1. Chapter 15 Restaurant Business and Marketing Plans

2. Objectives After reading and studying this chapter, you should be able to: – Identify the major elements of a business plan – Develop a restaurant business plan – Conduct a market assessment – Discuss the importance of the four Ps of the marketing mix – Describe some promotional ideas for a restaurant

3. Introduction Business plans – Increase probability of success Communicate to financial backers Restaurants – Are experiencing extreme challenges Difficult times

4. Business Plan Improve chances of operational success – Assist in obtaining financing – Communicate to potential investors – Define operational purposes Key ingredient: – Sustainability

5. Business Plan (cont’d.) Elements – Cover sheet – Description of the business – Description of concept, licensee, and lease – Market analysis and strategy – Competitive analysis – Pricing strategy

6. Business Plan (cont’d.) – Advertising and promotional campaign – Other information – Financial data – Existing restaurant balance sheet – Appendices

7. Business Plan (cont’d.) Mission statements – Generally do not change Goals – Reviewed as often as necessary – Established for each key operational area Strategies or action plans – Who is going to do what, when, and what order – Specific dates

8. Marketing Based on a marketing philosophy – Patterns the way to relate to guests, employees, purveyors, and the general public Fairness, honesty, and moral conduct – Finding out what guests want and providing it at a fair price – Asks would-be operators: Who will be my guests? Why will they choose my restaurant? Where will they come from and why will they come back?”

9. The Difference Between Marketing and Sales Marketing – Broad concept – Includes sales and merchandising – Determines who will patronize the restaurant and what they want in it – Ongoing effort – Gets into psyche of present and potential patrons – About solving guest problems

10. The Difference Between Marketing and Sales (cont’d.) Sales – Part of marketing – Focuses on seller needs – Activities that stimulate the patron to want what the restaurant offers – Sales mentality exists when seller thinks about only of his or her needs Pushes an item on a customer – Closely related to advertising, promotion, and public relations

11. Marketing Planning and Strategy Marketing plans – Must have realistic goals while leaving a reasonable profit margin Guest satisfaction, market share, sales, and costs SWOT analysis – Strengths, weaknesses, opportunities, and threats Strengths and weaknesses: internal factors and can, over time, be controlled by management Opportunities and threats: external factors

12. Market Assessment and Market Demand Market assessment – Analyzes community, potential guests, and competition – Helps to answer the all-important questions: Is there a need for a restaurant? Who will be the potential guests? Market demand factors – Population in the catchment area – Demographic split of this population

13. Market Potential Estimated maximum total sales revenue of all suppliers of a product in a market during a certain period – How many people in the market area are potential customers? – What is the potential for breakfast, for lunch, for dinner? – Will your restaurant attract guests from outside the immediate market area? – Who is your market?

14. Market Segmentation, Target Market, and Positioning Market – Total of actual and potential guests – Generally segmented into groups of buyers Similar characteristics – Within these groups are target markets Groups identified as the best for the restaurant

15. Typical Segmentations Geographic – Country, state/province, county, city, and neighborhood Demographic – Age, sex, family life cycle, income, occupation, education, religion, and race Behavior – Occasions, benefits sought, user status, usage rates, loyalty status, and buyer readiness

16. Positioning Once the target market is identified – Important to position the restaurant to stand out from the competition Focus on advertising and promotional messages Key to positioning – How guests perceive the restaurant Involves tailoring an entire marketing program

17. Competition Analysis Analyzing competition’s strengths and weaknesses – Helps formulate marketing goals and strategies to use in the marketing action plan Comparison benefit matrix – Shows how your restaurant compares to the competition You choose the items for comparison (e.g., name recognition, ease of access, parking, curbside appeal, greeting, etc.)

18. Marketing Mix: The Four Ps Every marketing plan must have realistic goals – While leaving a reasonable profit margin Cornerstones of marketing – Place (location) – Product – Price – Promotion

19. Place/Location One of the most crucial factors in a restaurant’s success Ingredients for success – Good visibility – Easy access – Convenience – Curbside appeal – Parking

20. Product Main ingredient: excellent food – People will always seek out excellent food Especially when good service, value, and ambiance accompany it Three levels of restaurant product – Core product: function part for the customer – Relaxing and memorable evening – Formal product: tangible part of product – Physical aspects, décor, and a certain level of service – Augmented product: other services – Valet parking, table reservations, etc.

21. Product (cont’d.) Product analysis – Covers quality, pricing, and service Atmospherics – Design used to create a special atmosphere Experiencing greater emphasis Product development – Innovative menu items Added to maintain or boost sales

22. Product (cont’d.) Product positioning – Conveys the best face/image of the restaurant What people like most about it How it stands out from the competition Restaurant differentiation – Owners usually want their restaurant to be different in one or more ways Call attention to food or ambiance Product life cycle – Introduction to decline

23. Price (cont’d.) Cost-based pricing – Calculates cost of ingredients Multiplies by a factor of three to obtain a food cost percentage of 33 Competitive pricing – Checks competition to see what they are charging for the same item Price and quality – Direct correlation

24. Promotion Goals of a promotional campaign – Increase consumer awareness – Improve consumer perceptions – Entice first-time buyers – Gain higher percentage of repeat guests – Create brand loyalty – Increase the average check – Increase sales (particular meal or time of day) – Introduce new menu items

25. Advertising Types: – In-house – Tie-ins and two-for-ones – Loss-leader meals – Advertising appeals – Twitter and Facebook – Travel guides – Yellow pages – Mailing lists