Powerful promotions can be a key to a restaurant’s success. But many operators don’t take the time up front to answer an all-important question: How do you define a successful promotion?
Answering that question is the first move in building an effective campaign. Here six points to remember when designing your next promotion.
1. Define how you will measure success.
Are you simply looking to drive traffic through the door, even if you don’t make much of a profit? That’s a legitimate goal, since some of those customers will come back if they get quality food and service.
Is your goal to attract regular customers and encourage them to spend more? This could involve such tactics as launching a new burger that comes at a premium price.
Or do you simply want to create a buzz, with unusual items like shamrock-themed green shakes for St. Patrick’s Day? This can be worthwhile in helping make your brand more memorable.
2. As you define success, pick a quantifiable way to measure it.
Of course, the simplest metric would be a bump in customer traffic; for example, increase overall traffic by 2 percent during December.
But if you want to focus on profitability, pick a metric related to the size of your average check. And if creating buzz is the goal, you might want to measure your website traffic or social media activity, or base your analysis on how any promotion-related advertising performs compared to your usual ads.
3. Determine a marketing budget, and stick to it.
It’s easy to get carried away with spending on a promotion, as your marketing and sales people get excited. But sticking to a predetermined budget—and tying that into your analysis of profitability—will help you make an informed decision on whether you should do a promotion again in the future.
In your planning, consider that if you want to promote more expensive items, this might require more extensive marketing to get your value proposition across to the customer.
4. Understand that when a promotion increases sales of one item, it also affects other items.
It’s critical to know what your customers buy. For example, if a regular customer buys your promotional wild salmon, what would he have bought it without the promotional push? If sales of a certain item grow, decreased sales of other menu items will either help or hurt your overall profitability.
This relates to the need for having a deep understanding of what your customers buy. Also, know how different menu items vary in profitability, and how your restaurant’s sales vary by day and time of day.
One approach to scheduling promotions might be to rely on low-margin traffic-driver campaigns in slower months, then shift efforts to growing check sizes in stronger months.
5. Know that every geographic market is not the same.
If you have multiple restaurants, start by testing a promotion in a few markets to see how it impacts your business. We usually recommend trying a promotion for at least 8 to 13 weeks, or for three purchase cycles.
And as you plan the budget, it’s important to have the funding you need to run ads repeatedly. In general, consumers won’t take action until they have seen an ad or product mention multiple times and in multiple places.
6. It takes time to create a well-run promotion. Don’t rush it.
It should take a year to plan a quality promotion, including creating specific marketing plans, running market-level tests and defining a quantifiable way to measure success.
Having the information in hand to help you determine whether you want to repeat a promotion will lead to a well-reasoned approach that pays off, whether your goal is to get more people through the door or to increase profitability.
Richard Delvallée is v.p. of consulting services for Revenue Management Solutions, a pioneer in bringing a data-based approach to pricing and other decision making for restaurants and retailers.
