01 Sep

Why am I writing this?

I am a restaurant owner but I’m also a marketing professional, and I’m constantly hearing from restaurant owners that they don’t really understand marketing. Most restaurant owners are hospitality people, so their background is in providing great food, drinks and service, not in actually marketing a business.

Unfortunately, these are two very different skills.

I’ve also made many of these mistakes myself, and if I can help someone else to avoid them, then maybe it will have been worth it!

Live and learn (and then teach) as they say!

I also despair whenever I go into a great restaurant that has great food, drinks, service or ambience (or all of the above), but still isn’t doing very well because they don't know how to market themselves properly.

So, while probably not all of these mistakes apply to you (especially if you’ve been in the industry for a while), I’m sure most of you have committed some if not all of them at some time in your career. And, I can almost guarantee, that no matter how experienced you are, you’re still committing some of them today.

So, read on and hopefully learn something of value. I love the hospitality industry, and I know how hard it’s been hit by the recent COVID pandemic. Hopefully what you learn here will help you and your business get back on its feet and live to serve another meal!

Lots of love,

Tom and the Loop Team.



Mistake # 1: Location


Location, location, location, is what real estate agents tell us are the three most important things when it comes to valuing a house.

Well, the same can be said for restaurants.

While you might not think of location as part of your marketing strategy - you should! One of the most important ways that restaurants attract new customers is by having a great location.

Believe me - I’ve made this mistake before. Locating a restaurant in a position which was almost impossible to find. We had ZERO street exposure, and, well, guess how many walk in customers we got? You guessed it, almost ZERO!

It’s very easy to get trapped by the promise of cheap rent, and this is why many first time restaurant owners will choose a location that is not ideal. But, for those who have been in the game for a while, you'll know that location is probably the most important factor determining the success of your business (sometimes even more important than the quality of the food!) We’ve all seen those restaurants that are highly successful even when the food is terrible, just because they’re located in an amazing location.

It’s well worth spending the extra money on rent to make sure you get a location with high exposure.

When we last opened a restaurant, we stood on the street outside all our possible locations every night for a few weeks and counted how many people walked past. You might think a location is good, but until you start counting people you won’t know exactly how good (or how bad!)

It’s also important to watch the people who walk past and see what they are doing. Are they hurrying home from work, or are they strolling around, looking for somewhere to eat? What is the average demographic? Are they in your target audience?

Getting the location right will make everything else about your business so much easier.

And while of course there are exceptions to this rule, and there are some venues that do great wherever they’re located - they really are the exception and usually they’re run by teams with years of experience and a strong marketing network.


Mistake # 2: Product and Identity


This is part of what we refer to as “branding” in marketing, and it’s something that is essential to get right.

What is it that is going to make you stand out from the crowd? When people talk about you to their friends, how are they going to describe you?

This has a lot to do with cuisine, but it also has to do with how you represent that cuisine. Are you doing a traditional take, a modern take, fusion, or something else?

It also has a lot to do with your restaurant fitout. What colours are your walls? What does your furniture look like? The decoration? How about the lighting? The music? The uniforms of the staff (or at least the dress code)?

All of these things must create a coherent experience that the customer can relate to, that they can describe in very few words (2-3 is best), and that they find appealing overall.

With the absolute profusion of social media these days, you also want to make sure that both your venue and your food is “Instagrammable”. If you make it nice to look at, you won’t even have to do that much marketing, as your customers will take care of that for you by taking photos of everything and sharing them with their friends!

The worst thing you can do is create a hodgepodge of a venue that nobody can quite understand… You know, one of those places that serves both burgers and Asian food, that has furniture that looks like it came from an op shop, that plays a range of top 10 hits on the radio, and that has a name that nobody will ever remember….

Related to this topic is the importance of choosing a good name. Find something catchy, easy to spell, easy to say, easy to remember, and easy to look up in a Google search!


Mistake # 3: Menu


While your menu might seem like a simple thing to get right - there are so many things that can go wrong with it that I probably don’t even have room to go into them all in this article!

After your location and your identity, your menu is the next thing that your customers will see. In fact, often they’ll check out the menu before they even come into your venue or make a booking.

Firstly, your menu must fit with your brand and concept.

Secondly, your menu should entice the customer and be easy for them to understand and choose from.

This is your menu, so you know it well and you can understand it easily. But look at it from the perspective of someone who is looking at it for the first time. Is it clearly laid out? Are there too many dishes on there for someone to make sense of quickly? Are there too few dishes?

Thirdly, your menu should be designed in a way that makes people spend as much money as possible. Most modern menus in Australia no longer use the old “Entrees”, “Mains”, “Sides”, and “Desserts” layout, but in fact this is a layout that most Australians understand well and it will encourage them to order more.

Using this layout, many people will order a bit of everything - an entree, a main, a side, and maybe even a dessert. If you just have a long list of dishes, then chances are they won’t know how many or which dishes to order, and inevitably they’ll end up ordering less than they might otherwise.

Even if you don’t want to use the heading titles (Entrees, Mains, etc.) then I’d suggest that you still try sticking more or less to this same layout. You can create separate sections on the menu, or you can use lines to divide each section, or you can simply use the pricing to signal to the customer which category each dish falls into.

Last but not least - it’s incredibly important to make sure that you have taken your costing into account. How much does each dish cost? And how much are you selling it for? Overall your costs should be somewhere between 20-30%. Any more than 30% and you’re going to struggle to make a profit from your restaurant, but if you go too low then people will notice the poor quality of ingredients and might not come back. A balance is essential!


Mistake # 4: Booking system


Your online booking system is something that you may not think of as important to your marketing, but it’s actually very important.

The first thing is - it must be easy to understand and use for both customers and the staff. It should make it easy to change bookings, cancel bookings, and confirm bookings by SMS or email.

The second thing is - you must make sure that all the customer data that is collected by the booking system is not being used by anyone else. Did you know that many third party booking platforms will track your customers and then market to them independently? They do this by either collecting their email addresses or they’ll do it more surreptitiously by tracking them using a Google or Facebook tracking cookie.

This means that everyone who visits your booking page gets tracked by these companies, and next thing you know, this company is marketing to your clients directly! Even worse, they’ll often use that data to sell advertising to your competitors!

Sometimes you might even find, as Quandoo used to do (and possibly still does), that they will create ads on Google which will appear every time someone searches for your restaurant name! They do this so that the booking is made through their platform, and they earn a commission for every booking, but they also do it so that they can collect your customer data!

There are very few trustworthy booking platforms, and the one that I recommend is called NowBookIt (www.nowbookit.com) NowBookIt is an Australian company, and their founders come from the hospitality industry. They understand the pitfalls of booking platforms and have created a product which does not use your customer data for their own ends.

I’m sure there are others out there - but do your research and make sure that they are not going to steal your customers from you!


Mistake # 5: Customer database


One of the biggest mistakes that I see businesses doing is NOT collecting their customer’s details - names, email addresses, phone numbers, and even their birthdays.

You shouldn’t just be collecting your customer’s details, but you should even be collecting the details of POTENTIAL CUSTOMERS.

How can you do this? Easy! Have you ever seen those popups on websites that ask you to enter your name and email address to join the mailing list? Well, that’s how you do it. You might think they’re annoying, but if you offer something in return, then they can be highly effective. For example, offer 10% off their first visit, or a bottle of wine.

By collecting all these email addresses, you can then start to create email marketing campaigns targeted at these people. At the very least, you can keep the abreast of your latest specials and events.

Most people will not book on their very first visit to your website, so you need a way to easily capture their details to make sure they keep coming back to your site until they do book!


Mistake # 6: Email marketing


This one goes hand in hand with the one above.

Once you start collecting the email addresses of potential customers, you can start marketing to them. There is plenty of software designed to create what is called a “drip marketing campaign” or an “automated email campaign”.

Essentially you set up a bunch of emails describing all the cool things about your business. You set each one to be sent off at a predetermined time. For example, send one as soon as someone signs up to your mailing list, and then one per week for the next 4-6 weeks.

Each one can be designed to help the reader learn a bit more about you, and about why they should visit you. Don’t make them all promotional, though. The best campaigns work by sharing useful information with your readers. Send them one of your best recipes, teach them a bit about your wines, show them how to make a cocktail (you can create a video and include a link to it in one of the emails).

These kinds of “infomercials” work great - because they’re teaching the reader something but at the same time they are showcasing your great products and services.

Another great strategy with email marketing is to set up an automated email a few weeks before someone’s birthday. That’s why it’s important to capture their date of birth. Send them an email which offers them a free dinner if they bring six friends, or a free bottle of wine. People ALWAYS go out on their birthday, and often they’ll organise a big party or function. By sending them this email, you’ll be at the top of their mind when they’re deciding where to go, and your function bookings (you know, those ones which bring in heaps of income?) will start to explode!

One of the best email marketing platforms is called Sprout (https://sproutsend.com/) but there are many others out there, so do your research.

If you'd like to work with an expert in this field, I highly recommend Howard Tinker from Restaurant Profits (https://restaurantprofits.com.au/)



Mistake # 7: Use of directory platforms (eg. Zomato, EatClub, The Fork, etc.)


Platforms can be a double edged sword for restaurants. On one hand, they can bring you new customers, but on the other hand they can start to cut into your profit margins.

Platforms exist to make money, so where do you think that money comes from? That’s right, from your business.

While they might appear to want to help you grow your business, they really just exist to grow their own business. This doesn’t mean that they can’t be useful, though. It just means that you have to be very careful how you use them.

To start with, as mentioned above, you should never use them for your primary booking system. Chances are, they’re going to start to steal your customers.

Secondly, you should definitely never depend on them. Often these platforms offer discounts to their users which you then need to bear the cost of. Don’t get trapped into thinking that these people will care about your business or become regular customers - because in 9/10 cases they won’t. All they care about is getting a discount, and they’ll happily move onto the next restaurant as soon as they need to!

Sure, if you’ve got a quiet night and you’re happy to offer a discount to people who come in on that night, then maybe it’s not a bad idea to use the platform. However, be very careful that your regular customers don’t find out about this and start using the platform to get this discount too, or, as I mentioned, you might start to lose some of those customers as they get siphoned off by the platform and sold on to other restaurants!

If you’re going to offer a discount through a platform, it’s better to offer the same discount on your website to all your customers. That way, your regular customers won’t have any reason to make their booking through the platform, and not only that, but they won’t feel like you’ve cheated on them by offering a discount somewhere else!



Mistake # 8: Delivery platforms

Delivery platforms are a little bit like the directory platforms mentioned above.

They can bring you in new customers, but they can also start to siphon off some of your existing client base if you’re not careful. Not only that, but existing delivery platforms take a huge commission - making it difficult to make a profit.

However, not offering delivery is a huge mistake. More and more, home delivery is becoming a part of people’s lives, and the way they prefer to consume food from restaurants. Just in the last few years alone, home delivery now makes up a large percentage of the hospitality industry. Avoiding it is going to hurt your business in the long run.

So, what can you do?

Well, part of the reason that we built the Loop app was to solve this exact problem. Loop allows businesses to take orders through our app, but does not charge a commission and doesn’t steal your customers from you. You can either take care of the delivery yourself, or work with one of our third party delivery partners for the actual transportation. But either way, you get all the benefit of offering delivery without any of the downsides that regular delivery platforms like UberEats and Menulog have.

Our platform is not the only solution, though. If you like you can just create a simple online shopping cart on your website, allowing people to order directly from there. Or to make it even more simple, you can just get people to call you up and place their order!

Whatever solution you decide on, definitely try to make sure that delivery is part of your ongoing business model.



Mistake # 9: Social media

Everyone knows how important social media is these days, but very few businesses take the time to embrace it and make the most of it. People spend ridiculous amounts of time on social media, so use that fact to keep your brand at the top of people’s minds.

Creating great social content is a lot of work, though, so how can you manage to do that at the same time as trying to run your business?

Well, here are a couple of strategies that work well:

Run paid ads on social media.

Create a great piece of content, and then pay Facebook to continuously cycle that content through people’s social feeds. Don’t just boost the post, but actually create an ad on Facebook and Instagram (through Facebook’s Ads Manager) which will show your content not just to your own followers, but to other people as well.

Facebook has almost unlimited targeting options, but a few that we’ve found really useful are: lookalike audiences, specific interest group audience (eg. people who like Mexico or Tequila, or people who like Spain or Tapas), or friends of your existing followers.

Get your customers to create content for you

Running a competition to get your customers to create content for you is one of the best ways to not only engage your audience, but also to get some quality, user generated social content.

You can offer a $100 voucher for the best photo taken that week, and ask your customers to post it to their social feeds and tag you and your business. This way, you’re not just getting great content, but you’re getting your customers to help you promote it too!

Once all the entries are in, just re-post it to your own social channels and voila - heaps of great content for less than $100 (as it won’t cost you $100 to redeem that $100 gift voucher).

Again - our very own Loop app has been designed to make exactly these kinds of competitions easy to run, but you can do it manually if you wish.

Whatever you do, make sure that you’re posting content to social media as often as absolutely possible!



Mistake # 10: Paid advertising


Paid advertising is a great way to get your business in front of a wider audience, but there are a couple of important things you need to take into consideration when spending this kind of money.

The very first one is: how are you going to measure the results of the campaign?

There is absolutely no point spending money on paid advertising if you don’t have any way of knowing how well it’s working.

The best way to measure the results of your paid advertising is through what is known as “conversion tracking”. Both Facebook and Google Adwords have conversion tracking built in, and all you need to do is set it up on your website, your booking system, and your delivery system.

That way - whenever someone clicks on one of your ads on one of those platforms, you can see whether or not that person ended up placing an order or making a booking.

And that way, you can work out the cost of the ad campaign, and the total value that it has brought to your business.

Don’t make the mistake of just thinking that by running campaigns you will get value from them, as more often than not, that is not the case.

Of course, there is always a certain amount of “added value” that you’ll get from any campaign, such as staying at the top of customer’s minds and maybe getting more walk in customers or referrals, so you can take that into account as well. But if you’re not getting any kind of direct value from the campaign, then it’s unlikely you’re getting much added value either.

The other way to measure results of a campaign is, of course, through some kind of more manual solution. Asking people to “mention this ad for a 10% discount” for example, is a good way to do that. The other alternative is to ask people to print something out and bring it in, in return for a discount or a promotional item (eg. a cocktail).

The point is - whatever you do - make sure that you have a way to track the ROI of any paid advertising campaign that you do, or it’s way too easy just to waste money.



Have you considered a loyalty program?

Loyalty programs can be very effective, although many restaurant owners won't even consider having one.

Did you know that it’s 5 times as expensive to get a new customer than it is to make an old customer come back again? Or that repeat customers are likely to spend up to twice as much as new ones?

Whatever the statistic, everything points to the importance of making sure that your customers come back again.

Of course, providing a great experience is part of the solution, but with so many great, competing options out there these days, you would be very well advised to do something to stand out from the pack and to offer your customers an additional incentive to return.

Coffee stamps have been a staple of many cafes over the years, offering a free coffee for every 10 bought, but most restaurants do not employ similar tactics. And, to be honest, it’s not entirely their fault.

Up until now there has not really been an easy way for restaurants to implement and manage a loyalty program at a reasonable price that is not full of friction for both the customers and the restaurant staff.

And this is where I’m going to give a little plug for our own platform - the Loop loyalty system.

You don’t have to use Loop, as that is not the purpose of this article, but Loop provides a number of great features that can help you to engage with and reward your customers in fun and easy ways.

First, as mentioned above, you can reward your customers for creating great social media content through the app, which you can then use on your social channels. Customers can use their reward “tokens” as we call them to get a discount on their next purchase, or you can create a fantastic reward “pool” and include things like special experiences, special events, or special products and services that only your loyal customers have access to (just like the reward shops that are offered by airlines).

Customers can also earn reward tokens for shopping with you more frequently, spending more money, or for referring their friends. All of these are things that are greatly beneficial to your business, and that you should be more than happy to reward your customers for doing!

Finally, the great thing about Loop is the ease with which rewards can be earned or redeemed. Any payments made through the Loop app can automatically add or subtract reward tokens from the customer’s balance, and credit card payments can be made in the same transaction (just like a digital wallet). This is a very smooth process for both customer and wait staff, which we know is essential during a busy service.

However, even if you don’t use Loop, then consider introducing some kind of reward or loyalty system into your marketing mix!



Conclusion


Thanks for taking the time to read this article, and I really hope that you’ve gotten something useful from it.

I’ve explored a lot of complex topics here, but hopefully it’s given you a high level overview of the things you need to think about when managing your marketing.

There is far more information about all of these topics available on the web, so just do a Google search for anything and you’ll probably come up with more information than you know what to do with.

Feel free to reach out if you need any help with anything, and I’ll do my best to help in any way I can.

Lots of love and best of luck with your hospitality business,

Tom Norwood


Loop Co-Founder

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