Tuesday, April 29, 2008

Using cash rewards to bring people to your restaurant

Today I stumbled upon a Web site that uses cash rewards to bring people to restaurants.

I won't name it, but if you look in Google for Restaurant Marketing, they show up in the Sponsored links quite high (under the heading: Restaurant Promotions).

Once you go to their web site, they have this Heading:
Drive Huge Traffic To Your Restaurant With A Big Prize Offer!

There are so many wrong things with this marketing approach that I don't even know where to start...

Ok, perhaps I do, let's try this:

  • You will spend lots of money attracting new customers.
  • These customers will go to your place only because of the Prize Offer.
  • You will probably fill the restaurant once.
  • These are bargain seekers, not quality customers (the kind of clients that you want to attract and cultivate).
  • They won't come back again (at least that you give them more prices or freebies).
  • You will make little or not money, even with a full restaurant.
  • You may alienate your existing clients.
  • You will attract the cheapest customers ever.
Do you think that this is worth it? I really don't think so.


Instead, spend your money bringing back your best clients. Give them incentives to come back with their family and friends. (I've talked about this in my previous blog, this strategy is also mentioned in detail in my Restaurant Marketing Strategies Seminar). This is the best way to spend your marketing dollars.

Forget about promotions, forget about ads in newspapers and magazines. Instead, spend your time and your money cultivating your existing clients.

If you do this, your return on investment will be always well spent. You will invest your money wisely and you will attract the best clients. If they don't come, you don't pay! Now this is being strategic!

Thanks for reading and happy sailing,


Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com

Sunday, April 27, 2008

Marketing Your Restaurant in the Yellow Pages

Many restaurant owners spend an incredible amount of money advertising their restaurant in the Yellow Pages.

It always amazes when I see full pages advertising a restaurant in the Yellow book. Let’s face, do you know anybody who decides to go to a restaurant by looking at the ads of the Yellow pages? I surely don’t.

In these days of ubiquitous internet access, people go online checking for restaurants and they trust more the reviews of other people than whatever marketing materials restaurant owners can put out there.

Personally, I think that the mission of the Yellow Pages is for somebody to find the place’s phone number to call and make a reservation. Yellow Pages are great to find a plumber or a service that you really need, but are really bad to look for a place to eat.

Eating in a restaurant is an emotional experience. You go there with expectations of having a great time, of sharing a meal with your family or friends and it’s not a place that people pick because it has a great name or a good ad (or at least they shouldn’t).

But let’s do a quick math to prove my point. Let’s assume that you spend $3,000 a year in Yellow page ads, and that your average ticket per client is $30. Now, from these $30, you get 50% profit. This means that for each client, you spend $15 in cost and get $15 in profit.

So doing easy math: $3,000 spent / $30 per customer = 100 customers, but since you make 50% profit, you need to bring 50 customers just to break even. (You can do this same exercise using your own numbers).

Do you really think that you are bringing 50 customers because of the Yellow Pages ads?

I sincerely doubt it; but there is a simple way to prove it.

Create a special coupon that people can bring when they come to your place and put it in your Yellow Pages ad. Offer a free dessert or some kind of discount. In this way, you can measure the effectivity of the ad.

If you see that you get more than 50 people coming in with the coupon, great; this means that your ad works and you can feel good about spending the money. If not, well… you know what to do.

However, there is another way, a much more efficient way for you to spend these $3,000 and have guaranteed results. Create a special “Great Clients” coupons with a discount, and offer them to your best clients. You could discount 20% of their next meal, for example. This means that your profit per client with these coupons will still be 30% instead of the usual 50% (50% profit - 20% discount =30% profit).

In this way, not only you increase the odds that these great clients come back to your place, but you don’t waste any money.

If they come back, great, you still make a profit and they will probably bring quality people (like themselves) with them. If they don’t come back, you don’t spend any money. This is a win/win situation for you.
Do you see where I am going?

The best way to market and promote your restaurant is always by spending the money in promoting repeated visits from your existing clients, instead of trying to capture new customers all the time.

Not only you will maximize your investment, but every penny that you spend will be measurable and will contribute to the satisfaction of your existing clients.

In my Restaurant Marketing Strategies Seminar, I dedicate a whole module to the important mission of increasing the frequency of visits from your existing clients.

This is one of the three only ways to increase your business, and perhaps the most important of the three (the other two being: increase the number of new clients and increase the purchase amount per client).

Don’t forget to participate in the forums.

Happy Sailing,

Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com


Monday, April 21, 2008

When aren't customers good for your business?

Alexander Kjerulf self defined as “Chief Happiness Officer” writes in his blog http://positivesharing.com/ about cases where customers are more trouble than benefit for the businesses.

He focuses his examples on the airlines industry, where thousands of people fly every day and have a few customers that are more trouble than benefit.

Mr. Kjerulf these top five reasons why business shouldn't follow the strategy: “The customer is always right”. I will add my take on this applying his reasonings to the Restaurant industry.

1: It makes employees unhappy
Mr. Kjerulf says that business owners should always be in the employee's side since they want to keep their employees loyal.

Of course, things are a little different in the restaurant business. Disgruntled customers mean no tips for waiters and really bad publicity (via online forums, etc.) for the restaurant.

Although I agree that you need to be loyal to your employees, and that if a customer is not reasonable and threatens any of your employees you should take always the side of your employee, I sincerely think that your employees could/would put up with any difficult customer if their demands are not unreasonable.

Happy customers are good for everybody (more tips and more referrals) and not all your clients will be pleasant and having nice personalities.

2: It gives abrasive customers an unfair advantage
The reasoning here is that abusive people get away with anything and get better treatment than nice people.

Again, I disagree here. Abusive people perhaps can bully their way once or twice; but your employees will always treat better nice clients by having extra attentions with them, engaging in personal conversation, etc., versus serving the minimum needs of nasty customers so that they don't complain.

3: Some customers are bad for business
He has a point here. Some customers are impossible to please. Perhaps they have some mental disorders (how many people walk the streets with mental problems? Many for sure) or are just grumpy or unhappy with their lives and they share their unhappiness with everybody around them, or more specific with your staff since they probably feel superior and want to let them know who's in control.

What can you do with these difficult customers? Well, I would suggest you to try to please them, within a reason.

However, if you see that they become aggressive or disruptive, invite them to leave your premises and tell them that you will call the police if they don't comply.

The limit of tolerance is the point where they start bothering other clients. This is never acceptable. You can't afford to have a few out-of-control customers spoiling everybody else's dining experience.

4: It results in worse customer service
Mr. Kjerulf's point here is that happier employees make happier customers. I don't doubt this. I just think that disruptive customers are a minority and your employees should be trained to deal with them. Of course, you need to care about your employees and side with them when they are right, but you also need to care about your clients.

At the end of the day, your clients are the ones who give you the money so you need to keep a balance.

5: Some customers are just plain wrong
The example that Mr. Kjerulf gives here is about a passenger that behave like a jerk. Again this kind of behavior fits into the disruptive category that we mentioned before. This passenger, with his behavior, wasn't only rude to the flight assistants, he was rude to the rest of the passengers and therefore this can't be tolerated.

To conclude, your customers have the right to ask for a great dining experience in your place and should ask you to make right something that it's wrong. However, they don't have the right to be rude to your staff or disruptive to the rest of your clientele. This is the point where you should intervene and ask them to leave your premises, even at the expense of not charging them for the food. It is better to lose a few dollars that to start a confrontation that makes the situation very uncomfortable for you, your employees and the rest of your clients.

Any Comments? Please let me know what you think.

Thanks for reading and happy sailing,

Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com


Sunday, April 13, 2008

Continuous Improvement Process

Japanese companies break down all their major tasks into three basic categories:
  • Innovation is often the responsibility of the upper management
  • Maintenance is the responsibility of the workers
  • "Kaizen" is everybody's responsibility
Kaizen is the process of continuous enhancement. It is the ongoing, systematic, incremental improvement of how things are done every day. We are talking about the small, almost insignificant changes that, taken one by one, don't seem like much, but once accumulated over time, they add up to an incredible performance.

You can apply this Japanese wisdom to your restaurant.

As a restaurant owner, it is your responsibility to come up with innovative ways to run your business, to create new marketing ideas and campaigns, to do the best to outsmart your competitors, get to know your clients and offer them a unique and satisfactory experience. Remember that clients go to your place looking for an experience, if you don’t provide them to them, they will go somewhere else!

Your employees are responsible for the maintenance. They run the business on a daily basis and they have to make sure that it is conducted in the best and most professional way. The food needs to be delicious and served on time, the clients need to be treated politely and respectfully, the place needs to be clean and pleasant, etc.

So what about Kaizen? All of you, from the owner to the janitors who clean your place, can contribute to the improvement of your restaurant by caring about it and giving you feedback for improvement.

Listen to your people when they make suggestions to you. Welcome the suggestions. If they make them, it is because they care about your restaurant, because they care about you. An uninterested employee is an apathetic employee.

If everybody contributes to improving your place, small as the improvements may be individually, they will make a big impact when taken together.

From moving the position of a table to give you clients a better view, changing the soap in the bathroom so that it smells nicer; replacing the brand of bread if it is not crispy enough (or your people discover a new provider with a more delicious taste, etc.), every detail, every step that isolated won’t amount to much, it will make a world of difference when added together.

It is very difficult, (I would say impossible) to run a perfect place. Things happen, people are moody and variable.

However, making small changes, continuously improving your operations all the time, will bring you closer to a place where people will notice the difference.

Thanks for reading and happy sailing,


Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com

Thursday, April 10, 2008

Surveys and Car Dealers

I don't know about you, but I hate the Car Dealer Surveys.

Some months ago, my wife and I bought a new car: a Toyota Prius. The car dealer didn't know much about the car. He told us that all the models came with a rear camera (wrong) and he even had difficulty starting the car (you just need to push a button instead of turning a key). He was a nice guy and we loved the car so we bought it anyway.

Since we had the kids with us and the purchase of a car can even dent the patience of the most dedicated Zen Monk, we left the dealership asking our sales person to prepare the paperwork for us so that we could come a couple of days later and just sign it in.

Of course, a couple of days later we showed up just to find out that the paperwork wasn’t done (he hadn’t even started it). We waited patiently (again with the kids bored and complaining) and after two more hours we’ve got the car. All in all, a normal car buying experience.

But now, here it’s the kick: after all was done and we sat on the car ready to leave, the smiley car dealer comes by with a Toyota survey and ask us to fill it in saying “Anything less than 5 stars is unacceptable”. Five starts means “exceeding expectations”.

Now, I am not really picky, I was ready to score as average since the service was average (actually it was probably below average) but come on! Exceeding expectations? I don’t think so (and really I don’t have very high expectations about car dealers).

So I’ve just ignored the survey (he was a nice guy after all and I didn’t want to damage his scoring) but I kept on wondering what’s the meaning of these surveys anyway?

Does really Toyota (or any other car manufacturer for that matter, since this happened to me also at Honda) think that all their dealers exceed customers expectations? What’s the game here?

I mention this anecdote because we don’t want to repeat this mistake in our restaurant business. If you ever ask your clients for feedback, ask for (and expect) genuine feedback and don’t get mad or defensive if the feedback that you get is less than optimum.

The purpose of feedback is to gather realistic information about your business so that you can improve it. By conditioning your audience about what to write in the feedback, you lose its purpose.

Ask sincerely and expect candid answers. This is the only way for you to get better and to make your place among the best in the industry.

If you only want to hear positive things, then don’t bother with a survey, have your friends talk nicely to you about your place. It won’t help you improve your business, but it will make you feel good and/or bust your self-esteem.

However, if you are serious about improving and getting better at what you are doing, then you need to confront the reality and accept the criticisms. Analyze and address all the critics. Even if they are due to a human error or a mistake, you can always thank the person giving you the feedback and either compensate them (if appropriate) or assure them that the problem or issue won’t happen again.

Also, try to see if you can find patterns in the comments. If so, this is an area that you need to focus on and improve. Again, thank the people who gave you the honest feedback, and put together an improvement plan (involve your employees in its implementation).

At the end, using feedback to improve your business is the best way to get ahead of your competitors. Unfortunately in this industry, owners often disregard honest criticism and always try to justify their actions, even if they or some of their employees were responsible for whatever wrong it happened (we are all humans, we all make mistakes from time to time) instead of using this feedback as a way to improve their processes and their employees.

And since we are talking about feedback, please feel free to send me any feedback regarding these blogs. Do you find them useful? Do you think that they are too obvious or a waste of your time? Just let me know. I won’t get mad. I promise.

Thanks for reading and happy sailing,


Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com

Monday, April 7, 2008

Frustration

I'm getting really frustrated now.

After more than a week after I sent the application to get my Merchant account ready (from Authorize.net) and not hearing from them, I pickup the phone and call on Friday to check the status of my application.

A lady took the call and told me that they were waiting for me to send them information regarding my web site, as well as the price of my product (online Seminar) and a copy of my driver's license.

I told them that I faxed all that information last Tuesday. After a few minutes of looking around, she found the fax with the information. "So it looks like everything is fine now, the lady who takes care of the applications is off today so you should be able to have this done by Monday".

I was expecting to launch this past weekend so I voiced my frustration to her and she told me that she will do "everything I can so that it's ready today".

Of course nothing else happened last Friday. This morning (Monday 7th.) at 8am Pacific time I called again.

They asked me about my company name, etc. and told me "We are missing your driver's license copy as well as information regarding pricing from your web site..."

I tried to be calm. I told this knew person that I already had this conversation last Friday, that I faxed all that information to them last Tuesday and that they should have -for sure- all the needed information since they found it last time.

After 5 minutes hold, she told me that she found the information so that now all the requirements are complete and she will forward this information to the bank and "hopefully in two to three business day, you'll have your merchant account approved".

I couldn't believe my ears. I told the lady that on Friday I was told that today I should be good to go. She told me that they will send the information today since it was incomplete before.

At this point, I lost it. I told her that they were sitting on the complete information for almost a week now and they were delaying my application for no reason. She backup and told me that in fact they already submitted all my information and now they were waiting for the bank's approval. "There is nothing else that we can do to speed up the process" she concluded.

So to make a long story short, I am still waiting patiently for my Merchant account before I can launch and promote my site...

I hope that I can start blogging soon more relevant information.

Have a great day!

Jose L Riesco
© Riesco Consulting Inc.
www.twitter.com/jlriesco
http://www.myrestaurantmarketing.com