Hidden Costs of Restaurant Marketing

Restaurant marketing’s hidden costs to keep in mind

When you’re creating your restaurant’s budget, it’s important to identify often-overlooked marketing costs, including offline marketing and digital marketing strategies. If you plan for costs early in your planning process, you won’t have to worry about exceeding your budget. 

Consider the following hidden costs when you’re developing your restaurant’s marketing budget. 

Website development

An attractive, user-friendly website is the first step in advertising your business. However, while modern tools make website design easier than ever, a website isn’t free.

Behind-the-scenes costs of a professional website include fees for website hosting, a website-building platform, a domain name and more. The best website builders and design services often make things easier with customized templates and built-in e-commerce functionality, but these services will cost you. Some fees, like template-creation fees, are one-time costs. Others, such as website hosting, are typically charged monthly.

App development

Today, diners have fewer one-on-one interactions with restaurant staff. According to the Phygital Index Report, 71 percent of consumers prefer using proprietary restaurant mobile apps when ordering food for pickup or delivery. In addition, 34 percent of quick-service-restaurant customers prefer ordering from a self-service kiosk.

If you offer pickup or delivery service or have a quick-service establishment, factor in the costs of developing mobile apps or in-store kiosks. App development for restaurants typically costs between $2,000 and $8,000 for a straightforward app, although it can be much more if you need complex features and functionality. If you have kiosks, you’ll need to include equipment costs, although you’ll probably have lower staff costs. The best restaurant point-of-sale (POS) systems can build the cost of self-service kiosks into your monthly payments.

Direct mail and email

Direct mail postcards and letters and email marketing campaigns are excellent ways to keep your business at the top of customers’ minds and promote upcoming events or sales. While both are effective tools for promoting your company, the costs can add up. 

If you’re on a budget, consider using one of the best email marketing services to boost your restaurant’s digital marketing ROI. Low-cost small business plans start at around $12 monthly. (Read our review of Constant Contact for more information on a budget-friendly email marketing service.)

If you want to integrate direct mail with digital marketing, make sure you budget for printing and mailing, which can cost hundreds of dollars monthly.

Social media marketing

Social media marketing is an excellent tool for spreading the word about your restaurant. Although posting on social media is free, combining organic posts and paid advertising on social platforms is the most effective strategy. Many restaurants overlook social media advertising costs when they’re creating a marketing budget.

Also, with myriad platforms and advertising options available, handling social media marketing on your own can be confusing and time-consuming. Hiring a social media manager is an option, but this will be an additional expense.

Loyalty programs and discounts

Restaurant owners also may overlook the costs of discounts and giveaways. For example, if you run a customer loyalty program that offers the sixth meal free, you must consider the cost of the “free” meal as a marketing expense and budget accordingly. The same is true for contests, popular giveaway items and other discounts.

How to create a marketing budget for a restaurant

Marketing your restaurant is crucial, but staying within a reasonable budget is also essential. Here’s how to create a restaurant marketing budget.

1. Determine your total marketing budget.

If you currently run a restaurant, determine these numbers: 

• Total sales during the last period
• Number of customers
• Profitability 
• Table count
• Cash on hand 
• Expected monthly revenue

These numbers will give you an idea of how much you can allocate to marketing. Your space and table count will dictate how many customers you can accommodate if your marketing is wildly successful. Generally, an established restaurant should spend 3 to 6 percent of its total sales revenue on marketing.

Budgeting is trickier if you’re just starting a restaurant and have no historical data. In this case, you must use your table count, average ticket price and projected profitability to determine your expected annual revenue and profit figures. Next, allocate between 6 and 10 percent of that amount to marketing.

2. Identify and prioritize your marketing goals.

Marketing goals can be divided into two categories: customer retention and loyalty, and new-customer acquisition. If you are opening a new restaurant, acquiring new customers is your primary concern. However, existing restaurants must consider both goals.

Here are some examples of customer retention and loyalty goals:

• Increasing visit frequency
• Boosting check size per visit
• Encouraging referrals and positive customer reviews 
• Adding repeat catering orders
• Booking repeat parties and events
• Increasing online order frequency
• Boosting sales during slow periods with promotions

Here are some examples of new-customer-acquisition goals:

• Raising brand awareness
• Generating more website traffic
• Increasing the number of first-time in-person customers 
• Increasing the number of first-time online orders
• Boosting sales during slow periods with events

Identify and prioritize your restaurant’s specific goals to ensure your marketing budget accounts for measures to help you achieve them. 

3. Know your target market and how to reach them.

Existing restaurants should already be familiar with their target market, have established buyer personas, and understand the best marketing methods for reaching their customers. However, if your marketing has been ineffective, you must reevaluate your efforts and make changes. Consider gathering market survey data from current customers to determine their favorite social platforms and gather additional helpful marketing data to inform your future outreach. 

New restaurants must identify their target audience and create buyer personas based on their food preferences, dining budgets and preferred locations. Once you have this data, you can make informed assumptions about the best way to reach them. Test your options until you develop the right marketing mix.

4. Assess marketing prices by category. 

At this point, you understand the channels that give you the best chance of reaching your target market and know what you hope to achieve. Next, you must determine marketing costs for each platform or channel you’re considering, including both digital and nondigital channels.

Some expenses, such as signage, are fixed, one-time costs. Others are ongoing expenses. You may need to reach out for quotes or research pricing online. For example, if you’re interested in Google Ads or business Instagram options (such as paid ads or boosted posts), you can easily find the current pricing online.

5. Allocate your marketing budget to each channel by month.

The next step is to divvy up your total marketing budget by channel. Here are some general guidelines.

After you assess your marketing investment, allocate monthly funds to each category. It’s important to prepare for significant holidays and events. For example, you should start marketing for Mother’s Day in late March or early April. If your location benefits from a tourist season, start your marketing three to four months in advance so you reach potential visitors while they’re planning. 

During slow times, you can plan to reduce marketing expenditures or set aside some of your budget for promotions to fill tables. 

6. Monitor your results, and reallocate as necessary.

Marketing budgets are fluid. It’s crucial to understand what’s working and pivot to reallocate your marketing funds as necessary. Many digital channels provide insightful analytics tools to help you evaluate your success. Nondigital marketing is not as trackable. However, one way to monitor the results is to ask customers to give you a unique code to take advantage of a promotion. Eliminate underperforming initiatives, and focus your marketing budget on the efforts that are helping your restaurant.

Restaurant marketing budget tips

Here are some tips and best practices for your restaurant marketing budget:

• Spend more on marketing in the beginning. Spend more when your restaurant is new to increase awareness and attract customers. Once you have happy customers, you’ll earn repeat business, gain referrals and amass good customer reviews, so you’ll be able to lower your spending. Consider offering discounts initially. According to Vericast’s Restaurant Trends report, over half of diners (53 percent) say coupons and other deals encourage them to try a new restaurant.
• Allocate a percentage of revenue to your marketing budget. A good rule of thumb is to allocate about 3 to 6 percent of your revenue to marketing and exceed those figures only for a good reason.
• Consider seasonality. The restaurant business is often seasonal, so don’t overspend on marketing during slow periods. Restaurants should utilize a seasonal marketing strategy, in which they spend more during busy times and less when business is slower.
• Use buyer personas to maximize your marketing budget. Build customer personas for your target customers, and determine where they are and what they want. For example, say your target customer is a professional who works nearby and needs a business lunch location. In this case, consider distributing menus or postcards to nearby businesses instead of advertising on Facebook. If your target audience includes millennial parents looking for a family-friendly casual restaurant, consider Instagram advertising or direct mail.
• Track your marketing efforts. By monitoring social media metrics and other measures, you learn which marketing channels and campaigns are effective and which can be dropped.
• Start slowly with your marketing efforts. Consider easing into any marketing campaign or project. A cautious start helps to prevent hasty decisions, mistakes and wasted marketing funds.
• Be creative with your restaurant marketing. Creative marketing helps you spend less while still achieving results.
• Continually refresh your marketing efforts. You must continue to reevaluate and refresh your restaurant marketing and expenditures. Get the most from your marketing investment by ensuring your funds go toward worthwhile efforts. 

Where to spend your restaurant marketing budget

Once you’ve been in operation for a while, consider breaking your marketing budget into a 70/10/20 model: 

• 70 percent: The bulk of your budget (70 percent) should be allocated to marketing techniques that have been the most successful in the past.
• 10 percent: Next, 10 percent of your restaurant marketing budget should go toward testing completely new approaches. You should not expect to see any initial return on this investment.
• 20 percent: The last 20 percent should go to marketing that you tested in the previous 10 percent. Whenever you try something with 10 percent of your budget and it succeeds, move it to the 20 percent budget area and then try something new with the 10 percent. This way, you’re constantly trying something new while spending the bulk of your budget on what you know works.

Restaurant marketing is crucial for success

Marketing your restaurant is vital to its success. Although marketing might be a significant expense, it’s not something you can afford to overlook or omit from your restaurant business plan. 

When you’re creating your overall restaurant business budget, carefully consider your marketing plan to identify hidden costs. Recognizing unexpected expenses early in the process can save you time and stress.