications, value added benefits and bonuses and recognition as a valued guest. This is used where rewards are no longer needed to cultivate a long term relationship, just as a reminder to learn more about your other products and services.

Examples: airline frequent flyers earn Silver or Gold status once they have earned a certain number of air miles. Night clubs have access to special rooms and benefits for members who have reached a special level of spending or are regarded as VIP customers.

Article by Jeffrey Summers with examples by Ken Burgin

We had the privilege of interviewing Guy Kawasaki about his new book called “Enchantment” on The Restaurant Marketing Hour today. The book talks about how to build better relationships and in our more social business climate, this book is sorely needed. Take a listen here and let us know what you think.

David Aaker has a great post here on his blog you should read that covers the book. I think “Enchantment” is a must read.

We’ll be hosting our first Restaurant & Hospitality Social Business Leadership 2011 Workshop in Sydney, Australia, March 22-24th.

The world has been and continues to be a rapidly changing social marketplace for restaurant and hotel businesses. Guests are more demanding and more engaged in defining value for themselves – with or without your input. This is why it is extremely critical to understand and engage with your guests on a deeper and more social level than ever before if you want to build future success. The question is not about the use of social media but instead, of creating a more social business.

This workshop will be an intensive two days of intellectually rewarding work that includes both strategic and tactical challenges to better prepare yourself and your business to face your ever increasing social marketplace.

Top learn more about attending, as well as the complete 2 or 3 day agenda and event overview, click here.

Also, don’t forget to visit us over at the Social Business Leadership 2011 website to learn more about how to prepare yourself and your business for a more social marketplace.

SmartPulse — our weekly reader poll in Restaurant SmartBrief — tracks feedback from restaurant owners and managers about current trends and issues.

Last week’s poll question: Do you seek advice from a restaurant consultant?

43.06% — My restaurant doesn’t need a consultant.
38.89% — My restaurant has sought advice from a consultant in the past.
6.94% — My restaurant currently is seeking the help of a consultant.
5.56% — My restaurant plans to seek a consultant.
5.56% — My restaurant uses consultants, but I don’t work directly with them.

I reached out to a couple of restaurant consultants to hear what they’re up to and how they can help.

Name: Jeffrey Summers
Company: RestaurantWorx Coaching & Consulting
Market: Dallas-Fort Worth

Most operators don’t have enough expertise to solve most of their problems with operations, profitability, people or marketing, let alone enough specific expertise to help innovate their business and take it to the next level.  The right consultant does.

The right consultant can, if utilized effectively, impact both sides of the equation – costs and profits. They can:

• Help you solve operational issues that have been plaguing you for a long time. How many times can you “fix” food cost? Why are labor costs still a problem? When are you going to move beyond what’s broken so that you can work on actually creating?
• Help you understand how to build a better and more successful business.  How many times do you say you never have enough time to work “on” your business?
• Help you execute better. There’s a process to building success in the restaurant business. Are you on the right path for you? How long have you been struggling to find “the answer”? What is the best answer for your business right now? A year from now?
• Help you understand the importance of marketing and develop the best strategy for your business, which builds long-term success. This is the No. 1 reason 66% of all operators go out of business within their first three years of operations.
• Help you stop relying on “hope” as an operational strategy. “I hope this marketing works.” “I hope this solves our problem.” “I hope we find the right people to staff our shifts.” “I hope our training works to help build our business.” “I hope people like our new menu.”
• Help you go beyond “best practices” and move toward “best results.” My definition of insanity is doing the same things everyone else is and expecting better results.

The one item of pushback I usually have to address is, “But they’re too expensive,” and my response is always, “Compared to what? Failure? Less business than you want or deserve?” Like anything else, you should be expecting a measured ROI from your investment.

Read full post by clicking here!

by Jeffrey Summers, Pres., RestaurantWorx Consulting

Just having completed the Restaurant & Hospitality Social Media Marketing Bootcamp in Chicago last week, we wanted to take a minute and talk about some of the most common mistakes we see being made by operators at all levels.

1. No goals. Without setting goals, your efforts become aimless and unfocused. Unless your social media strategy fits seamlessly with your overall marketing strategy, your message becomes fragmented and confusing to guests and results in killing your businesses momentum.

2. No measurement. You can’t pay the bills with fans and followers. You have to tie results to actual cash in the till. Doing anything in social media (or any of your marketing efforts in general) further than two degrees of separation from an actual sale is worthless and a waste of resources. The closer you engage a guest at their point of experience with your brand, the more impact your efforts will have on real loyalty and facilitating great word-of-mouth.

3. No social culture. The biggest factor that prevents a business from having any social media success (or any success in our business period) is that the actual business does not have a culture that encourages real engagement with its guests. FOH staff that can’t have real conversations with guests about their experiences, at the minimum, is not going to be able to fake it virtually. Real social media success begins in the dining room or lobby and without making a tangible difference in the moments your guests share with you, will only allow social media to amplify your mediocre levels of execution.This also includes using the wrong people to manage your social media efforts. You don’t want to give up this tremendous responsibility, facilitating relationships with your guests, to someone who isn’t engaging or who does not know your business. Outsourcing any part of the guest experience is always a definite “No” in our books. If you can’t find someone in your business who is the most “people friendly” then you have more problems than getting started in social media. And I don’t care if they know a tweet from a post, you can teach the technical stuff, but you can’t teach empathy or sincerity. This leads us to the next point.

4. Nothing to say. I get this question so much it scares me. “What do we talk about?” First you don’t talk about yourself. Stop pushing specials, coupons and discounts to your social media community. That’s not creating a relationship with your guests. That’s treating each one of them as nothing more than a transaction. That makes you a commodity and provides absolutely no basis of understanding who your guest is or why they visit you.Second, what you do talk about are those things that matter to your guests. What’s going on in their lives and how can you make an impact in those situations. Do they have kids? What events are their kids involved in at the moment? How can you make an impact in them? What are they celebrating in their life? What problems or difficulties can you help them overcome, within the context of your business? Do they work at a business that you need to establish and build a relationship with? How many names of core guests do you know? Can your staff recognize those guests on sight? What events do you have coming up? Pictures and video to share with your community? The list is endless.Third, understand that the conversation you have offline are no different than then ones you have online. Keep the focus on your guests and what’s important to them. Don’t be a social narcissist.

Our hospitality philosophy is centered around the simple understanding that every time a guest walks through your door, it’s a day in their life. First date, last date, engagement, divorce, birthday, anniversary, new job, old job, every success or failure is celebrated and if you can add to their level of enjoyment by making a significant difference in their day’s event, you can make an emotional connection that plants the seeds of real loyalty. Don’t add to it, and you are actually taking away from their celebration and won’t be remembered for anything positive.

5. Trying to be everywhere. The only platforms you need to engage in, are those where your guests are. Which means you have to have a conversation, at some level, to get a good understanding of where your guests socialize online (and offline!) . Where do they talk with their friends and family? That’s where you need to be, no place else. This might be one of the “Big 3″ (Twitter, LinkedIn or Facebook) but it could also mean someplace more local like your local newspaper’s website, in their culture sections (reviews, community news, etc…). Most likely you will reach more of your guests through these local community sources than the “Big 3″.Most times, the place where you should be, is in your own dining room, simply talking to guests. If 90% of your time isn’t spent talking to guests, or staff who do, then you’re not doing your job. How else will you find out what they’re celebrating today? Why they came? What they love about you? What they hate? Who and how they socialize? How much influence they have within their social circle?  (This goes for both staff and guests!) Which leads me to the final point.

6. Forgetting staff. The most important people in your social media efforts are those front-line employees who greet, shake hands, talk to, laugh with, engage with, celebrate with, encourage, and serve every single guest, at every single table, every single day. They know your guests better and they know your business better. They make or break every guest experience. Your guests know them better than they know you. Plus there’s simply more of them. Ignoring the impact that your staff has and can make is insane. Which is why the first people you need to dedicate yourself to are them. Don’t hold them back from being a part of your social media efforts. In fact, insist on it. It should be a criteria for employment. If you have a decent Facebook or Twitter presence as your main social media focus, then so should your staff. There’s nothing more powerful than a server commenting to a guest on your social media outpost with: “Hey George! Glad to see you visiting our Facebook Fan Page. I wanted to thank you for allowing me the pleasure of taking care of you and Helen when you were in celebrating your 40th anniversary last night. I’ll email you some of the pictures and video we took so you can share it with your family and friends.”

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Today’s tip is brought to you by Inside Hospitality™, a comprehensive and innovative guest experience management and measurement company whose integrated suite of hospitality business solutions achieves tangible results in the marketplace and is the choice for restaurant and hotels worldwide.

Contact us today and learn how Inside Hospitality™ can create a custom solution for your organization. We can be reached anytime @ (888) 260- 0380.

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www.RestaurantSocialMedia.com

April 26th. & 27th.

What the discussion boils down to is both the value of a happy guest and the value of an unhappy guest because both have equally important values.

Let’s assume you have a $20 per-person-average (PPA) and that for every happy guest they will tell five people within a month of their great experience.  Those five people then visit your restaurant and have a great experience and each of them tell five m0re people and so on. It will look something like this:

Happy Guest #1 is worth $240 to you a year if he visits you just once per month at the $20 PPA level. Do you have happy guests who just visit you once a month? Perhaps but most visit you much more.

So by the end of the fifth month, the initial guest has told enough people about his great experience to garner you over $15,000 worth of business – not bad for just getting it right – and after a full year of positive word-of-mouth, the initial guest has helped create over $128,000 worth of business for you simply by communicating to the people in his close community about how great an experience he had at your restaurant.

Now contrast this with the understanding we all have that when you “get it wrong”, people have a tendency to tell more people about the bad experience than the positive one. Then assume the $20 PPA again and multiple these amounts by a factor of 2 or 3 or 4 (whichever you understand to be the case about the flow of conversations about bad experiences) and you can see how much money is potentially lost from the negative word-of-mouth generated by bad experiences.

Now consider the amplification of the bad experience and subsequent communication about it by people engaged with social media and you see a whole bunch of potential for lost sales as well as erosion of your brand reputation.

Finally, add in the lost opportunity cost of getting the marketing wrong or not listening to your guests and understanding their level of dissatisfaction with your experience.

So the lessons of situations like this are what I rant and rave about to restaurant and hospitality operators on a daily basis. Those being:

• The reason most operators fail is not for lack of capitalization, it’s from bad marketing.
• The reason most operators continue to fail, even when they see how bad things are is because they can’t admit they need help.
• No marketing strategy is more effective or powerful than those which work to leverage positive word-of-mouth strategies and tactics.
• Failing to implement a serious Voice-of-the-Guest program to measure guest expectations is suicidal.
• The potential for success is too great to dilute by using any discounting strategy when what you should be doing is adding value to support and enhance each guest experience.
• Social Media can serve to amplify a great experience or a negative one more so than any other and underscores why you have to be listening, engaging and facilitating with those conversations.

What do you think?

Post by Jeffrey Summers of RestaurantWorx.com

This blog post was published last year (2009) when Denny’s announced their first Super Bowl promotion. Surprisingly it is relevant to this years stunt as well.

On the surface, giving away a free Grand Slam breakfast to anyone who comes in, might seem like good PR – but it’s not if you’re looking for long term loyalty or goodwill.

Yes they garnered massive media attention with the marketing stunt but this buzz will only last the 60 or so hours surrounding the event. Incremental sales will be up for a few days. Lots of kids skipped school to get a free breakfast and locals are complaining about it in their comments on just about every local online news blog in the country – read this one for example.

So what would have been better?

Charge for the meal and donate all of the proceeds to a great national cause. This would garner more goodwill than a momentary full belly that will go away in less than 24 hours. (See Cause Marketing)

You can’t build guest loyalty with stunts – that’s old marketing thinking. You garner goodwill and loyalty one guest at a time – one guest experience at a time. If your focus is maintained on building better experiences every guest, every table, every day, you will effectively build more loyal guests than any publicity stunt could ever hope to.

There’s no value in free if the goodwill isn’t a long term effect. Sorry, but if I was Denny’s CEO the opportunity cost would have simply been too high to pay for this stunt. Putting the money into coaching staff to deliver better experiences would have been a much better use of the money.

Yes there is a silver lining to every cloud!

1. Everyone is cutting back on their advertising (most think falsely that advertising is marketing).
2. Because there is a lack of advertisers, the cost of advertising, across all channels, is rapidly falling.
3. If you have a marketing message that is relevant (something more than the next, great value deal!) there is much less noise to crowd it out of the minds of your guests (think mindshare) and therefore it should be easier to communicate to them more effectively and efficiently.
4. Research shows that businesses that continue to market themselves (or even increase their marketing) even during recessions perform better in the long run. In a McGraw-Hill Research study looking at 600 companies from 1980 to 1985 found that those businesses which either maintained or increased their levels of marketing during the 1981 and 1982 recession had significantly higher sales after the economy recovered. Specifically, companies that marketed themselves more aggressively during the recession had sales 256% higher than those that did not.
5. Price is only a factor if your core marketing strategy is based on consistently low prices, i.e. Wal-Mart.
6. Messages that address the value of your guest experience over others who concentrate on commodity pricing consistently win both margin and share.
7. Continuing to add to the level of consumer fear in your marketing just so you can talk about how your “deal” is what’s best for your guest’s pocketbook, makes no sense. Keep the message positive and focused on the value added.
8. You cannot continue to try and differentiate yourself from your competitors and then send out the next batch of coupons, BOGO’s and 2-for-1’s.
9. If you can feel the price sensitivity in your guests, does it honestly make sense to continue to use your marketing to justify your pricing strategy? Or should you choose a different message?
10. If you’re in a higher end market, you should be emphasizing the emotional appeal of your experience to your guests.
11. Don’t dilute your hard won brand equity by “going cheap” or decreasing in any way the value your guests feel for their experiences with you. Just the opposite. You should be looking to increase the value of the guest experience at every touchpoint.
12. Just as it is more expensive to go after new guests rather than taking care of the ones who make up your core business, so it is with “mindshare”. No longer talking to your market because you have cut back on your advertising is like excusing yourself from the conversation and letting your competition do all the talking. Guess who your guests will remember when the downturn is over? Guess how much more expensive it will be for you to try and recapture their interest? Why wouldn’t you want to be on the other side of that equation?
13. Don’t forget that your best marketing strategy involves running a great operation. Never forget the basics.
14. Positioning is a tremendous opportunity right now. If you can position yourself in your guests mind that you have their best interests in mind, you will win. Hint: you can’t do this by decreasing your experience value.
15. Segment your guests and stop sending out the same piece to everyone. Not all guests are the same so why do you market to them as if they were?. Aren’t you really growing the seeds of your guests resentment of you?
16. Have you looked at what channels your guests are utilizing to receive their information and communicate with each other? Is it still direct mail? How many of your guests are on LinkedIn? Facebook? MySpace? Twitter? Are you really trying to build your email database and capture their social media preferences as well?

Read full post at Restaurant Worx