Loyalty Programs: One of Your Smartest and Most Powerful Marketing Tools

The restaurant industry can be cut-throat, especially in an economy that encourages people to save money and spend less on things like eating out.  These facts make restaurants the ideal places to create loyalty programs.  In fact, in almost every sector of the industry, loyalty programs increase customers, increase the number of times those customers return to the establishment, and increase the likelihood that they will buy more when they are there. 

So why don’t more restaurants have them?  Well, the simple answer to this is that many restaurants don’t know enough about loyalty programs, particularly how to establish them and how much they will cost.  This creates scenarios in which restaurant owners have misconceptions about loyalty programs and how to administer them.  Many might think that a loyalty program will be too expensive, won't work for their particular clientele base, or will be too much hassle to create and administer. 

The simple fact is that a restaurant loyalty program will significantly increase the frequency and spending of your most loyal customers.  While the number of repeat and loyal customers for most restaurants is typically one-third of the total sales that restaurant makes, you can increase that number dramatically with loyalty program incentives. 

One mistake that many restaurants make in establishing and administering loyalty programs is they offer discounts to their most loyal customers.  This is a mistake because in most cases, customers will be loyal to your restaurant because they like the taste of your food or the quality of your service—not because of the price discount.  This means that your loyalty rewards should be menu items rather than discounts, as customers will be more attracted to this type of reward than they will be attracted to discounts you might offer. 

Establishing a loyalty program is a simple, low-cost way to increase the number of times your customers return to your restaurant.  It isn’t difficult to administer, especially if you use cards that the customers can swipe each time they visit.  You will find that a loyalty program is a smart way to encourage repeat business, as well as a great way to offer free tastings of new menu items that might become available as your menu grows and changes. 

Tips for Marketing Your Restaurant To Your Current Customers

A restaurant’s marketing budget should be between 6-8% of the total sales it brings in yearly.  Despite this relatively small number, many restaurants spend closer to 85-90% of their budget to attract new customers.  In addition, often, restaurants make the mistake of focusing the bulk of their marketing to bring in new clients, when they should rather focus their marketing on the customers they have—even if it’s only a small amount of people. 

Below are some effective ways you can directly market to your existing customers:  

1.       A Newsletter

A newsletter is a great way to offer your guests important information about specials or coupons, as well as new menu items that you plan to add or have already added.  Having these newsletters available when guests enter will give them an opportunity to read about your restaurant while waiting for their food.  You can also have guests sign up to receive the newsletter electronically via email, and offer an incentive (like a free drink or a free menu item) for doing so.  

2.       Food Testing

Wherever customers congregate in your restaurant is an excellent place to have an upbeat, smiling member of your staff offer them free tastes of food.  This is a great way to introduce new menu items or highlight specials since customers are always appreciative of free food.  

3.       Themed Dinners

A themed dinner is a great way to bring customers in on particularly slow nights.  Advertise the availability of the themed dinner within your restaurant so that your current diners will see it and be inclined to return.  Examples of themed dinners can be: 2 for 1 specials, Specials for Mothers/Fathers, child discount or free child’s meal, healthcare employee discount nights, teachers’ appreciation nights, etc.  The list of possibilities is endless.  

4.       Prize drawing

Who can turn down a free dinner or a free bottle of wine with their dinner?  Offering prize drawings, such as asking customers to put their business card in a bowl, is a great incentive to bring current customers back.  You can also be sure that they will tell their friends about your restaurant. 

Restaurant Marketing 101

Marketing your restaurant isn’t an easy process—anyone who has opened a new restaurant and attempted to market it knows this.  However, creating a marketing plan doesn’t have to be as complicated as many people make it.  Knowing which facts to consider is half the battle, and once you determine the right questions to ask, marketing becomes a much easier task to take on.  

Here are the first questions to ask when creating your restaurant marketing plan:

1.       Who are my target customers?

2.       Who is my competitor? 

3.        What is the status of the restaurant industry in my area? (How are other restaurants doing?)

The reason why the target customer question is the first to consider is because this question will be the most important one to ask – and the one that will require the most focus.  If you want to have competitive advantage in the restaurant industry, regardless of who you are competing against or the area in which your restaurant is located, you will have to always put the customer first.  Regardless of how great you think your service is, it’s what your customers think of it that matters most.  

People are attracted to restaurants that are clean, consistent, positive, and personal.  This means that in addition to providing a clean and attractive environment for your guests to eat, you will need to make sure that this is provided consistently.  In addition to this, every piece of marketing that you send out – every statement you make, whether in person or in print – should be positive and personal.  The more personal you can make your marketing (for example, acknowledging birthdays and names), the more effective it will be.  

Finally, don’t make the mistake of only focusing on marketing when things are not busy.  You should be focusing on marketing every day—even when your restaurant is overflowing with guests and all the tables are full.  Your best and most effective marketing strategies will happen when customers are present, and this is when you should be building loyalty and relationships with them.  Their word-of-mouth referrals to friends, co-workers, and family members will do more to keep your tables full than all of your marketing efforts combined. 

The EPA Offers Food Service Providers Information on Sustainability Practices

According to the Environmental Protection Agency’s (EPA) pamphlet, “Putting surplus food to good use: A How-to guide for food service providers,” food waste losses account for up to $100 billion per year; $30-40 billion occurring within the commercial or retail sector (e.g., restaurants, convenience stores) and $20 billion from farming and food processing.

In efforts to encourage food service providers to promote and maintain sustainable practices within their business model, the pamphlet provides useful information concerning practical steps restaurants can take to become more sustainable, and therefore, more environmentally aware.  Some suggested steps include: 

1. Assess your food waste: Take a quick look at the food you are throwing away and identify potential food recovery opportunities to decrease the amount you generate.

2. Conduct a food waste audit: For more detailed information, track and collect data on the types and amounts of each food waste item you are generating. Collecting these data will help you determine if some of your food waste can be reduced by ordering or producing less, how much could be sent to food banks or shelters, and how much could be recycled through animal feeding, rendering, or composting.

3. Plan for costs: There are costs related to collecting, transporting, and composting food scraps. Talk to neighboring organizations also about instituting food waste collection at their facilities to create a cost-effective route for your hauler. You also might be able to generate revenue by selling compost created from your food waste.

4. Start the program: Talk to national waste organizations, haulers, town planners, recycling coordinators, and even the mayor or town manager to get support and assistance for your food recovery program. Employee training is also vital to the success of a food waste recovery program. You might want to consider an incentive program for employee participation. 

5. Decide what food recovery option works best for you: Use the information gathered from your waste assessment and audit to decide which food recovery option is best for your organization. The quality of your surplus food and your estimated generation rate will help you consider how to divert your food waste. To learn about waste disposal options and find haulers in your area, visit your state or county environmental department’s Web site. You can also ask your current recycling or waste hauler about hauling your food waste to a recovery facility.

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All information taken from the epa.gov website.

How can i build my restaurant's brand image?

Why Hispanic Advocacy Matters in the Restaurant Industry

The U.S. Hispanic Chamber of Commerce held a meeting with National Restaurant Association officials last month to discuss ways in which restaurants can attract the growing Hispanic market and find more effective ways of promoting Hispanic employees into management.  This meeting is one of many showing a trend toward promoting more just labor practices in the food service industry, particularly related to members of the Hispanic community, who make up the largest part of the industry’s workforce.  

Speaking on the U.S. Leadership in the Global Food Economy panel, the National Restaurant Association’s Vice President of Labor and Workforce Policy, Angelo Amador, stated, “Hispanics are making up a bigger portion of the market and their tastes are now merging into the mainstream American population. They're asking about food and healthy living, and our foods are influencing the items that are sold in restaurants.”

Amador shared the panel with Kathleen Merrigan, deputy secretary of the U.S. Department of Agriculture; Peter Larkin, president and CEO of the National Grocers Association; Anne Alonzo, vice president of global public policy for Kraft Foods Inc.; and Liz Lopez, an attorney for Barnes & Thornburg LLP. The purpose of the discussion was to develop a plan to promote advocacy within the restaurant industry.  

"We need to let Congress know, and keep repeating the message, that we're very proud of our line workers and our managers," Amador said. "In order to create more opportunities for more people, we need more resources to provide education. That is our biggest challenge. Nevertheless, I do think there is a clearer path to the boardroom today than ever before. That kind of opportunity is more evident at restaurant companies than in any other industry in this country."

Restaurants Claim Retail Builds Brand and Revenue

According to a recent study conducted by the NationalRestaurant Industry, restaurants are offering packaged food items as a retail stream and finding that such items help them stand out from the competition. In an industry that is facing increasing competition, such potential revenue streams are highly attractive and can serve to boost customer loyalty. Additionally, while providing an additional revenue stream, these items are also helping to build brand image for many restaurants who seek greater brand recognition for greater profits.  

The 2012 Restaurant Industry Forecast states that a majority of operators offer merchandise (e.g., frozen food, sauces, dips) for sale at retail outlets, big box stores, and within their own restaurants.  These items are generally placed for sale at the front counter or entryway into the restaurant, so that patrons see the merchandise while entering and leaving the establishment.  Restaurants are also placing ads for these items in their menus and on promotional material that is mailed or emailed to customers.  

Specifically, the numbers from the 2012 Restaurant Industry Forecast show that 54 percent of family dining restaurant operators have retail items, while quick-service and fast casual restaurant owners sell retail items at 37 percent and 41 percent, respectively.  The highest percentage of restaurants having retail items was in the fine dining segment, with 59 percent of operators saying that they sell retail items.  

Hudson Riehle, senior vice president of the NationalRestaurant Association’s Research & Knowledge Group, states that "Selling retail items generates additional sales and in some cases, licensing fees, and that's important considering that the average pretax restaurant profit ranges in the modest 3-percent to 6-percent range. It also expands a restaurant's brand and/or signature products. It keeps it more top-of-mind with current and potential customers and that's extremely important to operators given the highly competitive nature of the industry."