In a market filled with an abundance of choices for consumers, it’s crucial to make sure that your business and your brand are at the forefront of customers’ thoughts and choices. Achieving this through data-driven marketing and planning your strategy accordingly is key and can help prevent extraneous expenditures that provide little value.
The restaurant industry is still bouncing back from the global pandemic, which makes it even more important to take a data-driven approach to your business, reducing costs and getting the most value out of your investment. By growing your bottom line, you can reinvest in your business and continue to expand and serve your customers. Here are five different strategies to help improve your restaurant revenue through data-driven marketing.
Focus on identifying and obtaining the right customers
Customer acquisition for restaurants has been a pain point for most of last year given the COVID-19 pandemic. As the vaccine rollout continues and more restaurants begin to open their doors, bringing in customers will be key. Using data to create customer profiles, or personas, of your target audience can help you better identify the type of people you should be targeting.
According to HubSpot, using buyer personas made websites “2-5x more effective and easier to use by targeted users.”
By using more quantitative data such as age or financial status to more qualitative measurements like what a customer expects from a restaurant experience, you can reduce your costs by narrowing down your audience and increasing your effective marketing.
Marketing is key to locating and attracting the customers that you are searching for, and many people, especially throughout the pandemic, were relying on digital marketing.
One option that many businesses were taking advantage of was increased attention to social media marketing.
In order to get the most out of your venture in social media, it’s important to try and leverage CRM data in the marketing strategy in order to branch out and find new customers via existing ones. By better understanding your current customers and leveraging them to help find new and qualified leads, you can get the most out of your marketing efforts.
Identify the right areas for growth
Improving your data-driven marketing strategies means you have an increased ability to analyze your performance across all aspects of your restaurant. From the location of your restaurants to the effectiveness of your staff, you can better understand where your restaurant has room for improvement. Using the right data and business intelligence can help improve brick and mortar locations, ranging from the layout of your restaurant to building up your current customer experience.
Using data to compare restaurant performance on many factors then allows you to narrow down different departments or aspects that require further attention, and you can compare performance. Through removing key data sets for experimental purposes, you can see how your restaurant performs against others and identify steps for growth.
Identifying foot traffic as your main pain point can help you inform decisions to potentially expand or update locations. Or, perhaps your menu has many items that are very rarely ordered and can be removed to cut costs and reinvest in other areas. For example:
- Your restaurant offers 50 different menu items, but data shows 70% of your revenue comes from only five of those items
- Data also shows you have certain dishes that are ordered less than 5% of the time
- You can make the conscious choice to eliminate the underperforming dishes, i.e. the ones never ordered
- This allows you to focus on your high-performing dishes, and reduce wasted time and money
Through using data-driven marketing strategies to track and calculate the performance of each menu item, you can find relatively quick and easy ways to cut down your expenses.
Recognize and adjust for financial ups and downs
Many restaurants experienced elongated periods of financial instability last year, and while most of that was unavoidable, there are often where financial turmoil can be predicted to a point, using the right metrics.
Keeping an eye on your financial KPIs throughout the year is key, and data can help you adjust your plans in stride.
One of the simplest, yet most important, aspects of your finances is your P&L, or profit and loss statement. It’s relatively easy to calculate, simply take your overall income (sales, services provided), and subtract your overall expenses (business expenses that are directly related to revenue).
P&L = Overall income (sales, services provides) – overall expenses (business expenses directly related to revenue)
Knowing this number and tracking it consistently can help you prepare and understand your business better, and help you adjust the rest of your financials.
While data doesn’t predict the future, you can use it to make informed decisions and better prepare yourself for the most likely outcomes.
Financially, using data to identify periods of uncertainty in your cash flow can help you either adjust to attempt to bring in more customers, or let you decide how to set up to weather the storm.
For instance, if a family-owned restaurant is predicting a financial downturn, they can begin to plan and look for the financing options that are available to them.
Some may choose to take out a small business loan, while others may look to a no-closing-cost refinance for a quick influx of cash. Each option has its pros and cons, and each decision will likely vary based on the individual needs of the business but planning ahead gives you the right amount of time to make the decisions best suited to your needs.
Track and adjust inventory as needed
Inventory management is an extremely important part of every restaurant, and without the proper tracking and data, it becomes an increasingly difficult task to manage.
Both overstocking and understocking are large problems and leaning too far to either end of the spectrum can cost your restaurant a large amount of money.
Using data to better understand cooking and ordering habits can help you better adjust your ordering cycles and help ensure you have the right amount of inventory at the right time.
Data can help you adjust to seasonal trends, identify at what time of the year each menu option is at its peak, and recognize when it’s at its trough. From Apicbase, “80% of restaurant sales come from only 16% of menu items.” Harnessing this information can prevent either a shortage or a surplus and help your restaurant stay on top of current trends and ordering habits.
Cutting items from your menu can not only help with your goal of a more streamlined inventory management process, but also help customers feel more at ease. The Paradox of Choice “is an observation that having many options to choose from, rather than making people happy and ensuring they get what they want, can cause them stress and problematize decision-making.”
Using data to highlight the most popular menu items at any given time can then allow you to scale back your other offerings, creating a more efficient inventory system and creating happier customers.
Increase customer loyalty
Customer loyalty is a critical aspect of almost every business, and the restaurant industry is no exception. Based on research by Bain & Company, “a 5% increase in customer retention produces more than a 25% increase in profit” as repeat customers tend to buy more over time.
Customer retention is another relatively simple calculation, but again, one that you should be tracking over periods of time to better understand your business trends and the direction you’re headed.
Customer retention = ((E – N) / S) * 100 = X.
- E represents the number of customers at the end of a period, typically monthly,
- N is the number of new customers acquired during that period,
- S is the number of customers you had at the beginning of the period.
Using this formula, you can track customer retention over a period of time and learn where to make adjustments accordingly.
Oftentimes, this means going beyond email marketing into something more engaging for your customers. For the restaurant industry, given the often-wide variety of alternative choices your customers have, doubling down on customer retention is key to creating a stable base of regular customers.
Using data, you can improve your customer experience and boost the odds of a repeat visit from that customer. This can be as simple as gathering birthdates of customers in your system and sending them a coupon for their birthday.
Using data to show customers that you care about them and value their patronage as well as them personally, can have a great impact on their interactions with your restaurant.
Finding the right marketing strategy for your restaurant can be a difficult task but having the proper data and figures to help guide you along the way can make it a much simpler undertaking. Tracking these critical data points and using them to your advantage can help you better adjust and plan, which allows you to have more control over the strategic growth and more defenses for any unforeseen circumstances.
Remember that customers represent the lifeblood of your restaurant, and figuring out the best ways to retain those customers and increase their loyalty can represent a large gain in profits for a relatively small investment. Each of these offers a unique opportunity for your restaurant, but it’s key to have the correct data and statistics to be able to accurately predict and approach these moments head-on.
Creating customer profiles and ensuring you are attracting the right type of clientele can reduce your overall marketing costs, and increase your in-restaurant sales. Identifying the highest-return areas of your business can allow you to invest more heavily in them, and shy away from the less profitable ones. Tracking key financial figures can help you predict and then prepare for various economic uncertainties, and prevent you from overextending your restaurant. Tracking and adjusting your inventory is crucial to preventing unnecessary loss, and allows you to adjust for fluctuations. Increasing your customer loyalty can in turn increase the number of returning customers, and boost profitability with little or no cost.