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Chapter 4Chapter 4Restaurant Business & Marketing Restaurant Business & Marketing

PlansPlansThe Business PlanThe Difference Between

Marketing & SalesMarketing Planning &

StrategyMarket Assessment,

Demand, Potential & Competition Analysis

Marketing Mix-The 4 P’sPromotion

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BUSINESS PLANSBUSINESS PLANS

Increases the probability Increases the probability of success.of success.

Assists in obtaining Assists in obtaining financing.financing.

Communicates to Communicates to potential investors.potential investors.

Defines operational Defines operational purpose.purpose.

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ELEMENTS OF A ELEMENTS OF A BUSINESS PLANBUSINESS PLAN

Cover sheetCover sheetDescription of the businessDescription of the businessDescription of the concept licenses & Description of the concept licenses &

leaseleaseMarket analysis & strategyMarket analysis & strategyFinancial DataFinancial DataAppendicesAppendices

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BUSINESS PLANSBUSINESS PLANS Mission statements generally do not change.Mission statements generally do not change. Goals are reviewed as often as necessary.Goals are reviewed as often as necessary. Goals should be established for each key Goals should be established for each key

operational area (e.g., sales, food, service, operational area (e.g., sales, food, service, beverage, labor costs, etc.). beverage, labor costs, etc.).

Strategies or action plans are the “how to Strategies or action plans are the “how to reach the goal”. They are more specific than reach the goal”. They are more specific than goals & are generally short-term.goals & are generally short-term.

Strategies are specific as to the date by which Strategies are specific as to the date by which they are to be achieved and how much should they are to be achieved and how much should be achieved.be achieved.

Based on strategies, a detailed action plan Based on strategies, a detailed action plan with individual responsibilities should be with individual responsibilities should be implemented.implemented.

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MARKETING Restaurant marketing is based on a Restaurant marketing is based on a

marketing philosophy. marketing philosophy. Marketing philosophy patterns the way Marketing philosophy patterns the way

management & ownership have decided to management & ownership have decided to relate to guests, employees, purveyors & the relate to guests, employees, purveyors & the general public in terms of fairness, honesty & general public in terms of fairness, honesty & moral conduct.moral conduct.

Marketing is finding out what guests want and Marketing is finding out what guests want and providing it at a fair price.providing it at a fair price.

Marketing asks would-be operators to ask Marketing asks would-be operators to ask themselves, “Who will be my guests? Why will themselves, “Who will be my guests? Why will they choose my restaurant? Where will they they choose my restaurant? Where will they come from and why will they come back?” come from and why will they come back?”

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MARKETINGMARKETING Includes sales and merchandising.Includes sales and merchandising. Determines who will patronize the Determines who will patronize the

restaurant & what they want in it.restaurant & what they want in it. Is an ongoing effort.Is an ongoing effort. Gets into psyche of present & potential Gets into psyche of present & potential

patrons.patrons. Marketing is about solving guest problems. Marketing is about solving guest problems.

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SALESSALES

A part of marketing that focuses on A part of marketing that focuses on the needs of the seller. the needs of the seller.

Activities that stimulate the patron to Activities that stimulate the patron to want what the restaurant offers.want what the restaurant offers.

The actions of restaurant employees The actions of restaurant employees that influence patrons after they that influence patrons after they have arrived at the restaurant.have arrived at the restaurant.

Sales mentality exists when seller Sales mentality exists when seller thinks only of his or her needs & thinks only of his or her needs & pushes an item on a customer.pushes an item on a customer.

Closely related to advertising, Closely related to advertising, promotion & public relations. promotion & public relations.

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THE DIFFERENCE BETWEEN THE DIFFERENCE BETWEEN MARKETING & SALESMARKETING & SALES

SALESSALES focuses on the needs of the seller. focuses on the needs of the seller.MARKETINGMARKETING focuses on the needs of the focuses on the needs of the

buyer.buyer.

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MARKETING PLANNING & STRATEGYMARKETING PLANNING & STRATEGY Every marketing plan must have realistic Every marketing plan must have realistic

goals for goals for guest satisfaction, market guest satisfaction, market share, sales & costsshare, sales & costs while leaving a while leaving a reasonable profit margin. reasonable profit margin.

SWOT analysis, stands for strengths, SWOT analysis, stands for strengths, weaknesses, opportunities & threats. weaknesses, opportunities & threats. • The strengths & weaknesses focus on internal The strengths & weaknesses focus on internal

factors and can, over time, be controlled by factors and can, over time, be controlled by management. management.

• Opportunities & threats deal with external factors. Opportunities & threats deal with external factors.

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MARKETMARKET ASSESSMENTASSESSMENT Analyzes the community, the potential guests, the Analyzes the community, the potential guests, the

competition & helps to answer the all-important competition & helps to answer the all-important questions: questions:

Is there a need for a restaurant? Is there a need for a restaurant? Who will be the potential guests?Who will be the potential guests?

• How old are they?How old are they?• What are their incomes?What are their incomes?• What is their sex?What is their sex?• What is their ethnic origin or religion?What is their ethnic origin or religion?• What are the guests’ wants and needs?What are the guests’ wants and needs?• Why would people become guests?Why would people become guests?• What will they like or dislike about the proposed restaurant?What will they like or dislike about the proposed restaurant?• What do they like or dislike about existing restaurants?What do they like or dislike about existing restaurants?

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MARKET DEMANDMARKET DEMANDThe demand for a restaurant is The demand for a restaurant is

calculated using two factors:calculated using two factors:• The population in the catchment area (the area The population in the catchment area (the area

around the restaurant from which people would around the restaurant from which people would normally be drawn to the restaurant).normally be drawn to the restaurant).

• The demographic split of this population by The demographic split of this population by nationality, race, age, sex, religion, employment, nationality, race, age, sex, religion, employment, education, and incomeeducation, and income..

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MARKET SEGMENTATIONMARKET SEGMENTATION

The market—that is, the total The market—that is, the total of all actual and potential of all actual and potential guests—is generally guests—is generally segmented into groups of segmented into groups of buyers with similar buyers with similar characteristics.characteristics.

Within these groups are target Within these groups are target markets, which are groups markets, which are groups identified as the best ones for identified as the best ones for the restaurant to serve. the restaurant to serve.

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TYPICAL SEGMENTATIONSTYPICAL SEGMENTATIONS GeographicGeographic

• Country, state/province, county, Country, state/province, county, city, neighborhood.city, neighborhood.

DemographicDemographic• Age, sex, family life cycle, income, Age, sex, family life cycle, income,

occupation, education, religion, occupation, education, religion, race.race.

BehaviorBehavior• Occasions, benefits sought, user Occasions, benefits sought, user

status, usage rates, loyalty status, status, usage rates, loyalty status, & buyer readiness.& buyer readiness.

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MARKET SEGMENTATIONMARKET SEGMENTATION Once the target market is Once the target market is

identified, it is important to identified, it is important to position position the restaurant to the restaurant to stand out from the stand out from the competition & to focus on competition & to focus on advertising & promotional advertising & promotional messages to guests. messages to guests.

The key to The key to positioning positioning is is how guests perceive the how guests perceive the restaurant. restaurant.

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Competition AnalysisCompetition Analysis Analyzing the competition’s strengths Analyzing the competition’s strengths

and weaknesses helps in formulating and weaknesses helps in formulating marketing goals and strategies to use marketing goals and strategies to use in the in the marketing action plan.marketing action plan.

When analyzing the competition it When analyzing the competition it makes sense to do a makes sense to do a comparison comparison benefit matrix benefit matrix showing how your showing how your restaurant compares to the restaurant compares to the competition. competition.

You choose the items for comparison, You choose the items for comparison, which include name recognition, ease which include name recognition, ease of access, parking, curbside appeal, of access, parking, curbside appeal, greeting, holding area, seating, greeting, holding area, seating, ambiance, food, service, cleanliness, ambiance, food, service, cleanliness, value, and so on… value, and so on…

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MARKETING MIXMARKETING MIXThe cornerstone The cornerstone

of marketing.of marketing.

The Four P’sThe Four P’s• PlacePlace• ProductProduct• PricePrice• PromotionPromotion

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PLACE/LOCATIONPLACE/LOCATION

One of the most crucial factors One of the most crucial factors in a restaurant’s success.in a restaurant’s success.

Ingredients for success:Ingredients for success:• Easy accessEasy access• Curbside appealCurbside appeal• ParkingParking• ConvenienceConvenience• VisibilityVisibility

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PRODUCTPRODUCT The main ingredient is excellent food. The main ingredient is excellent food. People will always seek out a restaurant People will always seek out a restaurant

offering excellent food, especially when offering excellent food, especially when good service, value, & ambiance good service, value, & ambiance accompany it. accompany it.

3 levels of restaurant product:3 levels of restaurant product:• Core ProductCore Product: : function part of the function part of the

product for the customer.product for the customer.• Relaxing, memorable evening.Relaxing, memorable evening.

• Formal ProductFormal Product: : the tangible part of the tangible part of product.product.

• Physical aspects, décor & a certain level of Physical aspects, décor & a certain level of service.service.

• Augmented ProductAugmented Product: : other services. other services. • Valet parking, table reservations.Valet parking, table reservations.

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PRODUCTPRODUCT Product analysis: Product analysis: Covers the quality, pricing & Covers the quality, pricing &

service of the product offered.service of the product offered. Restaurateurs are placing greater emphasis on Restaurateurs are placing greater emphasis on

atmosphericsatmospherics, the design used to create a special , the design used to create a special atmosphere. atmosphere.

Product development: Product development: Innovative menu items are Innovative menu items are added to maintain or boost sales. added to maintain or boost sales.

Product positioning: Product positioning: Conveys to the customer the Conveys to the customer the best face or image of the restaurant, what people like best face or image of the restaurant, what people like most about it, or how it stands out from the most about it, or how it stands out from the competition.competition.

Restaurant DifferentiationRestaurant Differentiation: Restaurant owners : Restaurant owners usually want their restaurant to be different in one or usually want their restaurant to be different in one or more ways, to call attention to the food or ambiance. more ways, to call attention to the food or ambiance.

Product Life Cycle:Product Life Cycle: Restaurants, like all Restaurants, like all businesses, go through a product life cycle from businesses, go through a product life cycle from introduction to decline.introduction to decline.

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PRICEPRICE The only revenue-generating variable The only revenue-generating variable

in the marketing mix. in the marketing mix. Several factors affect price:Several factors affect price:

• The relationship of demand and supplyThe relationship of demand and supply• Shrinking guest loyaltyShrinking guest loyalty• Sales mixSales mix• The competition’s pricesThe competition’s prices• Overhead costsOverhead costs• The psychological aspects of price settingThe psychological aspects of price setting• The need for profitThe need for profit

Cost-Based Pricing Cost-Based Pricing Competitive Pricing Competitive Pricing Price & Quality Price & Quality

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PROMOTIONPROMOTION

Goals of a promotional campaign:Goals of a promotional campaign:• To increase consumer awareness of the To increase consumer awareness of the

restaurant.restaurant.• To improve consumer perceptions of the To improve consumer perceptions of the

restaurant.restaurant.• To entice first-time buyers to try the To entice first-time buyers to try the

restaurant.restaurant.• To gain a higher percentage of repeat To gain a higher percentage of repeat

customers.customers.• To create brand loyalty (regular customers).To create brand loyalty (regular customers).• To increase the average check.To increase the average check.• To increase sales at a particular meal or time To increase sales at a particular meal or time

of day.of day.• To introduce new menu items.To introduce new menu items.

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TYPES OF ADVERTISINGTYPES OF ADVERTISING

In-houseIn-house

Tie-Ins and Two-for-OnesTie-Ins and Two-for-Ones

Loss-Leader MealsLoss-Leader Meals

Advertising AppealsAdvertising Appeals

Travel guides Travel guides

Yellow pagesYellow pages

Mailing listsMailing lists

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The EndThe End

Copyright © 2008 John Wiley & Sons, Inc.