Do you feel like your sales are declining month after month and you don’t know what to do about it? Don’t worry because in this 20+ video series course, I am going to dive deep into the branding & marketing aspect of the restaurant industry. You will learn about the service marketing triangle, the history of marketing, consumer’s buying behavior and many more. You will also get to know about why a mission and vision statement is necessary and how it can help to select the best target audience for your restaurant. I can’t wait for you to start watching this course and start implementing it to earn huge profit.
Marketing is the process by which companies create value for customers, resulting in a strong customer relationship. The service marketing triangle consists of three major areas that are interconnected to each other i.e., need, solution and price. Great marketing is providing a solution to the customer’s needs in a way that exceeds their expectations. It also means that you need to create value for the price you are setting for that solution.
In simpler definition, it means that the restaurant must provide value and exceed expectations based on what the customer wants from that transaction. Some restaurants are just open for the sake of providing cheapest, affordable food whereas some restaurants focus on interior decor, ambience and events. Both these restaurants, at the end of the day, serve food however, the marketing is changed; the value proposition is changed, the whole process and operation will change.
Marketing we know today, is not the same as it was, decades ago. There was a time where companies and brands had to invest millions of dollars to promote their products via radio ads and newspaper ads. Some companies still do it and it is still a viable option however, the time has changed and consumers are now exposed to a lot of new media.
It started with marketing 1.0 which was very product-centric, meaning the whole intention of making a product was to sell it to the maximum number of people and earn a lot of money through that transaction. A lot of companies made a fortune doing just this. They looked at what they are good at and then started producing those products in bulk. If the product provided value to the consumer, they bought it otherwise, the product didn’t sell. There was not much competition back then; it was more about who can produce the most amount of X goods.
Then we shifted to Marketing 2.0 which was more consumer oriented. As mentioned above, the products produced had to provide value to the consumer. If not, the companies do not make money off it therefore, companies started to focus on satisfying customers. They focus on consumer behavior, target audience, segmentation, promotional campaigns and strategies and so on. Long story short, it worked. The customers who found value in the product bought the product but then a lot of competition started to emerge.
Moving along to Marketing 3.0, companies were frustrated because they weren’t seeing the growth as previous time due to the huge number of competitors. In order to combat this, companies had to make sure that the consumers were using their product instead of their competitors. They had to focus on retaining the consumers through different loyalty programs, branding and promotions, exclusive offers and so on.
Right now, we are on Marketing 4.0 where consumer retention itself is not enough. All those marketing efforts need to be seen online as all of the consumers have shifted their entire attention into the digital world. Consumers are well aware about all the information needed for them to decide before buying the product. Therefore, companies need to make sure that whatever they are promoting, needs to align with the consumer’s value.
We all know that every transaction happening in this world is due to demand and supply. You don’t believe me? From the moment you wake up, everything that you use; from the house you live in, to the clothes you wear have been bought due to the value they bring to you. And in doing so, you fulfilled the demand side of the transaction whereas the companies selling those products fulfilled the supply side.
The same thing applies to the restaurant industry. The restaurant creates the supply of food items through the location and their menu, whereas the customers creates the demand side of the transaction by consuming those food items. When the demand and supply meet, an equilibrium is set which is the price. When we look at the trends, we can see that a lot of the demand side has changed.
There is a soaring number of growing middle class and they have relatively higher income to spend on restaurants and other areas. This is the reason why fast food chains such as Burger King and McDonald’s are doing so great. With their competitive pricing on the market, a lot of customers who would not have consumed their product, are now brand advocates of those food items.
If we look at the supply side, there has been a lot of technological innovation that makes opening and running the restaurant much easier. There are POS systems that help with real time tracking and ordering of food items; there are food delivery systems that increase the ticket order without having the physical seat count at the restaurant and many more.
Competitive Analysis is a necessity when it comes to surviving in this competitive restaurant industry. There are new restaurants opening every minute and if your restaurant starts being complacent, some other restaurant will pull your customers towards them. All it takes is one other restaurant with an excellent value proposition to sweep away all of your loyal customers.
Let’s start with SWOT Analysis. SWOT Analysis is a strategic planning technique used to help an organization identify strength, weakness, opportunity and threat related to business competition. As the name suggests, strength defines the things that the restaurant can do the best. Maybe your restaurant has hired a top chef with 10+ years’ experience, maybe your restaurant is in an excellent location with cool interior design. Whatever the strength is, try to be as specific as possible.
Weakness is based on what could be done better. These are the things that can improve over time. Maybe your restaurant does not have a good POS system or inventory management system. This could be a weakness as compared to that of the competitors, however, these are the things you can improve on. You can formulate plans and strategies to convert the weaknesses into strengths.
Opportunities and threats are linked with the external environment. Opportunity is based on how you can grow. Knowing what’s new in the restaurant industry helps to figure out the opportunities on which the restaurant can capitalize upon. Maybe the target audience of your restaurant has risen and your best strategy is to increase the marketing budget and focus on promotion.
On the other hand, threats suggest the things that could negatively affect the restaurant in the future. Maybe there’s a new competitor who just opened its store across your restaurant with a similar offering. Maybe there is a new Covid-19 virus attacking the city where your restaurant is, and people are starting to come to the restaurant less often.
Mission Statement is an important element when it comes to showing what your restaurant is about, what the values are and why it exists. It states the purpose of the organization and creating a mission statement for your restaurant help you think critically about your long-term goals.
At the end of the day, the main purpose of opening and running any business is to earn profit however, how we get to that goal matters. Some owners want to run a restaurant because they love to see happy customers enjoying and celebrating at their restaurant. Some owners are chefs and they want to open their own restaurant in order to serve their signature dishes and so on.
Having a mission statement stating what experience you are trying to provide will make sure that customers and the management understand your company’s core values. Having a mission statement gives your leadership team and employee’s direction. It differentiates you from the competition and helps you hire the right talent.
Market segmentation can be seen as viewing a market of consumers as a number of smaller sub-set. We all know that we can’t please everyone all the time. If you like something over others, it likely means that you prefer that thing over others. Same thing goes for restaurants. A person or even a group cannot eat everything from the menu of a restaurant. Nowadays, we see that restaurants have over 50+ items on their menu which makes it harder for the customers to choose as well as harder for the chefs to prepare the dishes among the vast inventory of raw materials.
The solution to this problem is market segmentation. After the restaurant is opened for a while, I am sure that you will get a grasp of which items are sold most and which items are not consumed at all. After doing some research and customer survey, you can figure out your best target audience. It could be based on demographics, geography, psychographic or even a combination of them all.
The benefits you get from the market segmentation is immense. First, it forces the organization to do SWOT analysis. The restaurant needs to know what their strength and weakness are, so that they can capitalize their strength towards serving the core audience. Similarly, it improves the match of supply and demand. Customers get what they want to eat without having to choose from vast choices in the menu. On the flip side, the restaurant only has to buy a limited amount of supply to keep on the inventory.
We all know that the restaurant industry is a pretty board industry and we can cater to almost any person from any culture. However, this does not mean that we do not select a target market. Actually, it is in the best interest to have a specific target market so that you can differentiate your restaurant from other restaurants.
Having a restaurant that serves all forms of cuisines firstly means that the customers will have lots to choose from, which could lead to decision paralysis and secondly, your restaurant has to have different ingredients, different chefs in order to prepare those unique dishes.
Now that I have told you how important selecting the target market is, you have to do the hard part of actually selecting a target market. Here are some criteria’s that needs to be fulfilled while selecting the target market. First of all, the target market has to be large enough to be profitable. Secondly, you need to check whether that target market trend is growing or falling within the years.
Thirdly, it is important that you do a little market research on whether there are a lot of competitors within that target market. Moving along, a restaurant needs to be in a location where people are actually interested in the type of food you are serving. And lastly, the target market has to fit in with your restaurant’s mission and objectives.
Let’s just take an analogy of you wanting to climb up a mountain. You have been preparing yourself to climb this mountain for many years and finally, you have got the chance. Before beginning, you need to ask yourself where you are. If you are in a country where there are no mountains, it does not make sense for you to have this dream. Maybe, you should go to other countries where there are mountains for you to climb to.
In marketing, in order to find out where you stand, you need to conduct SWOT analysis, do market research. Basically, you need to have a baseline understanding of what and who your product/service serves in the marketplace. Moving along, let’s just say you are on your way to the mountain. Now, you need to decide which path you want to take in order to reach the peak of that mountain.
There will always be different paths; a path with curvy roads, a path that’s dangerous but quick, a path that requires help from others and so on. Since it’s your journey, you need to decide which path you want to take. Just because a competitor chose a path and succeeded does not mean that you also have to walk the same path.
Every path is different and every path leads to changing or adaptation of your product/services. For this, you will require the understanding of Segmentation, Targeting and Positioning (commonly known as STP). How you position your brand depends upon whom you are targeting and how well you have done the segmentation to reach that target.
You know where you are, you know which path you want to take so now the final question is how do you get there. You need to decide on the marketing channels you want to use, different product lines for different customer segmentation, the pricing strategy, differentiation strategy and how you communicate that to the target audience and so on. After doing all the hard analysis part, the road becomes much clearer as you begin unfolding the challenges and knocking them down one by one until you get to the top of the mountain.
Market segmentation analysis is basically the process of grouping customers into segments who share similar needs. It can be done in basically two approaches – either through common sense segmentation or data driven segmentation. One leans more towards being intuitive and another leaning towards customer survey and analytics. The step-by-step process of MS analysis goes like this:
First step is to decide what not to segment. We might think like our restaurant is for everyone and that might even be the case. However, let me give you an example. If your restaurant is a family theme restaurant then the food should be prepared accordingly, the seating should be arranged accordingly, the music and the ambience should be set accordingly. If in this example, youngsters and college students start to hang out more, the whole restaurant will fall apart.
This could mean two things. Either the area that the restaurant is opened has a lot of foot traffic from students which means there are colleges and universities nearby. Or, maybe the restaurant attracts more younger people as opposed to the customers we are targeting.
Second step is to sketch your ideal segment. Whom do you want to target? Make a detailed customer profile which describes their age, gender, hobbies, income level, preferences and so on. The more precise it is, the easier it is to find those types of customers for the restaurant. Once you have an idea on whom to target, you should start collecting data.
You can either hire a sales team to gather information around the locality or do it yourself. Prepare a questionnaire which contains questions which ends in Yes/No answer or rating from 1 to 5 scale. You need to include specific questions which will help you to understand the customers and their preferences.
Then you start to go through that data and see whether there is a market for your target audience. For example: If you have a question on whether they prefer family restaurants over other restaurants, and the majority answered No. You might have to avoid opening a family theme restaurant as there isn’t much market for it. You can also decide to go against the data and open a family style restaurant that challenges the traditional notion.
Moving on, we now have our hypothesis on what we want and also what the customers want. We will try to overlap the common theme and then work for the remaining ones. Suppose your target audience is office workers and a lot of office workers actually love the idea of having a restaurant which caters to them, this is a plus sign. You have just proven your hypothesis and now you can focus on other aspects such as lighting and seating and so on.
Once you have selected the target segment, you need to start developing a marketing mix for that target segment. Marketing mix, commonly known as 4P’s, focuses around price, place, promotion and product. Having a target segment will make it easier to build upon these marketing mix. For example: Knowing that our target market is office workers and business people, we can increase the prices of the food since they are willing to pay more than the average consumers. We can open restaurants near offices and corporations to increase foot traffic. We can promote our restaurants by introducing special offers and packages for office people. We can sell healthy food items knowing that office people need to work longer hours and need carbs and healthy nutrients.
As we have already discussed market segmentation analysis and the step-by-step process of conducting the analysis, now we move on to the principles of market segmentation analysis. There are certain principles that you need to follow while selecting a target market audience.
The first principle states that there are hundreds of solutions. If you want to target college students to open up a cool cafe that they would love, you can still do that and maybe shift the target audience towards entrepreneurs and freelancers who want to connect with each other and socialize. You should never be restricted within what you think is possible. Gather as much information as possible from the local community, look at other restaurants, count the foot fall traffic within that area. Before investing your hard-earned finances into this, try to invest your time and effort towards understanding the market.
The second principle states that most segments actually do not exist. If you decide to target a family in a location where there are lots of consultancy and colleges, the market size for that audience will be significantly lower. Similarly, if you target high income earners and the restaurant does not even have a parking space, most of them will not come to the restaurant. You need to make sure that everything aligns from the location to the ambience.
The third principle states that you need good quality data. You might ask, what is good quality data? It is something that is relevant, collected with scientific reasoning, serves a purpose and has little to no biases. If we have an idea of what the target audience should be, we always tend to search for information which confirms that idea, commonly known as confirmation bias.
We need to make sure that the questions that we ask are unbiased and help with the context of selecting the target audience which is later compared with the hypothesis. Similarly, the fourth principle says that it has to be dynamic. Dynamic, in the sense, that if the target market that you selected is working right now does not necessarily mean that it will still be relevant after a year or so.
We always need to be keeping up with the current restaurant trends, consumer’s eating habits, what they love and what they don’t. It does not have to be something that completely changes the menu; adapt to the market and gather positive or negative feedback. For example: You can start adding menu items based on what the consumers loved and let me taste a quick sample. Gather data on that new menu item and once there are enough positive responses, launch it.
The fifth principle states that one segment is enough. There is a saying “If we try to please everyone, we actually please no one.” If that one segment has enough market size and that the target market actually loves the restaurant, that alone could be the differentiating factor. Your profit will only go up because you actually serve the customers whom you are targeting, and they come to the restaurant because they feel like the restaurant understands or values their opinion.
The last but not the least principle states that you need to keep it simple. I know this sounds counter-intuitive. I have given a step-by-step process on how to conduct market segmentation analysis and also told you about the principles of MS segmentation and this is really confusing. To be honest, it is supposed to be complicated so that once all the complications are cleared, you are left with the true essence; the ultimate target segment.
I want to start by saying that marketing starts with differentiation and differentiation starts with the product itself. Whatever I am selling in the market needs to have some kind of value to the target customer or else they are not going to come to you. In the restaurant business, there are restaurants on every block of the city. We are able to order food online without any hassle so restaurant owners really need to dive deeper into why people should come to your restaurant in the first place.
The product needs to be different from that of its competitors. If the location is pretty much the same, if the taste is the same, if the service is the same; people will go to the place that is cheaper and within walking distance. I will not travel for 30 minutes in order to eat at the restaurant which serves similar taste that I get from the restaurant next door.
Even if your restaurant is the cheapest option, I would rather pay a little more in order to save the commute cost. Conversely, we see restaurants that are opened in the middle of nowhere, however the place is so great that people travel for great miles in order to dine in that restaurant.
We can take the example of restaurants such as Sasa and Lahana which are quite far from Kathmandu and still people go there in order to taste authentic Newari cuisine. That’s how much people are willing to do, in order to have an amazing experience. You need to be able to create that experience in your restaurant.
Moving on, you need to have a proper value proposition. What value do you provide to the target market that other restaurants have not been able to give? It could be in terms of products such as ingredients used, the method of production. It could be in terms of the market itself, making it as convenient and accessible as possible.
It can go along the line of distribution and pricing. If the packaging is good or the pricing just hits the spot, I am more likely to return to that restaurant. Last but not the least, the most important value proposition should be the service itself. Quality must be maintained, the food must be served hot, the staffs should behave properly, the ambience should be great and so on.
Positioning is an expression of how a product with differentiation fills the need of a particular customer segment. If your restaurant does not stand out from the rest, it means that you do not have any positioning advantage. People have the freedom to go to any restaurant and the probability that they will come to you will be based purely on luck.
Whereas, on the other hand, if we flip the scenario and your restaurant is one of a kind that serves authentic and special handmade Italian pizza with thin crust and flavorful toppings. Pizza lovers will definitely want to come to your restaurant for this experience and this is how you can position your restaurant as the best pizza restaurant in the town.
Without positioning, people will lack the top-of-mind awareness of your restaurant. Even if they had seen an ad on social media or the billboard, people are not going to remember about that for very long. Customers don’t know how your product is different from others, and what needs should be fulfilled. Without positioning, your restaurant has to compete with every other restaurant in the town.
It is said that if you can’t get your product to the customers when, where, and how they want it, they will simply buy a competing product. This is increasingly true especially in the service business where there are a lot of competitors. There is a restaurant open on every corner of the street and in order to differentiate your restaurant from the crowd, you need to have different marketing channels.
The first benefit of having marketing channels is that it saves time and money. You will be able to attract the right type of customer in an efficient way. Rather than letting them find your restaurant by luck, you create an excellent image/brand of the restaurant so that the customers can associate themselves with that brand.
Another benefit is that it helps in rapid distribution of products and easy access to new customers. Having the knowledge to understand the needs of the customers, predicting the inflow of customers on a certain day; supply chain management would be easy if those things are in place.
The factors of channel selections are the type of customers, the type of products, channel partner capabilities, business environment as well as competing product’s marketing channels.
Everyone knows that in order for a restaurant to be successful, the location has to be great, the food has to be great, the customer service has to be great and so on. However, the owners often miss out on the most important aspect of running a restaurant i.e. consistency. No matter how great the restaurant is, if the chef is switched every single week, the taste of the food won’t be consistent.
Similarly, no matter how great the marketing strategy is, if the marketing message is not consistent on all advertising platforms, it creates confusion within the customers. There will be a mismatch between what the customer sees and what they get afterwards. Therefore, it is necessary to have a solid integrated marketing communication (IMC).
In this modern world, customers check your restaurant online before even thinking of entering into the restaurant. Therefore, your restaurant needs to be updated consistently on new offers, new deals, loyalty membership cards, interesting menus, BOGOF and so on. If the marketing message is not tempting enough, people will not enter your restaurant.
People think psychology and consumer behaviour has nothing to do with business but this is farther from the truth. It is important especially for a business to understand the consumer’s buying behaviour. We have already discussed how to segment target markets and create a USP for that target market.
So, now we need to go one step deeper. Does our restaurant attract those types of customers and their buying decision? This question needs to be answered. If a restaurant is opened in a high-class location and targets people with higher socio-economic status, are you creating that type of environment inside the restaurant? If there is no car parking, then those target customers will not bother to come to your restaurant.
In order to understand these concepts, there are several factors that influence consumer’s buying behaviour. First are situational factors such as social situation, time, reason for the purchase and mood. Second is personal factors which include personality, gender, age, stage of life, attitude and lifestyle.
Moving along, there are psychological factors such as motivation, perception, learning and mental positioning. Last but not the least, there are societal factors that include culture, social class, opinion leaders and friends/families.
There is a difference between a famous, well-established restaurant and an independent restaurant that have just opened weeks ago. That difference is in terms of brand awareness. People do not know about the recently opened restaurant. So, the question is how do we go from a newly established restaurant to a restaurant that is filled with people who love the food, the customer service, the location and everything.
There are mainly four stages of customer experience. First is the pre-consumption phase where people do not know about your restaurant. We need to communicate our value proposition through brand awareness. We let them know about the type of restaurant, the types of food we serve, the location we are in, the opening and closing hours, the ambience and everything in between. Basically, we are trying to make the potential customers aware that we are in business and you are welcome to visit us in our restaurant.
Moving along to the second stage, which is the purchase phase. This is the time when the customers remember that ad that they saw of your restaurant. They decide to search more about the restaurant. How are the customer reviews? What’s the social media handle like? Is it car parking in the restaurant? What food do they serve and many more. In this stage, your restaurant should remain true to its value and showcase its value proposition in the best way possible.
On the third stage, which is the consumption phase, these people actually come to your restaurant. They order food, maybe bring along some friends, have a good time and leave the restaurant. You as the restaurant owner need to make sure that their experience should be flawless from the time they enter the restaurant to the time they exit out of it. This means that the decor and the ambience must be on it, the waiting staff should behave nicely, the food should be warm and well-presented, the waiting time for the arrival of the food should not be too long and many more.
The fourth stage is the post-consumption phase, where the customers have the option to either say that the restaurant was good and tag this restaurant on their social media or say that the restaurant was bad and the service was long, the waiter was rude, the music was too loud and so on. The response that you get from the customers is going to determine if the restaurant is going to stay in business for a long run or not.
There are two forms of marketing: internal and external marketing. Internal marketing focuses on the relationship between the business and the employees whereas external marketing revolves around businesses and customers. Businesses only tend to focus on external marketing but it is equally important to balance both types of marketing.
You see, the owner cannot be present all time in the restaurant therefore, all the interactions will be done by the FOH staff such as waiters and bartenders and managers. If you want your staff to be their best and perform their best then, you need to focus on internal marketing.
This includes hiring the right people for the job, training them, managing the employee’s emotion, reward and recognition and many more. I have gone in depth about this in my HRM series for restaurants.
For the external marketing side, it focuses more on attracting customers into the restaurant. In the awareness phase, you would do live events, branding, community building exercises, google optimization. For the engagement phase, you could integrate influencer marketing, social media marketing, and user-generated content. And for the retention phase, try out things like loyalty cards and different offers.
If you search on google about marketing and what marketing comprises, you are going to hear a lot about 4P’s. 4P’s are the fundamentals of marketing and it consists of, you guessed it, 4 P’s which are place, price, product and promotion. Let’s discuss it one by one.
First comes the product. Restaurants sell foods and drinks and they are able to sustain themselves through these sales. If enough people come to the restaurant within a month and all of the expenses are covered, then the restaurant goes into profit.
Then comes the place. Where you place your restaurant determines how expensive or cheap the rent is going to be. You need to do good marketing research before searching for a location. Opening a pork-styled restaurant in a neighborhood of vegans is not going to work.
We move on to the price. Price is determined by where the restaurant is located as well as various other factors. If your restaurant is opened in a high-class area, you can charge a premium price on the menu dishes. However, everything else should also live up to the potential such as excellent customer service, nice decor and ambience, ample parking space, great food quality and taste and so on.
Finally, we come to promotion which basically means advertising. What are you doing to make sure that people know about your restaurant? Without advertising, your reach will be limited to your friends and families alongside people close to that area. Therefore, in order to reach more people, you need to heavily invest in marketing your brand.
The other 4P’s especially in the service industry are People, Programming, Partnership and Physical Evidence.
Pricing is always a tricky subject. If we price our products too high, we risk losing customer demand whereas if we price them too low, we risk not making a profit at all. Therefore, there needs to be a fine line when it comes to pricing anything.
That being said, there are specific steps that you can follow in order to help in your pricing framework. First is setting price objectives. Why are you pricing a product the way you are pricing it? In other words, what is the objective behind that pricing decision? Is it profit-oriented, sales-oriented, status quo and prestige oriented?
Similarly, the second step is to estimate the demand accordingly. Establishing a premium restaurant with higher prices would mean that the demand will be less than that of a medium restaurant. Conversely, fast food restaurants will have a high demand due to the nature of the business.
Then, we move on to determining the cost. What are the expenses like? Expenses include fixed assets such as furniture and kitchen supplies and interior decors as well as variable expenses like rent, salary, marketing cost and so on. Understanding the cost and then putting a profit margin on that cost is a better way to see whether the price will be competitive in the market or not.
Then we also need to determine the pricing strategies that we want to use. We could either use a price skimming strategy where we raise the price from the start to cover up the investment cost or price penetration strategy which allows us to capture a lot of market share.
Using cost plus pricing, leader pricing, price bundling and so on are all part of giving an incentive to the people in order to capture their attention. We can later give them offer and make price adjustments as needed.
Nowadays, there is a trend of investing a lot of money and resources into making the best internal decor and buying top class furniture and sofas and an OLED TV for the restaurant. Restaurant owners hire architects and interior designers to build the best bars, best kitchen, best BBQ place and so on.
I am not saying this is a bad thing. Actually, this will make the customers feel special and valued especially after seeing the environment and the decorations. But I want to point out that internal marketing is equally if not even more important than instagrammable walls and colour changing lanterns.
The restaurant owner should focus on raising the morale of employees first and foremost. By employees, it includes everyone working in the restaurant: the chef, the waiter, the manager, the sous chef and so on. If the employees are given ample play, their performance appraisal process is justifiable, good services are appreciated then the employees will be satisfied.
Employee satisfaction leads to quality service. The chef will start preparing the dishes with love, the waiter will start serving the customers with a big smile, the cashier will be welcoming and kind and so on. With all of this, the customers will be satisfied. They will feel special and their experience with the restaurant will be memorable.
Once a customer remembers the restaurant and its happy memories, they will become a regular customer and regular customers means higher profit. It would mean more happy customers and a full house every time.
This will allow the restaurant owner to reinvest the profit back into the restaurant through increased salary, pay raise, more employee benefits, vacations and gifts and so on.
We hear about brands all the time. We want Nike shoes and Gucci jackets, BMW cars and Rolex watches, so on and so forth. There is always a brand attached to the product/service and that’s what makes the people want to buy and visit again for that brand experience. Branding on restaurant works almost the same. We know fast food chains like KFC and McDonalds not because the food is good or the ambience is great, but because of the branding itself. Yeah, the food might be good as well but the familiarity is the reason why most of the people opt for those fast food restaurants rather than a normal one.
What does that mean for us? It means that branding is a life-long journey and in order to stay afloat in the market, the restaurant should have a great branding. Your target audience should know that your restaurant exists and that they come regularly just because of how well the branding of the restaurant is. If you primarily sell pizza and somebody craves pizza, they better come to your restaurant to satisfy their cravings.
The power of the brand empowers the employees to work with full dedication. They can brag with their friends that they work for your restaurant and how amazing it is. It allows for brand extension. You will be able to create franchise opportunities and that brand name can help you to kickstart your new restaurant in a new location. You won’t have to start from the bottom due to the power of branding.
Similarly, it helps to create bonds with consumers which in turn increases the sales revenue. The customers can be updated about your restaurant through online presence and be wary about the different events and offers. And lastly, great branding allows the restaurant to have a better bargaining power with suppliers. The suppliers will be glad to supply products to your restaurant based on the positive responses.
We all need to understand that a new restaurant surely does generate a lot of traffic if you know the neighbourhood or you have a lot of network. But everything has a honeymoon phase and once that phase is over which could be 2-3 months down the line, the restaurant will stop getting as many customers as there were, during the opening stage.
That’s when the restaurant owner starts to panic because he had already hired a lot of staff in order to meet the growing demand and all of the sudden, only 3-5 customers come to the restaurant a day. Every restaurant owner faces this dilemma no matter how famous the restaurant gets. You need to start thinking about utilizing consumer sales promotion.
It could be anywhere from discount offers, contests, premiums all the way to pop-up stores and point of purchase displays. Let me explain. If you have watched my menu engineering course, I have mentioned that there should be high margin foods and low margin foods in order to balance the food menu. You can run discount offers and use coupon codes for those high margin food items.
Giving a free appetizer with an order above 1000 might not cost you much but it could bring in a lot of customers and the profit would increase solely based on that offer. You are already paying for the staff, the rent, the decor and everything, why not spend a little by giving out free appetizers or sodas or 10% discount offers?
Similarly, you can run giveaway contests, organize different events, bring in local celebrities and musicians and so on. It will surely bring in some new customers if the marketing is done correctly. You can launch membership cards where someone will receive some benefits if they visit the restaurant by X amount of times in a month.
Pop-up stores are also a great idea to see whether your unique food items have enough customer demand or not. You might think that Nepalese will love tacos. This is just a hypothesis and in order to test it, you can open a small pop-up store in a mall and see whether the customers like it or not. This is a great way to test a new menu item without breaking big bucks. And lastly, the restaurant can have a point of purchase display of different desserts, bakery items; things that will entice the customers to order it.
Customer Relationship Management can be defined as the strategies and practices to analyse and manage customer interactions and data. Its primary purpose is to improve relationships with the customers which in turn leads to customer loyalty and business growth. There are a lot of CRM software which helps with retaining the customer but I am not going to talk about that.
Let’s focus on how we can measure consumer satisfaction. There are two critical ways to do that – by establishing appropriate expectations and then delivering those expectations. For example: You can ask questions like were the order taken promptly, how long did you have to wait for your food and so on. Giving a customer review paper at the end would help the restaurant to understand where they are doing great and where they need to improve.
You might ask, what’s the reason that makes the customer dissatisfied and there are multiple reasons. First is the communication gap which simply means overstating the offering. If you say that there is a discount on the food menu and when you go to the restaurant, they say that the offering has expired; that counts as a communication gap.
Similarly, the next one is knowledge gap which means not understanding customer’s needs. As mentioned in the earlier videos, you need to do market research before opening a restaurant. You need to understand who the target audience is and what they want. If you open a restaurant and customers aren’t coming, that suggests a knowledge gap on your part.
Third one is the standard gap. There is also an expectation attached while going to a restaurant. We expect the waiting time to be low in a fast food restaurant; we expect the service to be phenomenal while in a fine dining restaurant and so on. If the restaurant cannot meet those standards, the customers will be dissatisfied.
Last one is the delivery gap which simply means failing to meet performance standards. This is mostly related to the human resources department. You need to make sure that the staff are doing the best of their abilities. What this means is that the waiters are being friendly, the cook is making the best dishes, the manager is keeping track of all the inventories and many more. When the whole system is not running properly, that’s when the restaurant fails.
A Marketing Plan is basically a document that outlines the advertising strategy and how the restaurant is going to function throughout the years. Every marketing plan consists of these 5 things: executive summary, business challenge, the market, the strategy and finally the budgeting.
Starting with the executive summary, it talks about why the restaurant exists and what is the purpose of opening this specific restaurant in a specific location catering to a specific type of audience. You need to define your vision and mission statement and the value proposition of the restaurant.
Moving on, you need to mention the business challenges. Where are you opening the restaurant and what are your offerings? Are the customers willing to come to the restaurant and pay for the price that you are selling the foods at? This requires market research and a lot of planning. Doing a location audit as well as looking at the restaurants nearby helps to understand whether the restaurant is going to sustain in the future or not.
Then, we focus on the market. The market consists of 3Cs: Customers, Collaborators and Competitors. Who are the target audience and do they know about your restaurant? Who are the collaborators and are they willing to partner with us? It could be an event management company, local artists, local musicians and so on. Who are the competitors and how are they attracting customers?
Now, we dive into the strategy. What are the 4 P’s like? Are the prices set appropriately? Is the place suitable for what you are offering? Are the products appealing to the target audience? Is the promotion done right to attract those target audiences? The strategy should also focus on IMC and CRM.
Finally, we move on to the budgeting part. Do we have the investment to run a restaurant or do we have to take a loan? What is going to be the ROI meaning how long will it take to cover the investment cost? If it takes more than 10 years, is it worth taking that risk as the restaurant industry is ever-changing. Are you planning on opening a restaurant alone or with partners? How will the work be divided? These things should be planned from the start before starting the restaurant.