Restaurateurs have myriad considerations when starting a restaurant. They likely plan for significant expenses like rent, restaurant equipment, staff, and food. But many new owners neglect to include marketing costs in their budget. When the establishment opens, and they must attract customers to the restaurant, there’s a problem. They’ll need to cram marketing costs into their budget after already incurring operating expenses, stressing the entire operation.
Your new restaurant might serve the best food in town, but if no one knows about it, you’ll never have enough customers to stay in business. It’s crucial to create a marketing plan for your restaurant and allocate money from the start to maximize your chances of success.
Restaurant marketing’s hidden costs to keep in mind
When you create your budget, it’s crucial to identify the hidden costs of restaurant marketing – including offline marketing and digital marketing strategies. If you target costs early in your planning process, you won’t have to worry about going over your budget.
Here are a few hidden costs that may present themselves when marketing your restaurant.
1. Website development can be a hidden restaurant marketing cost.
Everyone knows an attractive, user-friendly website is the first step in advertising your business. While modern website builders make designing a website for your business easier than ever, a website does not come for 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 offer customized templates and e-commerce functionality, but these services will cost you. Some fees, like template-creation fees, are one-time costs. Other fees, such as website hosting, may be monthly.
Did you know? The best web and cloud hosting services often include domain name registration and professional design services.
2. App development can be a hidden restaurant marketing cost.
Since COVID-19, diners have pivoted to fewer one-on-one interactions with restaurant staff. According to research by Deloitte, 57 percent of customers prefer to use a digital app to order food for pickup or delivery. Even among diners who come to your location, 64 percent prefer to order digitally at a quick-service restaurant (QSR).
If you offer pickup or delivery service or have a QSR or fast-food 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, although it can be more, depending on functionality. If you have kiosks, include equipment costs (although you will probably also have lower staff costs).
Tip: If you’re not a master coder, consider using one of the best app makers and development services for your restaurant app. Consider Zoho Creator if you’re interested in a low-cost app maker with an easy-to-use, drag-and-drop interface.
3. Direct mail and email can be hidden restaurant marketing costs.
Direct mail and email campaigns are excellent ways to keep your business top of mind with customers and promote upcoming events or sales. While both are effective tools for promoting your company, 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 return on investment. Low-cost small business plans start at $9.99 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, ensure you budget for printing and mailing, which can cost hundreds of dollars monthly.
4. Use social media marketing.
Social media marketing is an excellent tool for spreading the word about your restaurant. The most effective way is usually a combination of organic posts and paid advertising on social platforms.
However, with myriad platforms and advertising options available, it can be confusing and time-consuming to handle social media marketing alone. Hiring a social media manager can be a cost-effective solution that yields excellent benefits. Successful social media marketing is worth a reasonable investment.
Tip: Social media marketing is one of the best ways to increase your restaurant’s profits because it allows you to develop relationships with your patrons and keep them coming back.
5. Loyalty programs and discounts are hidden restaurant marketing costs.
Business owners also frequently overlook costs associated with discounts and giveaways. For example, if you run a customer loyalty program offering 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.
Tips on marketing budgets for restaurants
Marketing your restaurant is crucial but staying within a reasonable budget is also essential. Here are some tips on restaurant marketing budgets:
- Spend more on marketing in the beginning: No one knows you when your restaurant is new. Spending more, in the beginning, makes sense to increase awareness and attract customers. Once you have happy customers, you’ll start getting repeat business, good customer reviews, and referrals, and you can drop your spending to a lower level. Consider offering discounts initially. Over half of diners (54 percent) say coupons and other deals encourage them to try a new restaurant, according to Vericast.
- Allocate a percentage of revenue to your marketing budget: A good rule of thumb is to allocate about 3 percent to 6 percent of your revenue to marketing. While this is a guideline, you should only fall outside those figures with a good reason. If you have an increase of more than 6 percent, it should only be short-term. Hopefully, the extra money you put into marketing increases your sales, and you’ll be under 6 percent again.
- Take seasonality into account: The restaurant business is often seasonal. It’s a mistake to overspend on marketing during slow periods. Restaurants should utilize a seasonal marketing strategy, spending more during busy seasons and less when business is slower.
- Use buyer personas: The biggest way to waste money on marketing is with a shotgun approach instead of a targeted approach. Build customer personas for your audience 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.
- Ensure your marketing efforts are trackable: No matter how you market your restaurant, ensure your efforts are trackable. Tracking social media metrics and other measures tells you which marketing channels and campaigns are effective and which can be dropped.
- Start slowly with your marketing efforts: Consider starting slowly with any marketing campaign or project. A cautious start helps you avoid hasty decisions and mistakes.
- Be creative with your restaurant marketing: Creative marketing helps you spend less and still achieve results.
- Continually refresh your marketing efforts: You must continue to reevaluate and refresh your marketing. You can’t set it, forget it, and expect it to continue working for you.
Did you know? The National Restaurant Association predicts that restaurant sales will increase in 2022 to $898 billion due to pent-up demand, making this an excellent time to take your restaurant to the next level with marketing.
Where to spend your restaurant marketing budget
Once you’ve been in operation for a while, consider breaking your marketing budget into a 70/20/10 model:
- 70 percent of your restaurant marketing budget: The bulk of your budget (70 percent) should be allocated to marketing techniques that have been most successful in the past.
- 10 percent of your restaurant marketing budget: Next, 10 percent of your restaurant marketing budget can go to testing completely new approaches. You should not expect to see any initial return on this investment.
- 20 percent of your restaurant marketing budget: The last 20 percent goes to marketing 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 a successful business. While marketing might be a significant expense, it’s not something you can afford to overlook or omit from your business plan.
When creating your overall business budget, carefully consider your marketing plan to identify hidden costs. You can save time and stress by recognizing unexpected expenses early in the process.