Measure your way to increased restaurant profits

Before we get started on the many different simple and affordable marketing methods that are available to you, I want to make sure that you have a very important marketing tool in place. This is a tool that you will use every time you implement a marketing program.

Of all the theories in restaurant marketing, one of the most crucial to implement is the concept of metrics; of measuring every activity that you do, analyzing its effectiveness, throwing out what is ineffective and doing more of what is. It’s a simple concept and one that when applied will turn your restaurant marketing spend into an investment (each dollar spent brings in x revenue) rather than a cost (each marketing campaign costs x). Which will make your restaurant business even more profitable.  

Good marketers and business people know that anything you measure improves. If you actively track your sales, they improve. If you track the rate of complaints, you end up with less. It makes sense. If you focus on something and therefore understand what the issues are and what needs to be addressed then you can make improvements. And it is surprisingly something that very few people do, including your competition.

Measuring everything that you do can become an effective way of creating a competitive advantage with your marketing. It’s also a way to see your marketing in terms of something that can be improved on instead of just as a success or failure. If your ad doesn’t work, instead of seeing it as a lousy campaign, you can merely improve on it and see how you fare.

A colleague of mine once called this ‘failing quickly.’ He meant that it’s best to try many different marketing activities in small quantities, look at the results and if you find that it isn’t going to work then move on. In other words, don’t be afraid of trying many new things. Steal from other industries, look what your colleagues are doing, and develop partnerships. Just make certain to measure every single thing you do and use that knowledge to take further decisions.

Successful marketers are persistent about measuring the efficiency of absolutely everything that they do. They try many things and if they are successful, they keep doing those things. If they aren’t successful they eliminate them. These highly accomplished business owners and managers also have a set of standard metrics that they use as benchmarks to better understand their business.  

Most likely you have some measurements already in place, such as your average revenue per head and the margins that you make on certain menu items. These help you better manage what you produce, how you price, and what you sell. In a similar way there are also very important metrics you can use to manage your marketing spend and activities. These restaurant marketing metrics include:

• LTV (lifetime value of a customer), which is simply how much a customer is worth to you over the lifetime of his or her relationship with your business.

• ROI (return on investment), which is calculated to measure the performance of one investment relative to another (for marketing activities you should use the following calculation:

Profit/marketing spend = ROI), and CPA (Cost per Acquisition) which tells you how much it costs you to get a new customer (you should use the following calculation: Marketing spend/new customers = CPA).

Create a spreadsheet for these calculations (or find an already made one such as in my Win Win Restaurant Marketing Kit) and fill it out for every marketing activity you do. In this way you will begin to see which of your marketing activities are effective and which are not. This will allow you to eliminate waste and spend your resources improving on the things that are working for your restaurant.

The relentless use of metrics is one of the most important secrets of the super successful.

Discuss this Blog Entry 2

Jay OHare (not verified)
on May 7, 2013

Good concepts here but few details. How can you begin to figure out what a customer is worth to you over their lifetime?
Also, if you want to calculate ROI of a marketing campaign, surely you should know how much EXTRA business you have gotten. This can be very difficult to discern since extra revenue or increases in sales can be driven by numerous factors; day of the week, weather, prices, word-of-mouth etc. So if you decide to spend a certain amount on marketing a special event, say Mother's Day, how can you know what extra revenue is driven by promoting it in a certain way versus not?
I do marketing for an established restaurant whose business grows annually. There just seems like so many variables in trying to make that "extra profits" calculation.

Amy (not verified)
on Nov 1, 2013

We have some done for you ROI, etc calculators as well as precise explanations on how you can use these concepts to your fullest advantage in the Win Win Restaurant Marketing kit (http://restaurantmarketingsystem.amyfoxwell.com/backtobasicsguide/). You may not be exact in the calculations as yes, there is a margin of overlap, but you sure as heck will not what's NOT working (which is just as important as knowing what is). metrics will also allow you to refine the things that are working. While not a perfect science, it's better than flying blind!

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Tools to help promote your restaurant brand

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Amy Foxwell

Amy Foxwell is a restaurant owner and an expert in small business and restaurant marketing. She the author of the Win Win Marketing series, including the well-known Win Win Restaurant Marketing...
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