Marketing, like all other parts of a restaurant, requires money. However, unlike other investments in your restaurant, marketing can bring you a higher ROI (return on investment), spread brand awareness, and enhance engagement.
Effective marketing efforts increase the visibility of your restaurant while letting you build a strong brand identity. As a restaurant owner, you are always in search of a way to make more profits, and marketing is the tool that can help you push your business forward. However, the abundance of choices and limited budget make it difficult for most of the restaurateurs to create an effective restaurant marketing budget.
When creating a marketing budget, you always need to expand your market research to know where to spend your money for a better ROI. Of course, you don’t want to waste a dollar that could otherwise be used in other parts of your restaurant.
This blog will guide you on creating a winning marketing budget for your restaurant.
Purpose of Establishing a Restaurant Marketing Budget
Before going towards our main topic, it is crucial to understand why businesses spend so much on their marketing and why you need a restaurant marketing budget.
You have probably heard the phrase “Money Attracts Money” or “You Have to Spend Money to Make Money.” Restaurants invest in marketing for the same reason. Your restaurant might have the best food in the town, but you might not be able to generate thousands of dollars unless your customers know about it.
That’s where the marketing comes in!
Marketing, in simple words, is to spread awareness in a way that makes people interested in your product or service. It attracts your target audience to your brand through messaging. The stronger the message is, the higher your customer conversion becomes. This is the main reason why you need an effective restaurant marketing budget.
Estimated Restaurant Spend on Marketing
As restaurateurs became aware of the importance of marketing, they started spending more and more money on marketing and advertising campaigns. According to Statista, advertising spending in the food category in 2023 is around 440 million U.S. dollars. This means that more restaurants are prioritizing marketing as compared to a decade ago.
Generally, a typical restaurant should spend around 3-6% of sales on marketing. While it’s always good to allocate money for your restaurant marketing, without spending it correctly, you can’t make your restaurant marketing successful.
So, how to utilize your budget wisely? Don’t worry, we’ve got you covered!
How To Create an Effective Restaurant Marketing Budget?
As someone who is just stepping into restaurant marketing, it’s always a good idea to start with a small budget. You need to first start by tracking money in and money out. The improper tracking of finances can not only result in financial loss but can also lead to the closure of your restaurant.
Once you have complete control of your finances, take a percentage of the revenue and allocate it to marketing. It doesn’t need to be specific 5-6%. You can choose whichever you believe is appropriate.
Here are the top 5 steps that can help you to create an effective restaurant marketing budget.
Step 1: Calculate Your Restaurant Expenses
The first step to creating an effective restaurant marketing budget is to calculate your total restaurant expenses. By calculating your restaurant expenses, you can easily determine your total net income for the previous fiscal year and answer questions like:
- What’s your previous net income?
- Did you invest in your marketing? If yes, then what is your average ROI?
- What’s your best-selling product of the year?
You need to determine your restaurant’s overall financial health. Scrutinize your revenue streams, fixed and variable costs, and profit margins. This will help you to gain insights into how much income you can spend on your marketing.
Step 2: Optimize Inventory Management
As a small or medium restaurant owner, it’s obvious that you don’t have much room to allocate a high budget to your marketing. Therefore, cutting and saving costs from other parts of your business can be a great idea to fund your marketing.
You can start with optimizing your inventory to save money. Especially when inventory can cost a small fortune, optimizing it can help you to lower your cost. In many cases, manual inventory management leaves room for errors. To avoid it, you can acquire proper inventory management techniques that can do wonders for you.
With the right inventory management software in place, you can successfully
- Minimize hefty expenses
- Organize kitchen operations
- Improve customer satisfaction
Step 3: Conduct Market Research
Effective marketing is based on the research you conduct. You need to know your potential customers and competitors, identify customer dining preferences, track popular trends, and much more. The more information you gain, the better you will analyze the marketing needs of your restaurant.
Step 4: Establish Objectives
Preparing a restaurant marketing budget isn’t all about Investing your money in campaigns. Instead, you need to establish clear objectives that help you to determine your marketing progress. You need to allocate funds based on how you aim to achieve specific, measurable goals.
Make a restaurant marketing plan that addresses your objectives, long-term and short-term approach, and estimated ROI.
Step 5: Determine The Marketing Budget
Now, once you have followed all the above steps, it’s time to determine your marketing budget. While there is no exact rule to determine your marketing budget, by using any of the following widely used methods, you can easily determine your marketing budget for the restaurant.
- Percentage of Revenue– In this method marketing budget is derived by calculating the expected revenue of the current fiscal year.
- Competitive Analysis– This method is relatively easier as you need to derive your marketing budget by analyzing your competitor’s marketing budget.
- Aligning with Budget– This method, also called a need-based method, is used in small businesses. You spend only the amount needed to achieve a specific number of leads.
Restaurant Marketing Budget Breakdown
When it comes to marketing, the allocation of budget is not as important as the choice of where to spend it. A million-dollar budget won’t be useful if you are unable to spend it on platforms where you can get high ROI.
Here are the key restaurant marketing strategies where you can spend your budget.
1. Website Optimization
Having a website isn’t enough. As the competition is rising, more and more restaurants are switching to digital platforms. Therefore, it becomes essential for you to stand out by building a custom website that is easy to navigate. You need to
- Create a Google My Business Page to list your restaurant on Google
- Optimize your website for local SEO to enhance visibility
- Create quality content consistently
- Align your website theme with your restaurant theme
- Conduct on-page SEO to optimize your website
2. Social Media Marketing
As your target audience usually scrolls social media such as TikTok, Instagram, Facebook, etc., it becomes crucial for restaurants to establish a digital presence. Gen-Z loves to interact socially. They don’t hesitate to try new restaurants, display pictures on Instagram, and brag about their favorite restaurant on digital platforms.
Therefore, focusing on social media marketing not only helps you to enhance visibility but also increases your chances of getting new customers. You need to
- Create social handles on Instagram, Facebook, and TikTok
- Post high-quality images of your restaurant’s food
- Post seasonal, daily, or weekly menus
- Showcase customer content (such as reviews, feedback, and short clips)
3. Influencer Marketing
Social media influencers are now playing a crucial role in making or breaking a business. Their credibility and followers can help you get more customers. You need to search for the right food influencer in your area and invite him to review your restaurant. This will help you to increase your sales while staying in the spotlight. When searching for influencers, make sure to keep the following points in mind.
- Influencers need to have good credibility in that specific niche
- Research whether they have active followers or not by analyzing the engagement of their posts
- Understand their requirements and negotiate with them to finalize the compensation
4. Social Media Ads
From the beginning, advertising plays a pivotal role in the marketing of any business. Since billboard and mainstream media advertising require you to allocate a huge amount, social media advertising comes as a cost-effective alternative.
You can run your ads on Google, Facebook, and other social media platforms where your target audience hangs out. This is the reason many restaurants are running their ad campaigns on social media platforms. By allocating a specific budget for advertising, you can successfully run your ads on social media platforms.
5. Online Ordering
In this post-pandemic world, the popularity of online ordering is on the rise. People find it convenient to order their food online. According to DoorDash, In the United States, around 80% of diners prefer to order food online. This means many customers seek to order food from the comfort of their homes. Therefore, without investing your money in an efficient online ordering system, you may lack the ability to convert visitors into customers.
Ready To Invest in Your Restaurant Marketing?
When looking forward to investing in your restaurant marketing, you might get confused about the accurate amount you need to spend. As a restaurant owner, calculating the restaurant marketing budget might seem to be a daunting task. But we have made it easy for you.
By using Modisoft Restaurant Marketing Budget Calculator, you can easily calculate the cost you need to spend on restaurant marketing.
Click Here to use a Free Calculator.
FAQs
A restaurant marketing budget refers to the amount of money you are willing to spend on your restaurant marketing activities in a certain period. It usually covers one year and is often created at the beginning of the fiscal year.
What is The Ideal Marketing Budget for a Restaurant?
Your ideal marketing budget will depend on how established or stable your business is, and how much gross revenue you are making. There is no one-size-fits-all budget. Therefore, you need to consider all the factors such as whether you are rebranding or launching a new product or service that will require extra marketing cost.
How Much Should I Budget for Marketing a New Restaurant?
If you’re starting a new restaurant you need to invest more in your marketing to spread the word out. Therefore, you need to invest between 12% and 20% of your gross revenue in marketing a startup. With time, as you start establishing your restaurant you can decrease your marketing budget to 6-12% of total gross revenue.
