Restaurant Marketing Ideas You Could Be Overlooking10 Dec 2019, by Kamron in Sales, Restaurant Marketing, contribution margin, restaurant food cost
Looking for restaurant marketing ideas? I'm going to show you exactly what to promote to drive traffic to your restaurant. And I'm also going to bust a food cost myth while we're at it. Watch this video, or continue reading below, for the restaurant marketing ideas you might be overlooking.
About Restaurant Marketing Ideas
So, what do Led Zeppelin, The Smashing Pumpkins and 50% food cost have to do with marketing? Let's talk about it.
One time I went to see Led Zeppelin live and the whole time we were all waiting for "Stairway to Heaven," their most famous song. They had done an encore and had not performed the song. They leave the stage and whole crowd is expecting them to do another encore of that song. But nope. The lights went up. The whole stadium gasped. It turns out they were tired of "Stairway to Heaven." They don't like playing it anymore. It doesn't matter to them that's why everybody came to their concert.
Another example: I go to the Smashing Pumpkins years later who have two of my favorite songs, "1979" and "Perfect." Guess what. Smashing Pumpkins played "Stairway to Heaven," but they didn't play "Perfect," one of the biggest hits they ever had. Why? Apparently Billy Corrigan, the lead singer, is tired of it. I flew to Portland Oregon to meet my daughter, and we had front row tickets, and they didn't play one of the biggest hits they've ever had.
My point here is that you get tired of your advertising and promoting long before your customers do. And that's because you are around it all the time. "Oh, we've already promoted this. We've advertised this. I need to try something new."
No no no no no. What you need to do is keep promoting what attracts people and brings them into your restaurant. All you have to do is pull a report off your POS system to find out what your top selling items are. That's what gets people in the door. That's what you lead with in your advertising.
I was recently on a call with a client, and he was talking about promoting his pepperoni pizza instead of his combo because the pepperoni had a lower food cost. When I asked about this it turns out his food rep, his pinheaded accountant and every seminar he'd ever attended about food cost told him he'd go go broke if his food cost went over 30%.
That's a myth, and I am here to debunk it.
Let's talk about contribution margin: Let's say you have exactly 100 guests tonight and they're all going to order whatever you're promoting. You have three dinner items on your menu: steak at 50% food cost, salmon at 40% and chicken at 30%. Looking at it that way, you have a 70% profit margin on your chicken, 60% on the salmon but only 50% on the steak. If you sell 100 chicken dinners at $15 a pop, your food cost is $450. If that salmon goes for $20 a pop, your food cost will run $800, and the steak dinner is $30 and the food costs is $1,500.
Being that chicken has the lowest food cost, some folks, like guy I talked about earlier are more inclined to promote the chicken. But does that make sense? When you sell 100 of the chicken dinners? You generate about $1,050 in gross profit on the chicken, $1,200 on the salmon, and we've made $1,500 in gross profit on the steak. So oddly enough, the steak dinner at 50% gives us more money to take to the bank and pay our bills with tomorrow.
So how do you use this in your restaurant? There's a certain price that is going to sell more just about anything. And it could be higher it could be lower but just be aware that if you're setting prices based strictly on low food cost, you might be missing the boat. You might be selling less than you should. Especially if some of your nearby competitors have something very similar or the same at a lower price. So don't go strictly off food cost. Contribution margin is the money you put in the bank and it's what pays the bills.
If you have a low food cost item that sells like crazy, keep promoting it. But if you have a popular high food cost item, consider the contribution margin. Maybe it makes sense to nudge the price up a little, maybe down, to sell more of it.
And let me get clear I am not suggesting that you cut prices willy nilly. Just be aware that a lower price or even a larger portion on certain items could drive more traffic, sell more side items and make you more money at the end of the day. Promote what sells and consider food cost along with contribution margin but not in place of it.
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