Restaurant marketing can be mysterious, especially when it comes to knowing exactly what works. Marketing can get expensive fast, so it’s critical to know if the money you put in is paying off. You want to be confident that every dollar spent increases covers and drives up revenue.
You can solve a lot of the mysteries around marketing by getting clear on your return on investment (ROI). It’s a metric that compares the profit generated by marketing to their costs and tells you how much money a specific marketing effort brings in.
Measuring your results is critical for success, and the good news is demystifying marketing ROI isn’t as hard as it may seem. Forget the over-complicated formulas—here’s how to get clear on your marketing performance so you can make investments that pay off.
Simple math can be very powerful. The first step to understanding marketing ROI is to look at the hard numbers. The more exact figures and solid estimates you have at your fingertips, the more you can figure out what has worked in the past and what hasn’t. Then use this knowledge to squeeze more value out of every marketing dollar.
A common issue during this stage of information gathering is the lack of metrics for certain popular marketing channels. For example, a lot of digital and social media marketing can’t tell in concrete terms if your marketing actually gives you what you set out to get. Sure, they can provide metrics on clicks and page views, but not if this online engagement led to people seated at your restaurant.
Understanding which channels can be tracked and quantified can shape decisions about how to spend marketing dollars. Take a look at how measurements work across various marketing channels. It’s only when you know the real cost-per-acquisition that you can accurately measure marketing ROI and get the most for your money.
Know what you’re paying for
Part of the process of knowing ROI is understanding different marketing channels. Some restaurants invest in the more traditional marketing options, which include TV, radio, and local print advertising. These can be some of the most costly options out there. Though this kind of advertising can have a big impact, it can be impossible to know if they’re putting butts in seats.
Increasingly, restaurants have leaned into digital and social media marketing channels, especially Facebook, Instagram, and Google. They typically have a lower cost and provide more metrics than traditional marketing options. You’ll know how many people liked, clicked on, or otherwise engaged with an advertisement or post.
But more information doesn’t always add up to intel you can use to make marketing more effective. It can feel good to know 1,000 local Facebook users liked your ad by clicking a thumbs-up icon, but these vanity metrics tell you very little about whether or not your spend translates into revenue. When using these channels, dig into the conversion metrics to measure the true impact if possible.
When you’re evaluating ads you’ve placed on delivery partner platforms, such as DoorDash and Uber Eats, don’t forget to factor in the marketing costs plus whatever extra delivery fees you incur. And when it comes to marketing with discounts and promotions, subtract the percent discount or dollar value you’re offering as well as the cost of promoting the special from the revenue it brings in.
When you use OpenTable digital marketing, such as boost campaigns and bonus points, take a look at the metrics. With these strategies, you don’t have to wonder how many diners made reservations—you can count up the number of real seated covers, not clicks, likes, calls, or leads. And you only pay for diners who find you through your OpenTable campaign and actually come in and spend money with you. As a result, you always know the exact ROI for those ads, and the cost-per-acquisition is low compared to other options.
Calculate your marketing ROI
You shouldn’t need to rely on gut instinct to know if marketing is working. Understanding the basics of how to calculate ROI empowers you to make decisions based on facts, not feelings.
First, you’ll need your reservation and revenue data handy. For the timeframe of a marketing campaign, look at your total revenue number and then subtract the cost of the campaign as well as food and operation costs. This will give you the net profit from the marketing initiative you’re trying to measure.
To determine ROI, you can calculate the following:
ROI = Net profit / (Marketing Cost + Food/Ops Cost)
These numbers empower you to make better, more cost-effective marketing choices to supercharge your success. No more guessing about the impact of any particular digital marketing channel. When you know your ROI, you’re in control.
Marketing today is about more than getting your name out there and increasing online engagement. The goal isn’t likes and hearts but dollars and cents. Ultimately, the best marketing investments translate into increased reservations and revenue numbers you can clearly count. Understanding your marketing ROI allows you to pull the right levers to get more diners in the door when you want to.