How Much Should I Spend On Marketing?
The generally accepted rule of thumb is that your restaurant should be spending 3-6% of your sales on marketing activities. This is a very useful benchmark, especially for restaurants who are just getting started with marketing. But it is best to view this 3-6% suggestion as a guideline, not a rule.
There will almost certainly be specific situations or times of year where your marketing spend falls outside of this range. As long as it is not for an extended period of time, that is totally acceptable and normal. For instance, you may be in the middle of a major PR push for an upcoming event, and spend closer to 10% of your sales for a couple months. Or you may be located in an area with a drastic seasonal cycle where some months you spend 8% and other months you spend 3%. Your goal should be for restaurant marketing spending to average out to 3-6% of your sales over time.
What Counts as Marketing?
Your marketing budget includes a wide variety of activities. It’s not just the obvious advertisements that count toward this budget. All of the below activities and more make up your entire restaurant marketing budget.
Common Restaurant Marketing Mistakes
Unfortunately, far too many small business owners fall into common traps when it comes to marketing, especially their marketing budget. These are just a few of the most common restaurant marketing budget mistakes you’ll want to be sure to avoid.
Focusing Only On New Customer Acquisition
When restaurant owners think of marketing, the first thing that comes to mind is probably finding new customers and convincing them to visit your restaurant for the first time. This is certainly one goal of marketing and should not be ignored! However, there are a number of ways marketing can drive revenue, and finding new customers is just one of them. Marketing can also drive revenue from your existing customers by increasing how often they dine with you or how much they spend each time they visit.
New customer acquisition is significantly more costly and difficult than increasing the value of your current customers. This has been shown in numerous studies and is widely accepted in the marketing field.
So if you’re focusing your entire marketing budget on efforts to bring new customers through your doors, your return is probably much lower than it could be. By shifting some of your marketing budget to efforts that concentrate on existing customers, your ROI could jump substantially.
Not Spending When You’re Succeeding
This is a HUGE trap that is easy for restaurants to fall into. When things are going well, it can be tempting to stop spending on marketing. You might think to yourself: We’re getting plenty of business now, so no need to pay to try to bring in more.
There are two issues with this. First, it’s very possible that your marketing campaigns are what brought all these people to your restaurant in the first place. If you stop marketing, you may see an immediate drop-off in revenue.
And even if that’s not the case, your most successful seasons are the time you should be spending the MOST on marketing. Those are the phases where you have extra income to dedicate to marketing purposes, and can use those funds to plan for the future. If you wait until you’re struggling to return to your marketing budget, cash may be tight and you may be too late.
Ignoring Local Seasonal Trends
Depending where your restaurant is located, the time of year may impact how many people are around, and how often they are dining at restaurants. For example, for a restaurant in a coastal beach town, business likely booms in the summer and tapers off during the winter. If your restaurant has a patio that doubles the amount of tables you have and can be used 6 months out of the year, your revenue is probably much higher during those 6 months.
When planning your marketing budget, don’t ignore relevant seasonal trends in your area. Pay attention to when more people are around or more people are dining out. Your restaurant marketing should be focused on bringing in as many customers as you can, which means concentrating on the times of year when more people could be dining with you.
Following The Crowd
Another trap that’s easy to fall into: Just spending your marketing budget where other brands are spending theirs. It’s true that looking to others in your industry can be a useful guide to what works marketing-wise. But just because a particular platform or method is trending doesn’t mean it will fit for your restaurant.
For example, TikTok has been an absolute powerhouse for the last few years. You may feel tempted to focus on TikTok just because everyone else is. And in some cases, that would work. But what if you own a fine dining restaurant with a clientele primarily in the 50+ age range? That is NOT the demographic on TikTok. So if you spent your money there, you’d be marketing to the wrong people.
When deciding where your marketing budget should go, think about your business goals, your audience, and what platforms align best with those. Reaching more people means nothing if it’s all the wrong people.
Forgetting In-Restaurant Marketing
When people are dining in your restaurant is the time they are most engaged with your brand. Don’t miss this prime opportunity to market to them! Make sure your menus and signage are all up-to-date and align with your branding. Include ways for diners to find you online on each table, like a QR code. Include special offers for those who subscribe to your email list on customer receipts. There are numerous ways to make sure those in your restaurant are being effectively marketed too while they’re with you.
Focusing Too Much On Immediate ROI
Finally, a concept that can be very challenging for restaurant owners to understand and accept. Some of your marketing spending will go to channels, platforms, and activities where you do not see an immediate return on investment. That’s normal, and does NOT by any means indicate that your marketing isn’t working.
There are so many more factors to consider in determining your return on marketing efforts, and paid advertising in particular. Say you run an advertisement on Facebook that showcases your best-selling menu items and includes a link to your online ordering website. You’ll want to see some sales funnel in directly from that ad. But your true return on that ad is so much more than just the direct sales.
For instance, are the sales from that ad coming from new customers who wouldn’t have found your restaurant otherwise? If so, their entire LTV (lifetime value) can be attributed to that ad, but all you’ll see in Facebook’s data is the value of their first purchase. What about all the people who see your ad, aren’t hungry now, but follow your page and make a purchase next week? Or the people who join your email list because of the ad and order food from you sometime down the line? Or the bump in engagement your Facebook page gets because of impressions made by the ad, which then leads to more people seeing your page and learning about your brand? All these factors can be hard to quantify.
The point is, immediate ROI is just one way that marketing is valuable. For every dollar spent on marketing, you’re not going to see ten dollars in sales that same week. It’s important to pay attention to larger trends, like comparing sales in months you weren’t advertising and months you were.
Restaurant marketing is no easy task, and neither is setting the perfect restaurant marketing budget. That’s where an expert can help. BYK Digital is a marketing Swiss army knife. We can help your restaurant set and stick to an appropriate marketing budget to help you meet your business goals!