1. Lisa D. Spiller, Ph.D. Christopher Newport University Carol Scovotti, D.P.S. University of Wisconsin – Whitewater DMEF/CADMEF Case Writers Workshop – October 17, 2009 San Diego, California

2. Background: Restaurant Industry Economic Crisis by the numbers –U.S. sales: $181 billion in 2008 –Projected decline in 2009 by 2.5 percent –52% of Americans dining out less often –66% no longer enjoying fine dining –Few families (with children) dining out –Smaller average check amounts –Numerous competitors…offering discounts –Harsh times for restaurants…

3. Nonna’s History Family Owned Italian Restaurant Owned & Operated by Anna and Cris Small staff Opened: June 2007 New location: 2009

4. Situation: New Location… New Opportunities Old location: Not visible, limited capacity New location: –Excellent visibility –Spacious, patio and private dining room –Convenient location

5. Decision Problem: The Case Challenge With a new location… an expanded menu… a new private dining room… a new outside patio… new specialty products… many loyal customers… Where should it begin?

6. Case Organization Case perspective –Anna Russo Coggeshall –Grew up in family restaurant business –Passion for Italian food –CNU graduate –Understands D/I Marketing

7. Overarching Problem How should Nonna’s allocate its marketing budget to:  Increase its guest traffic  Promote its catering business  Launch its specialty product marketing

8. Decision #1 – Increase Guest Traffic to Nonna’s Spent more than $30,000 on direct response promotions –Cooperative mailings –Discount mailers –Special invitation dinner events –Yellow pages advertising –In-house bounce back coupons

9. Nonna’s Discount Postcard Mailer - Front

10. Nonna’s Discount Postcard Mailer - Back

11. Direct Mail Special Event Postcard - Front

12. Direct Mail Special Event Postcard - Back

13. Nonna’s Promotional Offers - Metrics OfferQuantity Mailed Quantity Redeemed Response Rate Cost per Piece Print.Post.Redemption Costs Valentine’s Day Special 30017558%$0.88$0.42$ 20.00 Family Feast Day Special 60022538%$088$0.42$ 25.00 Discount Offer2,0001,20060%$0.88$0.42$ 10.00 (Ave.) Cooperative Mailings Buy one/Get one Free 3,6001002.8%--- $ 12.00 (Ave.) $ 5.00 Off250208%--- $ 5.00

14. What works best? Case Question: How might Nonna’s use its customer database to increase guest traffic? Bounce-back coupons CRM… Database-driven marketing!

15. Decision #2: Increase Nonna’s Catering Business

16. Nonna’s Catering Services Dine-In Parties –Restaurant - 250 seat capacity –Private banquet room – 35 seat capacity –Private patio – 60 seat capacity Casual Catering –Off-site catering services –Business meetings, lunches, parties, etc. Formal Catering –Off-site catering services for up to 500 people –Weddings, showers, formal events, etc.

17. Case Question: What lists might Nonna’s rent to increase its catering business?

18. Decision #3: Generate Sales for Nonna’s Specialty Products  Based on consumer demand  Marketed within the restaurant

19. Nonna’s Specialty Product Costs and Prices ProductRetail PricePackagingIngredients/ Processing Dipping Sauce $9.00$3.50$2.00 Italian Dressing $8.00$3.50$1.50 Tomato Sauce: (16 oz container) $8.25$0.75$5.25 (32 oz container) $10.25$1.50$7.00

20. Case Question: What might Nonna’s do to launch its specialty products & generate sales?

21. Case Summary This case demonstrates how… D/I marketing methods are used by a family-owned restaurant business The multitude of objectives D/I marketing can address The need for: “Shark marketing On a Minnow’s budget”

22. Teaching Suggestions Suitable for lectures & team projects associated with: –Market planning & coordinating –Entrepreneurship & small business –Relationship building/loyalty, offer strategy, creative strategy, or lists/database portion of direct marketing courses –Segmentation or promotional strategy portion of upper-level marketing courses –Integrated marketing communications –Brand building & sales promotions –Quantitative analysis & direct marketing math

23. Thank you for your attention. Any questions? Lisa D. Spiller, Ph.D. Christopher Newport University Carol Scovotti, D.P.S. University of Wisconsin - Whitewater