Restaurant Lessons from a Recession (Part Two) – Marketing
Perhaps marketing is the most challenging task a restaurateur faces with or without the impact of a recession. Recognizing that there is a recession is always in hindsight and pinpointing the day it started is impossible. You don’t wake up one morning and the newspaper headlines tell you your business is down, people are losing their jobs, there are fewer dollars for dining out available and prices are going up. Those things occur over a period of time. Recognizing the trends and realizing the impact it is going to have on your restaurant is the key to keeping the damage to a minimum.
If your restaurant had a marketing budget and programs in place, you at least know the importance and value of planning. The challenge is knowing how you must change as the consumer changes in a financial downturn spread across literally all parts of your demographic.
Restaurant visits is one of the first things to be curtailed when your guests have less discretionary dollars to spend. When they do go out to eat they are looking for value. There is more focus on price and the total experience – in simple terms, diners want to know what kind of bang they are getting for their buck.
Another phenomenon is people want to feel good. The media is plastered with bad news, so the small window to feel good is at a restaurant table eating comforting food they may not normally eat. Comfort food becomes a big seller. It’s interesting that even fine dining restaurants have jumped all over the gourmet hamburger trend. Casual restaurants are reviving dishes that were stored in the recipe books for years as the pre-recession consumer was looking for more healthy foods, less fried foods and watching calories closer than their wallets. During this economic downturn it appears the “feel good foods” are a hit.
Another aspect of evaluating consumer habits is the sympathy choices. Rich or poor, there was budget tightening. Even people who had plenty of income and assets have changed how they eat and spend money. There are fewer $75 dollar bottles of wine, $50 dollar steaks and extravagant desserts. The fine dining establishments have seen a double digit decline in sales for months.
How do you combat all of these negative forces? As always, give the guest what they want and keep your regular customers loyal.
Regular Customers
If you hadn’t developed a method to communicate with your loyal clientele before the recession, you are discovering how important it is when they are not at your tables as frequently (or not there at all) any more. Direct mail and email are the tools of choice. Other media possibilities include newspaper, website, television and radio. These are expensive and make it difficult to reach your client base specifically. Email is perhaps the most effective and less expensive. Regular communication about the changes you have made in your menu to reflect the guest’s focus on value is important.
Getting New Customers
New customers, while difficult to motivate, are more susceptible to your contacts than ever before. They are looking for value. Your competition may not be as aggressive at changing their operations to meet the consumer’s demands. There are fewer dollars to be spent and fewer new diners, but the ones that are out there are looking for new experiences. Their eyes and ears are more tuned to listen for things that fit their budgets and taste buds in this economy.
Clearly the best source of new business, in any economic climate, is word of mouth. That is why you want to make every effort to maintain and increase you regular customer frequency. The second best source of new clients is personal contact with you or a member of your staff.
Your Marketing Plan
The key to keeping your revenue and profits up is having a viable plan based on the facts known about the consumer environment we have pointed out. If you had a previous marketing plan for your restaurant, scrap it and design a plan on the new circumstances. Key elements include;
- Make sure you have a customer loyalty program in place and direct communication ability with your regular guests. Step up the frequency of contact.
- Be creative. Anyone can offer 15 or 20 percent off existing menu prices through coupons, specials and discounts – don’t do it. The potential long term damage to your brand is inevitable. The look of desperation is not a message you want to convey. Look at your inventory. What can you menu that is a value to your guest, but keep your margins within reason. Use your suppliers. Find new products that offer bargain pricing and comfort to the diner.
- Service must be impeccable. The guest is looking for value in their experience at your restaurant. “Value” is more than just price. Value is a package. It is meeting and/or exceeding what the customer expects. Whatever your concept, from fine dining to quick service, there is a minimum of standards that the diner expects when they walk in the door based on the price points you have established for your concept. Get your staff involved, informed and re-trained if necessary.
- Consider additional changes to cut costs and increase sales. Everything from catering, brunches, party trays, group sales, additional hours (or shorter hours) and operational procedures have to be examined. Make the changes that will add sales dollars and cut costs.
Summary
You may think it’s too late to react. If so, you must have a crystal ball or some other method of knowing the recession is over or won’t last longer. As recessions go, the end is as elusive as the beginning. What if the end is a year away? How about two years? What if it gets worse?
In reality, the plan you put in place now will work in any business climate. There is never too late in the restaurant business. We work on deadlines – some in the next minute, next five minutes, hour, day or week. One big deadline is while your doors are still open.
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Comments
Hey Larry,
I have read all your posts on the front page of your blog here I do have a comment for each one but I will just comment on this one for now.
I have been in the Restaurant and Hotel Business since I was 13 years old, I can totally relate to what you have written. Your bullet lists are very important. Customer loyalty is number one once that is established you have a foundation to build on. Slashing prices is defiantly not the answer to survival. If you want to rework your menu a little and offer some less expensive items great do so with in your established food cost percentage parameters and you will be fine. Making available less expensive fare dosn’t mean you have to sacrifice on your end.
You can also contact Restaurants in your surrounding area and form a small buying Co-Op this will give you all as a group some purchasing power as a group for some of the Items you all may have in common.
Thanks for the posts.
I rarely make it through posts that long unless they have value.
Brad West ~ onomoney
Thanks for the useful info. It’s so interesting