Chapter 4 Restaurant Business & Marketing Plans The Business Plan The Difference Between Marketing & Sales Marketing Planning & Strategy Market Assessment, Demand, Potential & Competition Analysis Marketing Mix-The 4 P’s Promotion

BUSINESS PLANS Increases the probability of success. Assists in obtaining financing. Communicates to potential investors. Defines operational purpose.

ELEMENTS OF A BUSINESS PLAN Cover sheet Description of the business Description of the concept licenses & lease Market analysis & strategy Financial Data Appendices

BUSINESS PLANS Mission statements generally do not change. Goals are reviewed as often as necessary. Goals should be established for each key operational area (e.g., sales, food, service, beverage, labor costs, etc.). Strategies or action plans are the “how to reach the goal”. They are more specific than goals & are generally short-term. Strategies are specific as to the date by which they are to be achieved and how much should be achieved. Based on strategies, a detailed action plan with individual responsibilities should be implemented.

MARKETING Restaurant marketing is based on a marketing philosophy. Marketing philosophy patterns the way management & ownership have decided to relate to guests, employees, purveyors & the general public in terms of fairness, honesty & moral conduct. Marketing is finding out what guests want and providing it at a fair price. Marketing asks would-be operators to ask themselves, “Who will be my guests? Why will they choose my restaurant? Where will they come from and why will they come back?”

MARKETING Includes sales and merchandising. Determines who will patronize the restaurant & what they want in it. Is an ongoing effort. Gets into psyche of present & potential patrons. Marketing is about solving guest problems.

SALES A part of marketing that focuses on the needs of the seller. Activities that stimulate the patron to want what the restaurant offers. The actions of restaurant employees that influence patrons after they have arrived at the restaurant. Sales mentality exists when seller thinks only of his or her needs & pushes an item on a customer. Closely related to advertising, promotion & public relations.

THE DIFFERENCE BETWEEN MARKETING & SALES SALES focuses on the needs of the seller. MARKETING focuses on the needs of the buyer.

MARKETING PLANNING & STRATEGY Every marketing plan must have realistic goals for guest satisfaction, market share, sales & costs while leaving a reasonable profit margin. SWOT analysis, stands for strengths, weaknesses, opportunities & threats. The strengths & weaknesses focus on internal factors and can, over time, be controlled by management. Opportunities & threats deal with external factors.

MARKET ASSESSMENT Analyzes the community, the potential guests, the competition & helps to answer the all-important questions: Is there a need for a restaurant? Who will be the potential guests? How old are they? What are their incomes? What is their sex? What is their ethnic origin or religion? What are the guests’ wants and needs? Why would people become guests? What will they like or dislike about the proposed restaurant? What do they like or dislike about existing restaurants?

MARKET DEMAND The demand for a restaurant is calculated using two factors: The population in the catchment area (the area around the restaurant from which people would normally be drawn to the restaurant). The demographic split of this population by nationality, race, age, sex, religion, employment, education, and income.

MARKET SEGMENTATION The market—that is, the total of all actual and potential guests—is generally segmented into groups of buyers with similar characteristics. Within these groups are target markets, which are groups identified as the best ones for the restaurant to serve.

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

MARKET SEGMENTATION Once the target market is identified, it is important to position the restaurant to stand out from the competition & to focus on advertising & promotional messages to guests. The key to positioning is how guests perceive the restaurant.

Competition Analysis Analyzing the competition’s strengths and weaknesses helps in formulating marketing goals and strategies to use in the marketing action plan. When analyzing the competition it makes sense to do a comparison benefit matrix showing how your restaurant compares to the competition. You choose the items for comparison, which include name recognition, ease of access, parking, curbside appeal, greeting, holding area, seating, ambiance, food, service, cleanliness, value, and so on…

MARKETING MIX The cornerstone of marketing. The Four P’s Place Product Price Promotion

PLACE/LOCATION One of the most crucial factors in a restaurant’s success. Ingredients for success: Easy access Curbside appeal Parking Convenience Visibility

PRODUCT The main ingredient is excellent food. People will always seek out a restaurant offering excellent food, especially when good service, value, & ambiance accompany it. 3 levels of restaurant product: Core Product: function part of the product for the customer. Relaxing, memorable evening. Formal Product: the tangible part of product. Physical aspects, décor & a certain level of service. Augmented Product: other services. Valet parking, table reservations.

PRODUCT Product analysis: Covers the quality, pricing & service of the product offered. Restaurateurs are placing greater emphasis on atmospherics, the design used to create a special atmosphere. Product development: Innovative menu items are added to maintain or boost sales. Product positioning: Conveys to the customer the best face or image of the restaurant, what people like most about it, or how it stands out from the competition. Restaurant Differentiation: Restaurant owners usually want their restaurant to be different in one or more ways, to call attention to the food or ambiance. Product Life Cycle: Restaurants, like all businesses, go through a product life cycle from introduction to decline.

PRICE The only revenue-generating variable in the marketing mix. Several factors affect price: The relationship of demand and supply Shrinking guest loyalty Sales mix The competition’s prices Overhead costs The psychological aspects of price setting The need for profit Cost-Based Pricing Competitive Pricing Price & Quality

PROMOTION Goals of a promotional campaign: To increase consumer awareness of the restaurant. To improve consumer perceptions of the restaurant. To entice first-time buyers to try the restaurant. To gain a higher percentage of repeat customers. To create brand loyalty (regular customers). To increase the average check. To increase sales at a particular meal or time of day. To introduce new menu items.

Tie-Ins and Two-for-Ones TYPES OF ADVERTISING In-house Tie-Ins and Two-for-Ones Loss-Leader Meals Advertising Appeals Travel guides Yellow pages Mailing lists

The End Copyright © 2008 John Wiley & Sons, Inc.