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THe Audacia Company

What If The True Recurring Customers Are The Friends We Made Along The Way?

Average Order ValueAverage Order FrequencyTotal Customer Pool

Like any good holy trinity, they are supposed to reflect the whole picture in three separate aspects. Regardless of your religious affiliation, many of us seem to be devout members in the church of digital marketing. Even if some of us are less pious than others. I occasionally skip service myself and do other things, which would explain the hiatus on recent issues of Notes On The Margin.

In this edition I'm going to share some findings from sixty days of research. I'm going to explain why I cryptically dropped three KPIs in the first sentence of the article. I'm going to talk about how restaurant owners looking to improve the bottom line can focus on certain channels, and the statistics around those channels. This all comes from interviews with restaurant owners, my spelunking in Facebook groups, and gems of wisdom found in the online articles I've read through.

Be Warned All Ye Who Enter Here - This is a lengthy read, but I promise you will leave more prepared to execute on multi-channel campaigns that will drive more recurring business for your restaurant.

Restaurant neon sign

Digital Marketers And Social Media Managers Might Owe Restauranteurs an Apology.

In the time since posting my last written article I've been learning as much as I could stomach about effective restaurant marketing. This including reading articles, doing my own research and speaking with owners.

I joined restaurant owner groups on Facebook and looked at the issues they were asking for help with. I even interviewed a few of them. Almost across the board they've explained that they prefer to do marketing in-house, and that they haven't seen an increase in sales after working with many marketers. They don't want a social media strategist, they don't want/need you to build a new website, they don't want a free analysis. Some run ads, but with the average annual gross profit ranging widely due to location, style of cuisine, business model, etc. - everyone seems to be taking a different approach for how much they allocate in spend.

There are restaurants with less than stellar websites and no social media strategy doing one million + a year because they've been around for a few decades with strong ties to their community. Then there are restaurants with all the bells and whistles. They've got influencers, high-quality reels, Meta tracking pixels, vegan avocado free-range pancakes, prime location near liberal arts colleges with tens of thousands of students - that are here today and failing by the end of the semester.

Here's the hard truth that I put together. Most marketers genuinely don't have a blueprint for success when it comes to effectively getting new customers in the door. We rebrand guerilla marketing efforts, we have staff post memes, do Tik-Tok dances, spend thousands on google search campaigns, post flyers, and the returns aren't always stellar. Many succesful owners leverage personal connections, friendships and relationships to get corporate opportunities, or generate word of mouth marketing.

Yes you can close sales by posting to social media. Many people discover your location on social and can turn into customers from that. Yes Google ads can work, and honestly so can the vegan avocado free-range pancakes. It doesn't mean that we don't owe restauranteurs an apology for attempting to convince them that these are the things that drive the most impact on the bottom line. 

A Tour Of The Statistics

So now we've apologized, and our next step is to see if we can make things right. Let's look at the numbers and get as clear as we can on how Social Media, Paid Ads, Email and SMS marketing perform for restaurants. Each definitive statement will be hyper-linked with a source. I'll include that same list of sources at the end of this article for those who like to do their own research.

Paid Search Ads

Let's assume that these numbers are at least generally accurate. Precision is difficult to achieve, especially because many owners aren't sharing the results of their campaigns publicly. 

According to the data, 100 clicks is equal to $153 dollars. These clicks aren't guaranteed to convert into sales, but buyer intent is clear. If we look at the average cost of acquisition, you're essentially paying for three customers. 

The people clicking on your ad may be searching for restaurants in general because they're hungry and looking to make an order. Unfortunately the conversion rate isn't that great. - and because it's an average, this can come in much lower for many of those first trying search ads out. 

You need solid budget, which some sources claim to be at least thirty dollars a day. This isn't factoring in that search ads tend to be more succesful following a display ads campaign, which is more about generating brand awareness than it is generating immediate sales. To summarize, you need a lot of money to spend on something that will take awhile to generate returns.

Organic Social Media Marketing 

This one is a little tricky. We can say that having a great social media account is better than not having a great social media account. The more followers you have the better the overall perception is of your location. It's similar the benefit you'd get from loads of positive reviews.

If 30,000 people follow this account, the food must be good right? Usually that's correct. Unfortunately it's hard to say, because we've all learned how to game the algorithm to get us more views and "engagement". We pay for third-party companies to help us improve our reach and grow our accounts. So like any dish that seems good but is missing a little something - you might want to take it with a grain of salt.

Why do I bring this up? The more followers you gather, the more likely it is that most of them will never travel to your restaurant. Even if they like every reel and leave heart eye comments. This is just because they might be too far away from the location to ever become a regular customer. 

The upside is that people who are too far away to ever become regulars help cement the value to those who are close enough to visit regularly through social proof. Of course this all depends. If you're the type of fine dining establishment that people visit on special occasions then social proof helps in part to justify the pricing. People are also willing to travel much further to try the food.

In general opt for visual platforms like Tik-Tok and Instagram over text driven platforms. Find what the popular accounts are doing and duplicate their efforts until you build enough of an audience to start experimenting. 

Email Marketing

I've got a confession to make before I get into the email marketing thing. I'm biased and potentially an unreliable narrator when it comes to this topic. Only because I've made a fair bit of change doing this for the past four years. So I'll keep my personal opinions personal and stick to the numbers here.

Men lie, women lie - numbers don't. Unless of course the people reporting the numbers happen to be men or women. In which case it's best to do your own research. 

The overall average ROI for email marketing across industries is very high, with estimates ranging from $36 to $42 for every $1 spent  - Source One | Source Two | Source Three

The restaurant industry has an average email open rate of 18.5% - Source One | Source Two

Look email marketing is awesome. It works, and the more personalized your emails, the better your offers, the more relevant your timing, the more money you stand to make. You should be doing everything in your power to grow a list. I've driven more than my annual salary in revenue for a past client with only 48 emails. 

Use in-house QR codes to drive sign-ups. Have your servers mention joining your email list to receive special perks. As many ways to get people aware and signing up as possible.

A decent use of social media marketing and paid search could be getting people on a mailing list or newsletter where you can market to them later. The return on investment is egregiousBananasBonkers. Throw some more adjectives in there. Any more praise for email marketing and I'll break my promise of keeping my personal opinion out of this. 

SMS/Text Marketing

Email marketing's favorite cousin is SMS marketing. Like the cousin you can't wait to kick it with at Thanksgiving every year. Text marketing has the highest base open rate of all channels. Almost consistently landing over 70 percent. The favorite cousin indeed.

This works better with a younger audience - millennials and Gen Z are more likely to engage with this form of marketing. For those of you selling those free-range avocado pancakes? Make sure you get phone numbers so you can send cute updates about your pancake farm.

I don't think any more stats will help cement just how powerful this kind of reach is. The only reason this isn't yet the main protagonist in our digital marketing epic is because Email marketing hits an older demographic that has more money to spend than Millennials and Generation Z. I'm not sure when that will change, but as it stands getting SMS marketing right for your business is getting your business prepared for the future.

Collect phone numbers through sales, promotions, perks, and any other way that comes to mind. They are worth the effort required to secure them many times over.

The Holy Trinity

Average Order ValueAverage Order FrequencyTotal Customer Pool.

We've looked at the exoteric with the statistics that help us make informed decisions as marketers and business operators. Now we get to study the higher mysteries. 

These three numbers properly observed will tell the story of most businesses, including the Restaurant industry. Increasing these numbers in your business means you'd have the revenue to hire the right kind of team to handle the other areas of your operation.

Yes you'd need to find a way to implement cost-controls in your business, keep COGs low, and make sure you pay your taxes on time. But for the purposes of growth these key performance indicators do an excellent job.

You can influence all of these numbers through a mix of the digital marketing channels explained in the previous section. 

Average order value can be increased through a mix of promotions - offering a free appetizer for a minimum spend amount is one example. Giving group discounts for parties of a certain size, or providing access to a special menu that others after they hit a certain total spend at your location. Gamification is a great way to get people excited about hitting certain milestones, and if that milestone is dollars spent at your location... well it sounds like a game everyone can get excited about playing.

Average Order Frequency is where SMS, Email and Social Media can play a powerful role. The name of the game is multi-channel campaigns. Imagine posting to your story that everyone on your SMS list is about to get early access to a new seasonal menu. Then following that up with an Email that provides a preview of the new menu design and dishes. Finally following up with an SMS campaign with a link to reserve a table or place delivery orders in the next 72 hours to get a chance to try it for themselves. This is just one example - but doing something like this monthly will increase your order frequency - and requires less cost than traditional paid campaigns.

Total Customer Pool may be one of the hardest to effectively measure because it is constantly changing. Especially for restaurants. How many people can your business reach at a moment's notice that would happily buy from you right now? Is it the total number of followers on social media? Is it the number of newsletter subscribers or past customers on your SMS list? The correct answer is that it's a percentage of all of those + those who haven't yet discovered you but are actively looking to buy. You should constantly be encouraging people to follow you on socials, join your email list, and share phone numbers for special promotions.

The Recurring Customer and Need For Personalization.

I shared the statistics, the common complaints from restaurant owners, and more details on increasing the three KPIs. What the succesful restaurant owners I spoke with cared about was creating recurring customers. Loyal buyers who enjoyed bringing their families and friends to eat with them. Their primary concerns were creating an environment where these customers happily opened marketing emails, texts, and engaged on social media by sharing posts with friends.

This holy grail was only attained through deep personalization and attention to detail of the individual. It started with excellent food and customer service. It was sustained by timely messages that felt human across multiple platforms. Using names, remembering their favorite dishes and going the extra mile to make the communications feel as personal as possible.

People come back to places they feel welcome. Use these different channels to create that type of experience for your customers. The most succesful owners I spoke with cared about this over everything else, and as a consequence everything else was taken care of.

Subscribe For More Notes On The Margin

So you've made it to the end of the article. Thanks for getting to this point - and while you have reached the end, this is not THE end. If you like what you've read then subscribe. Moving forward I'll be exploring some topics outside of the Hospitality Industry. 

See you next time!

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