The Opentable Monopoly

The shadow that looms behind Urbanspoon’s undertaking is Opentable. We are doomed to mention OpenTable, a company which dominates online restaurant reservation. It’s unfair. As we all know, a monopoly or near monopoly (OpenTable has over 90 % market share) always, always offers their service at an unfair price, whether they low-ball to kill start-ups or jack up the price because restaurants have no choice.  They seem to be in the business of being the only one in business. Restaurant owners feel like they are being shortchanged, and they are .

Essentially, many, if not the majority, of the 15,000 restaurants that use Opentable believe that they have no choice. At this point, the average online customer knows of no other online service that takes reservations. They do not read the tech websites, and they know next to nothing about Urbanspoon or similar enterprises. For those who want to opt out of Opentable’s near monopoly, it’s not a viable choice because they feel that they are committing long-term financial suicide. OpenTable’s supporters often shoot back that why would restaurants use OpenTable if it was so hurtful. The argument that 15,000 restaurants are happy with Opentable’s prices only because they signed up is ludicrous, and ignores that small businesses are terrified of falling behind.

But though OpenTable pulls the strings in online reservation, Urbanspoon, a relative light weight in online reservation, has created a system both refreshing innovative and beautifully simple. As shall become obvious, we are not just championing the underdog. Rezbook maintains efficiency and ease of use while maintaining all the requisite features. It’s a step forward. To make an analogy: Urbanspoon especially RezBook, the anchor of their reservation system, takes Apple’s ethos of simplicity, functionality and style that have catapulted iPhone, iPad, and iMac to being the industry standard. Not coincidentally, Rezbook works off the iPad.

With Rezbook’s reasonable prices, a simple interface and millions of potential users, Urbanspoon has turned a lot of heads. It, though, lives up to the hype. We were pleased with their contribution to the restaurant world, especially the software behind Rezbook. But by most, Urbanspoon isn’t well understood as it is a company with many faces. Although these functions harmonize well, a look at each will spell out the possibilities for restaurants.

Website: Reviews and Online Portal to Restaurants

First off, Urbanspoon’s website is a repository of high-quality reviews. It combines the general ratings with reviews from established bloggers and print food critics. Unlike Yelp, it doesn’t emphasize one to the detriment of others. It doesn’t try to be cool and reviews seem to be thoughtful. Consequently, millions trust Urbanspoon, and it has a strong footing in this market. It cuts through the inaccuracy of ratings found on Yelp and CitySearch (many ratings say something completely than the ratings), and puts the restaurant to the test: would you suggest it or not? With a community of size, scope and intelligence, it is at this point as close as you can get to word of mouth with millions of strangers. Granted, I am a little uncomfortable with review sites on principle. And inevitably, some of the arguments against Yelp gain some traction against Urbanspoon’s website, but I get the sense that Urbanspoon works hard to prevent a free-for-all.

On the Go: Smart Phone Applications

Next, Urbanspoon takes much of the information on their website and condenses it into an immensely popular smart phone application. Years back, Urbanspoon’s iPhone application earned its reputation through the shake. You’d shake the iPhone and the app would select nearby eating alternatives based on your GPS location. Urbanspoon has built on that. Now the application, which is available for a whole host of smart phones, has a menu system that provides a thorough and streamlined listing of restaurants. It has search, maps, descriptions, reviews, and menus. And slowly it boasts more and more reservation options.  It leads the pack. Similarly, there is an iPad application for restaurant goers, which should not be confused with Rezbook. As the reservation options increase, Urbanspoon’s application will become an even more powerful tool. The most likely way this will happen is through Rez, the computer based reservation system, which is compatible with other reservation systems like OpenTable.

Rezbook: Urbanspoon’s Online Restaurant Reservation Breakthrough

Rezbook is the cornerstone of Urbanspoon’s online reservation system, from which all the parts come together.

The already spectacular iPad, with its wireless internet capability, is the main platform that a restaurant manages reservations from Urbanspoon with. Buying an iPad involves some investment but if you put this up against OpenTable, your restaurant gets away unscathed. Anyway, an iPad has some resale value (iPad’s have tracking devices that discourage theft). But Rezbook is not merely for online restaurant reservation; Rezbook is a versatile table management system. Everything is there, and because it’s so impressive we prepared a video. It also has its fair share of improvements. It has a graph to assess the number of diners at one time.

Urbanspoon is not lying when they say a person needs no more than 15 minutes get the hang of it. It is fortunate for restaurant brave enough to adopt this system as multifaceted programs this intuitive are as rare as solar eclipses. Of course, it syncs with the computer-based software and Rezbook can be managed remotely on an iPhone. But the genius is in Rezbook. Out of nowhere, it sets the bar for the ease of use, the effective use of technology, and the sheer beauty. See for yourself.

If Urbanspoon’s Rezbook, being right on the money, fails to make inroads, the restaurant industry will for the foreseeable future be at the mercy of Opentable. Surely, even with Rezbook, there is work left to be done. And hopefully, customers will transition to an industry which has room multiple companies. Still, if Urbanspoon is half as good at business as they are in creating an online restaurant reservation system, we have nothing to worry about.

You could of course punish your customers (I say punish because that will be how they see it). Rising your prices can be done without much thought and regard for customers, but in actuality it is a delicate process and can scare off customers. This can be a disaster if it is done abruptly, without giving customers forewarning or without training staff in a customer friendly explanation. But you have other choices, which you should consider before jacking up prices. These four strategies may lessen the damage that price increases have on your business.

1. Shop Around

If you haven’t spent time considering all your purchasing options, this is where you should start. It is easy to assume that ingredients from other sources and suppliers is of lower quality or of equal or higher price. This may be true, but don’t take the word of your current supplier’s rep. You have to put it to the test and make the necessary phone calls, especially as other suppliers may have incentives for you to switch. Although this is a frustrating process, you cannot know if there is a better deal out there if you don’t put in the time. You do have to take into account other factors besides quality and quantity however, such as service and reliability.

2. Haggle with Suppliers and Buy in Bulk

Sometimes, you can get the slightly prices reduced, especially if you own more than one restaurant. Still, by buying in bulk (and decreasing shipments), most restaurants can save money. This is all contingent upon storage space and how long the food keeps. Be realistic (and follow health codes) here and also provide the necessary buffer to keep everything running smoothly.

3. Local Farmers

This is not cheaper in nearly all cases, unless you are willing to take some risk. Essentially, the only method I see of lowering prices is by making a payment before harvest at a reduced price (a simple futures contract of sorts). Farmers, especially small ones, have to deal with fluctuations that attract them to minimizing risk. The problem is that you do not know what the harvest will offer months beforehand. While the quantity can be decided on beforehand, the quality of the produce cannot be guaranteed. So do not choose a random farmer and look for a best deal (do your research by asking around) blindly.  Also, farmers are only interested in this if there is an order of sufficient quantity so you need the ability to store your order.

4. On the Plate

a. Less Food – Because owners don’t want to bump up price and anger regular customers, they often resort to decreasing portions. Sometimes, it is dramatic. Other times, it is barely noticeable. Whether this decision is a wise choice or catastrophe depends on the restaurant. You must ask questions before you take this step like: Are the portions generous? Are the generous portions part of my brand? Will I leave customers hungry? What do my customers expect? Think about the psychology of your customers and how you can make it easy for them to adjust.

b. More Filling Food – Some food just fills you up more and frequently the most filling foods are the cheapest item on the plate (many vegetables). It only speaks to reason that the proportion can be slightly shifted to favor these foods over more expensive ones, especially if it does little to alter the dish.

c. Less Food Visually Enhanced – Owners should consider that food is visual too and that is normally how customers assess the size of the portion. That means that the arrangement can alter your customers’ experiences. You are not pulling a fast one, because this visual perception actually contributes to your customers’ satisfaction. The easiest way to accomplish this is actually changing your plates. It does not have to be dramatic as the food to plate ratio has an enormous effect on customers’ psychology. Let’s be clear, you are not selling a commodity but an experience (that includes the perception of food). For many restaurants, the last three techniques will reduce a restaurant’s contribution to the obesity crisis in America. It stands to reason that no dish should have a days’ worth of calories (otherwise, your hands are nearly as dirty as McDonalds).

d. Bread – The complimentary bread (or chips) is so cheap (if you make your own that is) and when customers are waiting they can consume a lot, limiting their appetite. Of course, the bread has to taste good and be constantly refilled, but this is a technique to lower customers expectations and also keep them happy as they wait for their meal.

5. Relabeling, Revamping or Replacing Menu Items

Your menu isn’t the ten commandments. It isn’t written in stone. You can replace dishes (simply method) or repackage them at a slightly higher price or with a cheaper assortment of ingredients. Give yourself flexibility with interchangeable ingredients and decrease slightly the specificity of your menu. Even better is revamping some menu items with a different name and a somewhat different (hopefully improved) taste that has a higher price. Come on, you have made the salmon exactly the same way for 15 years, and it hasn’t created a fanatical following. If you earn the higher price, customers will definitely not fixate on it nearly as much. Of course, I don’t suggest doing everything at once, but having ⅓ the menu evolve over a year isn’t that big of a deal. An easy way to do it is introducing the dish as a special and then instituting it into the menu. Get creative.

What The Future Holds

The USDA predicts that the food price increase will slow down, so you may not have to go to your bag of tricks and ideas every few months and you can focus on other things. But don’t take it lying down. It is a reason to improve your business and maintain (or improve) customer satisfaction.

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Giving Loyal Customers a Part of Your Restaurant

The benefits do not end after the customer pays for your merchandise.  Frequently, it has a much larger marketing effect. Typically, a loyal customer commits to your brand even more. This commitment has a lasting effect as it solidifies (literally) his or her opinion of your restaurant. Think about all the times the customer will come across the merchandise at home and be reminded of your restaurant.

Being the Topic of Conversation

The second effect springs out of the conversations that the product provokes. A compliment or question is an opportunity for word-of-mouth marketing between a loyal customer and a potential customer. You may think your logo is an effective advertisement when someone walks down the street wearing it on his or her cap or shirt. That is not normally the case for an independent restaurant. Instead, the T-shirt serves a marketing purpose when people get into conversations about the merchandise. These conversations give your customers the opportunity to talk about your restaurant and why they like it so much.

Spreading Your Brand

Merchandising can also take your brand one step further, as just having only your logo on a cap is a recipe for failure. Some restaurants (like the Hard Rock Cafe) have brands that can pull this off. Most restaurants that have merchandising potential cannot. You should really express your brand fully and connect it to your restaurant’s identity whether its through memorable/interesting text or visuals. Of course, you must consider customer demographics and what they want.

Also, what the merchandise is should reflect your restaurant. T-shirts don’t go with a restaurant with Michelin stars, but wine glasses might work. Don’t just do it yourself if you have never designed anything before. Ask for help from someone competent. Here is a rundown of a couple pieces of merchandise you may consider and a few pointers:

Tips for Merchandise

T-shirts

• text or image in front that expresses brand (whether funny, clever, cool or elegant)
• logo is better on the back (or secondary) as customers shouldn’t feel like billboards and it will get more attention
• should last in washing machine and affordable
• if appropriate, use a T-shirt as a staff uniform

Mugs

• should relate to restaurant (diners, coffee shops, pancake houses)
• travel mugs are better as they have the potential for greater word-of-mouth marketing
• better to have a distinct shape rather than traditional mug

Hats

• should be quality build
• baseball caps are safest bet
• creative placement or representation of logo as back is out of sight

Packaged Food

• provide customers with the ingredients but not the exact recipe
• logistical issues: proper packaging and shipping
• necessary phone and online services

Brand-specific Items

• fine dining restaurant: wine glasses, shot glasses, watches, wallets, ties, scarves, throws
• quick serve & casual dining: T-shirts (look above), glasses, magnets, key chains, pins, stickers

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The best way to start is going from the inside out. Start inside the restaurant as the customers in your restaurant have already committed to eating at your establishment. As you know, making a customer come the second time is much cheaper than motivating a customer to come the first time.  Even though I am starting inside out, I firmly believe that in-house, local store and online marketing are three pillars that are crucial to having a successful marketing plan. Media is more of crap shoot, however. With even those three, you can go in and try to get a passing grade, or you outclass your competition.

In-House Marketing

It is disconcerting how many restaurant owners who do not market effectively when customers are in their establishment. When they visit your restaurant, you have their attention like no other time.

Here are some things we normally see. The menu is haphazard and doesn’t incorporate a marketing strategy. Signage is missing. Customers aren’t informed of the specials or events.There is no newsletter or anything to occupy customers as they wait for a table. The walls are blank; there is nothing on the table. These give nothing to the wandering eye of customers. Instead, they have inexperienced waiters try to clumsily up-sell to customers.

Your restaurant is not a bulletin board. But information (text with images) should be strategically placed throughout your restaurant. It increases interaction and generates additional curiosity. I am aghast at how many restaurants have street chalkboards with not menus in the window, or menus in the window without a case for events (fitting one event..at most two).

Customers should know that you host private events. Customers should know that Thursday is Jazz Night. You don’t have to come on too strong, but you must let them find the information.

The best in-house owners are finding ways to coordinate their online marketing with their in-house marketing. They are finding ways for customers to become Facebook Fans, become email list subscribers or visit their website. This has to be done subtly in most places, but it is doable.

Much of this takes little investment after you get the basics up. Yes, you will need a designer and choose a printer, but making a couple posters won’t set you back too much. Your menus have to be made with care. Your signage has to be visible (and for many restaurants, classy).  With a strong enough brand, you may be selling merchandise, such as T-shirts or throws.

Local Store Marketing: Community

By and large, unless you are a tourist hangout, your restaurant brings in a lot of local customers. Most rely on them. Local marketing is frequently neglected and that is a major mistake. One reason is regulars who make up a disproportionate percentage of the regulars. Your most loyal customers (perhaps 20%) bring in significantly more than 50% of sales and are key to word-of-mouth marketing.

Reaching out into the community is a cost-effective way of bringing the community into your restaurant. It is all about finding the right partnerships. There are numerous ways to do this. You can earn good-will by supporting local charities or popular causes. By donating food to local charitable gatherings, you show off your food while showing your affection for the community. You can reach out to hotel staff to help direct tourists into your restaurant. You can sponsor events or work with other local businesses. Some restaurants can get away with a contest for those who leave their business cards. Remember to send emails to the others, as you can build a relationship. Even welcoming customers when they arrive at your restaurant and introducing yourself will create good will.

People like being treated like people and that means the more you build a personal relationship the more loyal your customers will be to your business. Promotions and loyalty programs will never be as strong as remembering someone’s name and giving them a handshake.

Online Marketing

Of the main three pillars, you have the most flexibility and the most potential creativity online. The internet is a great marketing leveler (especially for restaurants) is one sense as you don’t need tons of resources to reach a lot of customers. But restaurant online marketing can be passive or aggressive.

Before I explain the difference, I want to emphasize that not being online is no longer an option. Often, customers think that you are closed without a website. If you don’t check up, Google Places or Yelp might list you as closed. Just as important is giving customers access to your menus and your brand. If you give a customer no information when they search online, you encourage them to be hesitant and direct them to third-parties like Yelp. You are throwing away business without any online marketing.

A passive approach requires certain things. With this approach, you have a decent website that provides all the information to customers, such as up-to-date menus, directions and anything else customers would normally be looking for. Next, you claim your Facebook Page (or start one) and set up a Twitter account. Although you may start off slow with Twitter, you cannot leave your Facebook Page blank nowadays. Not answering a customer’s question is really bothersome to others who might come to your restaurant. Don’t forget you need to build an email list. Email marketing is highly effective. You will collect emails in-house, on your website and (for the more tech savvy) on your Facebook Page. You need text about your restaurant, but you also need high quality pictures. Professional photos would be best. However, a really talented amateur will normally suffice for most restaurant except fine dining ones.

In essence, you haven’t created any real value with your online presence but you also haven’t created a vacuum. Most of these costs are not month to month but year to year (that is if you can manage updating the website). To give you a rough idea of the ball-park figures. Only a website can range from $500 (which is almost always a uncustomized WordPress template) to $10,000 (capable of numerous functions and fully customized. Hiring someone for a WordPress template is probably a bigger waste of money as you won’t get much more than if you downloaded one yourself. Professional photos can cost anywhere from a couple hundred dollars to several thousand. Email marketing (with more than a few hundred subscribers) normally demands a service. Try out Mail Chimp for free and see if you need to fork over the $25 to 75 a month to get all the features.

An active approach is much more dynamic and creative. The most basic step is tying promotions into your online marketing whether it is on Facebook, Twitter or your website. But it doesn’t stop there. You have an attractive, easy to use website and a customized Facebook Page. You get the most out of Twitter and Foursquare. You also pay attention to your website’s organic search results (for your name and related descriptive terms) on Google as search engines send you new customers. You provide content through many different outlets, such as sharing outside links on Twitter, putting up engaging posts on Facebook or enriching the Internet with original non-promotional material. Your email campaigns are fully fleshed out in HTML and offer all kinds of content to users.  You should be using analytics to track customer response. You can even consider online ads (which are much more effective than cable TV). At this point, it gets very difficult to price each of these parts. Also, the interactions between the different elements is not as straight forward. When done right, this makes back your money, but it involves managing your expenses effectively.

Media Marketing

I am grouping public relations and mass media ads together. Although public relations can be free, it isn’t easy to get press coverage. Sending out a press release that cannot make a compelling story is a waste of time. However, if you put a lot of creativity into your restaurant, public relations might put your restaurant in the spotlight. You should not always aim for the big boys (major newspapers, network TV) as smaller media can be effective and sometimes, can reach the right customers better than big media.

Mass media advertisements are an even bigger long shot. Normally, as they are quite expensive (the slot, the commercial filming and editing) and can cost hundreds to thousands of dollars, an independent restaurant owner is the exception if they make back their money. Normally, pride plays a role in why a restaurant owner makes an ad. Most times, it would be better developing creative and compelling Youtube videos.

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1. 3% to 6%: Size of Budget
2. Timely Marketing: When Should You Spend It
3. Breaking It Down: Directional Versus Incentive Marketing
4. What’s The Right Mix

3% to 6%: Size of Budget

A general rule is that your marketing budget should be 3% to 6% of sales. Some mention those figures as gospel. I see them as guidelines. However, if you are outside the 3% to 6% range, you’d better have a good reason. For example, your marketing budget may jump slightly over 6% for a short period because of a public relations campaign. But if this is a long term strategy, the amount of extra business from the PR (which is hopefully successful) should push it back under 6%.

Frequently, successful and struggling restaurants that spend under 3% of sales justify this underinvestment with their financial circumstances. The struggling restaurant defends this with the weak financial position of the restaurant. If it is really that dire, a restaurant owner must compensate with creative guerrilla marketing strategies. Since you don’t have money, expect to put in much more time and effort on cheap, shoe string marketing.  The restaurant owner who is flush with cash often attributes his/her disinterest in marketing by pointing to the success of the restaurant. In fact, success in business makes marketing success all the more easy.

Those putting in over 6% have to worry if they are being desperate or putting all their eggs in one basket. Sometimes, restaurants have several proven marketing techniques that have paid off year after year, and it seems like more investment means more business. This may be the case, but there has to be several because putting more than 6% into any one method ignores the possibility that the well suddenly dries up. It happens all the time. Restaurants that top 6% also must have clear ways to track the results of their marketing as to assess if they are over-investing and getting diminished returns. Still, the 3% to 6% applies should be followed by most restaurants (80%).

Timely Marketing: Seasonal and Week-Based

Your marketing should not try to compensate for general customer behavior. Therefore, you should spend less on marketing on the off season and more during the busy times. You cannot transform winter into summer without having a genius marketing idea (which you’ll have to come up with every year). Yes, you may want to anticipate the busier periods but don’t throw away money when everyone is out of town or at the beach. You only have so much influence on customer habits.

Week-based marketing (such as Wing Night, Margarita Night) is one of the most difficult decisions and is more complicated than owners normally appreciate. After a day or night is designated for a promotion, it is hard to go back. So moving over to these promotions slowly is the best approach. Start off with one or two day(s) a month and promote it like hell for several months (6 months is desirable). The trick is not to only measure that day, but the weekly take (as compared to year before). Frequently, customers opt to go on that day rather than another day. Because of the promotion, your margin may be the same for 2 visits on the promotional day as one visit without the promotion.

Incentive Versus Directional Marketing

It is a little too naive for me to look at marketing as either appealing to return or new customers. That simplifies a process that is more complex, as there is normally a lot of overlap. [Just a reminder: marketing to returning customers gets a much higher ROI.]

If we forget about the engagement part of marketing (which is normally only expensive in time) and free Internet offerings, we see two modes for marketing. They play off each other of course, but they also have different effects and expenses.

Directional Marketing (Paid to Third-Parties)

Think about this type of marketing as flow. You are directing customers to your restaurant. Ads (online or off), branding, website design and interesting web content (like an email newsletter) are normally purer forms of this. A sign points out an event. A Google or Yelp or Facebook Ad (steer clear of mass media ads) takes a customer to your website. A strong brand stays in your customers’ memory or appeals to their values/identity, influencing their behavior. A great website lets your customers get information quickly, gives them a powerful message about your restaurant and allows them to make a reservation or online order. Interesting web content funnels customers over to your website through search engines. There are more.

This kind of marketing means you still have to close the deal, after you get them to the destination where they make their decision. Often they decide while on your website, so it goes without saying that this is key to directional marketing (along with signage).

In directional marketing, you are almost always you are paying a third party (a company for advertising, a designer for branding, a web designer for a top notch website or a blog writer). Pure directional marketing is hard to track. Sure, you can see how many clicks for an ad, but what percentage of those actually visit your restaurant. Is a sign only informing the customer or is it actually selling to the customer? It isn’t simple arithmetic because you cannot track decisions. More tech-savvy marketers have techniques to gauge the effect of this kind of online marketing and vigilant owners pass out surveys. The point is you have to know what you are doing, because directional marketing, although it can be quite powerful, is difficult to track for someone unfamiliar with marketing.

But you run into another issue too. Pure directional  marketing has less of a word-of-mouth effect. No one wants to go out on a limb for a restaurant, or event, after they have only seen an ad. So rather than the chance of winning over 4 customers at once, you are more likely to get 2 and have them tell their friends if they are satisfied.

Incentive Marketing (Financial Offer to Customers)

In essence, you are taking a hit directly with incentive marketing. You are offering a discount or freebie or special, and this is meant to drive business. This includes loyalty programs. This includes coupons. This includes lunch prices.

Although the hit for a discount is not always predictable, you can track incentive marketing’s effect more easily. The math is in front of you and that is comforting to restaurant owners.

The tendency is to think your tracking ability is very precise, but remember you normally are attracting satisfied return customers too and the change in behavior isn’t easy to anticipate, especially for long-term promotions. By throwing this carrot in front of customers, you may also experience silent effects. The two primary ones are devaluing your brand and causing marketing complacency.

First, customer psychology is distorted by discounts. To make a over-generalization, the more steep the discount (not only pricewise however) will create a higher the distortion (if all other things are equal). Groupon-like discounts are the ultimate distortion as there is always a mist of desperation in these deals. Not only do customers become very price conscious (rather than experience-conscious), they become skeptical about the your normal pricing. Many times you cannot get people to pay full price, so your business like your customers become addicted to discounting.

Second, restaurant owners forget that reliance on discounts suggests that their directional marketing or the dining experience isn’t selling itself. Something is missing. Besides, at the end of the day, word-of-mouth marketing is what pulls people in and if you can’t earn that for free, don’t expect the restaurant business to be kind to you. .

However, you think that you just need to get a little larger group through the door to get the engine started the word-of-mouth capabilities of incentive marketing are greater. A person feels a little more confident about inviting someone along to try something new when it is discounted. For return customers, the prospect of a discount can be a tool to show that you want to provide value to your customers (especially with loyalty programs and social media. They may never even take advantage of it (I have lost so many loyalty cards over the years)

The Combination of the Two and Free Online Resources

This is perhaps the most potent but the hardest to assess as two factors are driving customers. For example, a good flow of online visitors can be enticed by a discount. You can put a small discount in a Google Ad and customers will come to your site with a little less hesitancy. But how much is the ad and how much is the discount?

Here too there are tricks to measuring what is driving customer decisions, but they are the most complex as you have to isolate the directional from the incentive (which could be more expensive as you have to experiment).

But if you put a discount before many more eyes, it can be minor to get a similar boost in business. And you will get the right boost in business, because a small discount (glass of wine, side of whatever with an entree) really isn’t sexy to obsessive bargain hunters.

The directional part is shifting online however and becoming less expensive and sometimes free. There are free tools to provide discounts, such as using social media or your website/blog. A deft and interesting use of Foursquare, Facebook and Twitter can keep customers engaged with your brand. The trick is providing value consistent with your brand without going over the top. Even email marketing (which isn’t always free) adds the potential for capturing customers attention. Sometimes, these are much better than online ads. Sometimes, ads are appropriate. With the rise of free online tools, more options are on the table.

What Is The Right Mix?

It does depend on the restaurant. Nevertheless, most of the time, the soundest method is combining, or at least combining marketing that can be tracked. Even better is to build incrementally and see the level of effectiveness, but that takes some knowledge of what you are looking for. Of course, a level of creativity can significantly lower costs and still get similar results, but you have to be committed to finding those ideas and making sure they are doable.

Periodically (every 2 to 3 months), you need to sit down and think it over. Marketing should never be put on auto-pilot. The hope is that you can have a very rough estimate of the value of all your marketing moves (over the long-term), but trust numbers over subjective estimates. A way to see the results makes sure that you get at least your 3% to 6% back.

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Groupon

Groupon is the daily deals site that has become astronomically popular very quickly. It offers customers extreme discounts for entire meals (50%). Groupon takes a big share (another 25% off normal price). Restaurants are left with 25%, a burst of traffic and the hope that customers will return. It stresses your regular customers and your staff without any guarantee of success.

Short-term Fix for Long-term Problems | For us, it is a gamble and a distraction. Restaurant owners should not be looking for quick fixes. It wastes precious time in making your business experience sustainable growth. Restaurant owners who ask “if only they got in the door, they will see how great a place this is” are missing the point.

Asking Why Do You Need It | First, you have to ask why they are not coming in the door without Groupon. Groupon isn’t going to fix that, and any business that isn’t always acquiring new customers is eventually doomed (you can only do Groupon so many times). There are different problems for different restaurants, but Groupon puts off the hard marketing work that will lead to success.

Be Objective | Second, why aren’t your customers telling their friends? Obviously, you haven’t been earning word of mouth marketing (which determines a restaurant’s survival). There is something wrong. It’s time for you to find out what (if it’s quality of food or service or value). There are probably 1,000 restaurant owners in NYC who believe they have the best food in NYC. That means we have 999 restaurant owners who are delusional (some more than others of course).

Groupon is like copying the other kids’ answers. You may get a good grade this time but you have learned nothing.

Yelp

Yelp walks around like its the final authority on restaurants, even though it has major flaws. For restaurants, this is discouraging because Yelp has been largely successful in convincing millions that their assessments are fair. The truth is customers don’t have anything else to chose from.

No Other Choice | Yelp is one of the few complete sources online. Yelp reviews however don’t need to meet any standards and are at time enormously inaccurate. At times, Yelp blocks reviews without any discernible logic (if they showed restaurant owners the factors behind each decision, it would be beneficial). They feature others that go against the consensus. And reviewers are given no structure and write what they want without any guidance from Yelp.

We Pay You to Judge Us | To add insult to injury, Yelp lives off advertising, often from restaurants. Rumors have circulated that Yelp gives privileges to restaurants who advertise. This may or may not be true, but the conflict of interest will remain. But your Yelp advertising is only as good as your Yelp rating, creating a vicious cycle. We don’t look favorably on Yelp advertising in marketing terms as it hasn’t benefited our clients much.

Anti-Restaurant | We aren’t against customer reviews, but what is the big deal in giving reviewers guidance and creating an environment of responsibility? Why can’t owners be told the general categories of why reviews are removed? Why can’t Yelp farm out their advertising to another company? I don’t think restaurant owners are asking too much (they’ve lived with brutal newspaper critics for a long time); Yelp just seems to act above it all, as if they weren’t a business with competing interests too.

LivingSocial

A lot of what was said about Groupon applies to Living Social as two biggest daily deal sites are almost identical. They aren’t that different because they copy each other’s ideas.

A Person Not A Call Center | They may emphasize different things (but that is in flux because of geographic considerations), and perhaps Living Social has the advantage in that you get a face to face meeting rather than dealing with a call center. This means a representative can see what your business is like and hopefully, give you sound advice (so it isn’t a disaster).

Better But Only Slightly | In money matters, Living Social is a little bit more restaurant friendly. They send out a check in the mail in 1 month after the deal closes rather than the 60 days that Groupon makes you wait. Obviously that is very helpful for cashflow reasons. Also Living Social is negotiable when it comes to percentage fee rather than the 50%-take-it-or-leave-it Groupon attitude. However, expect the negotiations to begin at 50% and also expect that Living Social isn’t going to give you much better terms than Groupon.

No company cannot make itself more friendly to the restaurant industry. The steep discounts and fees of Groupon and LivingSocial are counterproductive, and they could find new formats that don’t ask so much of a restaurant. Yelp could greater explain its filter and challenge reviewers to give a balanced report on their dining experience. Until then, they make the list of the worst marketing tools of 2012.

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1. Foursquare

Foursquare is a geolocation application for smartphones where users “check-in” at venues such as a restaurant, bar or arena. Foursquare has 15 million users worldwide; half are in the US. The average user makes about 50 check-ins a year (but that average is including the chunk that signed up and do not use it). After users check-in at a venue, Foursquare notifies their Foursquare friends and other users at the same location. Customers can post tips on a venue’s Foursquare site that gives visitors suggestions about the venue.

Restaurant Opportunities Foursquare enables restaurant owners to offer deals on Foursquare. This is part of the appeal of Foursqaure to users. There are several different varieties of deals but they all involve checking-in. A member of your staff makes sure the customers has checked-in. Some of the deals work to encourage loyalty while others focus on drawing new customers in.

Benefits Foursquare is our first choice because restaurant owners can run a deal over Foursquare for free. After a restaurant owner claims their venue, it is easy to set up a deal (you are allowed two at a time). Foursquare users in your area will see the deal and this will drive traffic to your restaurant. It’s free and if you have any interest in appealing to customers under 35 (the Foursquare demographic), you should a post a deal on Foursquare.

2. Facebook

Facebook is the center of the social media universe. Half of your customers are on it if not more. There is a lot to Facebook, but there are two aspects central to a restaurant marketing. The first is a restaurant’s Facebook Page, a kind of website for businesses on Facebook. You need to create your Facebook Page. If your restaurant has a Facebook Place already, you should claim it and merge it with the Facebook Page. There is no use in making your life difficult. A restaurant owner also should understand the tools that help customers share your restaurant. One of these are the LIKE buttons that appear on websites.

Customer Engagement Your Facebook Page is a place to convey information, represent your brand, and most importantly, engage with customers. If managed correctly, your Facebook Fans can become like a second email list. The difference is that it will be interactive. The interactive component allows for deeper engagement with your current customers. This takes dedication but it pays off as you can access your customers 365 days a year with less risk of irritating them (Facebook News Feeds algorithms are good at anticipating the users interests).

Sharing to Acquire New Customers Another required part of Facebook is sharing. You want customers to share info about your restaurant with their friends, whether it is by a customer liking your restaurant or commenting on it. This is the primary way that you can gain new customers on Facebook (much more challenging than engagement). There are many strategies for doing this. After installing the appropriate tools, it comes down to creating value. Generally, customers find this value in your brand, promotions or online content. People will always share what they find to be interesting or useful.

Facebook Ads Facebook Ads are getting better to, so if you need an extra push, you should look into if they will benefit you. Facebook is good at targeting the right customer and mixing the ad into the user experience.

3. OpenTable

You need an online restaurant reservation tool and OpenTable is the biggest. OpenTable costs money (and can be expensive), but it has become the main online broker for restaurant reservations in the US. Some customers, especially in major markets, have skipped making a phone call or going to a restaurant’s website and go instead directly to OpenTable’s website. This is good and bad.

With more than 20,000 restaurants worldwide, not being on OpenTable could put you at a competitive disadvantage. You miss the customers that go to OpenTable’s website or use their mobile app without doing a general search through Google or Yelp. It’s more of being left out than getting a head start. But the consequences of being left out varies widely for different restaurants. We aren’t opposed to other online reservation tools (in fact, some are better values like Livebookings), but they aren’t nearly as powerful a marketing tool because the reservations primarily go through the restaurant’s website. Also choosing OpenTable is reliant on your website. If you really invested in online marketing, OpenTable becomes less significant.

A Future With More Competition This recommendation comes even though we hope that OpenTable’s competitors will be able to capture part of the market, creating real competition. With more competition, customers will be more likely then to visit the restaurant’s website. Restaurants would therefore gain more control over their marketing destiny. I advocate normally going with OpenTable Connect first where you don’t pay the monthly fee, but pay $2.50 a head when it goes through OpenTable’s website ($.25 from your own).

All About Your Restaurant OpenTable’s marketing importance is related to region, customer demographics and what your competitors are doing. Having online reservation tool is becoming almost obligatory, but there are other restaurant reservation tools that will do this just fine. For example, OpenTable may have different value for a restaurant in Harlem (traditional African American cultural heart of NYC) and a restaurant in the Upper East Side (the priciest residential area of NYC), although they are only a couple miles away from each other. In Brooklyn, there is only 76 restaurants with OpenTable, a small percentage. That’s different than the 1300 in Manhattan. Check out if your competition is using OpenTable (check if they are completely booked and compare that to your restaurant) and see if restaurants on OpenTable are taking business away from you.

The Big Picture

The general trend in online marketing is not an increased emphasis on the tools, but how they are used. A set-it-and-forget-it attitude will be more damaging in the future. More of your competitors are learning the value of online marketing, so just being present won’t do the trick anymore. You will have to invest either your time or money into online marketing to not be left behind.

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Engagement

If  your customers have something good to say about your restaurant, thank them! Be engaging and ask them what their favorite menu item was, then suggest something else similar that they may like. This could turn them into repeat customers. If they have something really good to say, offer them a discount the next time they visit if they mention their tweet.

Since restaurant patrons are probably the hardest people to keep happy, you’re going to have some negative feedback. Turn these people into
lovers instead of haters and find out why they had a bad experience, then do whatever you can to make it better. Some people don’t understand that you have to wait for a table and will complain, offer them a reservation next time they want to visit you, or a  discount off their next meal. Remember Twitter “replies” are public, so  make sure that when you respond, you provide excellent customer service and aren’t defensive. If you feel uncomfortable with responding publicly, you can follow that person and then you are able to “direct message” them. This is private, but it is better to have a longer conversation on the phone or by email.

To gain followers, run searches through Twitter, or a Twitter search engine like Followerwonk.com, and search for people in your city. Let  them know that you’re new to Twitter, and offer them a small discount if they’ve never dined with you before. Follow prominent people in your city, like radio DJ’s, TV personalities, or other recognizable spokespersons.

Management

Food is one subject that people love to tweet about, and you better believe they’re going to be tweeting about your restaurant. Monitor your tweets and mentions with programs like Hootsuite, CoTweet, or TweetDeck, and reply to every single one!

If  you use multiple forms of social media, then consider using one of these programs. Hootsuite is my preference, and it allows you to view your Twitter and Facebook accounts from the same page. This cuts down on  time significantly, and all your social media information is displayed  in one area. You can tweet directly from the programs, see any mentions,  and respond to messages. These programs also allow you to schedule tweets. This comes in very handy in time management, because you can sit down and plan out tweets for a whole week at once. Mention your daily specials, and have them go out on certain times that day.

One way to stay on top of your mentions is to get your tweets sent to your phone via text message. Through the Twitter website, you can have any mentions, direct messages, retweets, and more sent straight to your phone, and you have the option to reply right away. This is great for  staying current, and addressing any issues you may have right away.

I’ve worked in a restaurant, so I know firsthand how much time it takes up to keep the restaurant functioning. Taking the time for Twitter can seem
hard, and there just aren’t enough minutes in the day. Make a set time each day for Twitter and work it into your routine. Take advantages of the breaks between breakfast, lunch, and dinner rushes. You can take as little as five minutes a few times a day to check up on your Twitter  followers and address any mentions. If you don’t have the internet in your restaurant, there are several great mobile Twitter apps for all  types of phones that make keeping up with your mentions easy.

Success Stories

For my past birthday, I visited Café Patachou with some friends for brunch. It was my first time, and I loved it so much I tweeted it not once, but a few times. I took a picture of my delicious meal, and then afterwards mentioned that I was hooked. To my surprise, I got a tweet the next day from Café Patachou thanking me for visiting them on my special day, and that they loved having me. What a pleasant surprise!

The best Twitter story has to go to Morton’s Steakhouse. Peter Shankman jokingly tweeted before his plane took off:

When he arrived at his destination, he was greeted by a man in a tuxedo with  a bag from Morton’s Steakhouse, with the steak that he asked for. Not only did Morton’s bring the steak, they found out which flight Shankman was on, found his gate, and greeted him with the porterhouse.

About the Author:

Maggie Thistleton is a social media marketer for Affordable Style and former front-of-house manager. When she’s not tweeting, facebooking, or checking-in for her company, she enjoys experimenting with new recipes, running, and obsessing over Top Chef: Just Desserts.

Many restaurant owners sit on their hands as customer stream in and out of their restaurants on the holidays. However, smart restaurant owners market to the people who dine at their restaurant during the holidays because they want holiday customers to return in the coming months. They need to find ways to minimize the inevitable pain. Therefore, all restaurants should have marketing strategies that look ahead this time of year. You need one so that your business does not go into hibernation during the winter months. The consequences can be pretty severe if you don’t, such as losing staff (because of no hours).

The bulk of these strategies will work in-house and online or media marketing will play a supporting. You should use signage, pamphlets, newsletters and slips, or anything else that can serve as a gentle reminder.  Besides, you have to interact with the rush of customers that will be visiting your restaurant during the holidays and inform them about why they should be coming back.

Newsletter or Calendar of Upcoming Events

Just because it’s slow, doesn’t mean you don’t have events. The response may not be as big as other times of year, but if you don’t do anything, customers quickly forget your restaurant as an exciting venue. Over the holidays, it is important to gather together all the information about what’s happening in your restaurant in the next few months. Put it in a newsletter or condense it into a small sheet. Some restaurants may make it available at the hostess stand in the front of the restaurant. Restaurants that create a nice enough newsletter/sheet can slip it in with the menu or with the check. You want them to plan to visit your restaurant in the near future, so give them a reason.

Social Media Promotions

Customers who are Facebook Fans or Twitter Followers are much less likely to forget about your restaurant. They have a greater knowledge of promotions and events. They are substantially more loyal. In fact, by only seeing a post from your restaurant in their Facebook newsfeed, customers may consider returning. Accordingly, encouraging customers to become part of your social media community is a good strategy to keep them interested. Of course, you will have to provide value for these customers online, so a small promotion may make them click the LIKE or FOLLOW button.

Return Deal

Customers are already there. It gives you an opportunity to offer them a deal if they come back in the winter months. It is easy; all they have to do is bring the receipt when they return. Give them a set time period and a strong incentive, and customers will make a mental note. The temptation is to give a low discount on the bill (10% or 25% off). A freebie is more interesting, especially if it relates to the time of year. When you give a free desert with an entree, your deal seems more directed at customer happiness than drumming up business.

Announcement of a New Menu Offering or Service

The holidays is a great time to announce a launch of something new. I don’t mean that you added a new soup. But perhaps, you now will start making several different varieties of gourmet pizza. This is the time to make an announcement even if it is several months off. Nonetheless, you want to be somewhat specific as to when the change will happen. You don’t have to name the particular day, but giving a month will make it more concrete to customers.

Catering and Private Parties

Restaurants often concentrate on catering and private parties to offset the drop in business. Your customers need to know about these services if they are going to use them. You’d be surprised at the number of regular customers that do not know if the restaurant caters or throws private parties. This is your chance to show off other services. Well-placed pamphlets (with photos) will let customers know about it without cramming it down their throats.

Rework Promotions

Just like your menu, you should freshen up your episodic (weekly or monthly) promotions every year. You may get rid of the under performer and try something else. This is an opportunity to make your promotions match your brand. If you do add a new promotion, direct it at regular customers not at acquiring new ones because customers tend to be more conservative in their dining choices during winter.

You shouldn’t try and wait the winter out, and hope everything gets better in spring. Be proactive. Although you cannot reverse customers’ seasonal habits, you can lessen the damage and maintain customer relationships by marketing to holiday customers. It will be a much better New Year if you do.

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On New Year’s Eve, customers want more than “something to do.” And a restaurant owner who has a smart strategy like a theme party will attract and satisfy more customers. This goes beyond New Years being solely a moneymaker, as customers build an attachment (and memory) to a restaurant when they come there on a day of particular emotional significance. Most people look over their last year (and their life) on New Year’s Eve. New Years is the greatest example of a holiday with emotional importance, but Thanksgiving, Easter, Christmas, Independence Day, Mother’s Day and Father’s Day are also memorable in this way.

Even though there is this sense of deeper meaning, customers are chasing fun on New Year’s Eve and they want to celebrate (whether the last year was so great or the next will be better). If they choose to go to a restaurant rather than staying home or going to a private party, the restaurant has to provide a true party.

Theme parties need to be followed through on. Ask any event planner and you’ll hear how the details excite people and make the theme come alive. Details make all the difference. Calling something a theme party and then making the actual event pretty theme-less is a formula for disappointment. So let’s go through the execution (broken down by stages of the event).

Party Details

1. First Impression

They arrive at your themed party They pay $50, or $100 or $250 and they are psyched. You should give them something right away that goes with the theme. You cannot get away with just decorations. Perhaps, you give out a free cocktail that relates to the particular theme.  Maybe you chose one for women and another for men. Don’t leave them wondering for a second what the theme has to do with the party.

2. Get the Customers to Participate

You may request that customers adjust their wardrobe a little for the theme. We aren’t talking Halloween, but if it’s clothes from the modern era, some customers may jump on board. It wouldn’t do much harm if the women styled their hair a certain way or the men wear a certain type of tie. For a 50s theme, you may even sell cheap thin ties (I saw for $4 online but charging customers $2 is better) after you tell men to wear a collared shirt. Of course, it should be simple and doable.

3. Get them Moving

Many New Years parties have a dance floor. Hiring a dancer or two (especially ones familiar with the appropriate dance) can add an extra dimension. Of course, most of your music is going to be modern but that does not mean you can’t mix in a little music related to the era. Perhaps you have the dancer teach your customers a step or two. This can also apply to cultural restaurants (teach people to Rumba at a Cuban restaurant). Customers will appreciate learning something new.

4. Friendly Contest

Customers like a friendly contest. If it nothing more than making a pose for a (theme-related) picture (say cigar smoking next to a life-size pic of Al Capote), you can get them excited. You judge it that night and offer an award along with sending their photo to other participants. It should have a little skill involved as otherwise it would be a raffle and you do have to designate people to judge it that night. Finding the best picture out of 30 doesn’t take much resources however. There are a lot of similar ideas (like a short video, etc.). Then put it up on social media so other customers know the fun that they missed.

5. Something to Take Home

A little something to take home isn’t a bad idea either, if it isn’t too cheesy. Remember you are trying to create a memory for customers and they may be a little forgetful from alcohol. If they think about it in the next few days, they are a lot more likely to remember their experience.

Throwing a Better Party

If you throw a party, really throw a party. You should differentiate it from your competition and if you use a theme, you need to follow through on the theme. Above all else, it should be fun. For themes, you have many choices. During the upcoming year, the Mayans predicted the apocalypse. Why not use themes like that if your customers would find it interesting? Think about your customers’ interests. It is too late to organize and market a themed party for this New Year’s Eve but there is always next year. For those that have already chosen one, I hope this helps you plan the party. Make it a party worthy of New Year’s Eve and your customers will have a special night (and restaurant) to remember.

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When you think of restaurants, you can normally organize customers by demographics involving socioeconomic status and proximity. Besides cuisine, price determines a lot of what happens on the plate and in the dining room (of course there is the cool versus classy aspect too). But at its core, the quality and uniqueness of the food, which relates to pricing and branding, affects most of a restaurant’s marketing decision. Bars are a whole different ballgame.

Find Out the Reasons

You should give more importance to WHY the customer has come to your bar in planning your marketing. Partially, this is because bars serve beers and liquor that can normally be found other places. A Budweiser is a Budweiser is a Budweiser. You cannot say the same for Pad Thai or New York Strip Steak.

This is one reason why bars are more about setting. The other is because oftentimes people go to bars to socialize with people they do not know. In contrast, at restaurants, you have a table and a group and you barely ever interact with other customers. Many bars have different etiquette. They can be highly social and an entirely different experience than a restaurant. My main point is your motivation for going to a bar varies greatly while with restaurants it is somewhat simpler (to eat good food)

With bars, the motivations of customers may change at different times in the week, but customers come for a reason and that is vital to bar marketing. I can identify 5 reasons(with many blends)  that make up the bulk of customer behavior. We won’t discuss customers that come for food as restaurant marketing strategies apply. They are:

1. 1. To look for prospective romantic partners
2. 2. To watch a sporting event
3. 3. To enjoy alcohol
4. 4. To hang out and have fun with friends
5. 5. To eat (restaurant marketing)

Marketing changes based on these motivations and a bar should consider them separately when planning their marketing. Of course, if there is overlap, they should have promotions that  address the multiple ones.  I’ll focus on promotions for each  in a future article. I want first to help you identify your beer.

Bars for Socializing with New People

Here I’d divide this group up in two. There is the upscale version (normally a cocktail lounge) and then there is the party bar (think college campuses and where customers do bar crawls). Although the interiors definitely differ, in each, customers tend dress up, especially women. These bars do a lot to draw women in.  On the upscale side, cocktails bars focus on style and ambiance, almost verging on a nightclub. These places should have a girls night. It would be better if girls night was adapted to your brand. Party bars, on the other hand, have drinking games. Some include beer pong. They are competing with keggers and house parties. The music tends to be contemporary and normally, loud. Here you see eating contests and all sorts of games that appeal to young drinkers. You’ll find binge drinking and kids acting like kids. Don’t expect too much loyalty. It’s more important to stick out and create buzz.

Sports Bar: All About Them Rooting for Your Bar

A sports bar is a boys club. It doesn’t really matter if the bartender can make a good martini. You may have a pool table or a hand shuffle board or football or darts. Promotions are centered around football games and basketball games, and business is centered around important games. In these bars, good promotions make the bars clubby. The same people show up on Sunday and root for their team. In essence, a sports bar should be focused on creating loyalty. This must come up with different methods than punch cards. Too much investment in acquiring new customers (by being especially cool) is a mistake for the average sports bar. You want people to come back everytime the game is on.

Drinking Bar: Loners and Beer Aficionados

Bars like these tend to come in two types. There is the heavy drinkers bar.  In cities, they were once dive bars before dive bars became cool. These places are built on regulars who frequently come alone and tend to dance with alcoholism. It isn’t a very social place, except customers talk to the bartender, who anchors the bar. Loyalty here is reliable and promotion is normally a waste of time. Just get a good set of bartenders.  The other type is the craft beer bar, a totally different type of experience. It also is alcohol focused, but customers want new beers. This kind of place always has to balance craft beer favorites with bringing in new beers. Craft beer lovers want to try everything and are willing to go to many different bars to try as many beers as possible.

Talking With Friends

This kind of bar normally is a jack of all trades. Pubs fit this category.  Normally, all four things happen here. There is some mixing between people. There is sometimes a game on. There are those that just come to drink. The vast majority however are here because of their friends. They want to hang out and talk. That means having the music too loud is frustrating. They like to eat bar food and play games. Pool tables, foosball and table shuffle board are popular. For them, it is something to do. These kind of bars appeal to people who want to get a drink after work. Couples come out here on first dates and into their relationship. People are there to enjoy other people in their group.

We established what your customers are there for. Other than sports bars, bar owners do not consider this when running promotions. For each, the customers’ behavior is different and the bar owner should anticipate this in planning promotions.

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