AN IN-DEPTH LOOK AT THE RESTAURANT RESCUE PLAN AND WHY IT WORKS

PART 1: RESTAURANT HOW RESTAURANT COMPANIES GET “RIPPED OFF” BY SERVICES PROCLAIMING TO ASSIST THEM

 

After my last blog post on LinkedIn and on my websites, I had some e-mails and calls with some people that had read my posting and I received some fantastic feedback.

One constant theme I heard was that they suggested I “drill down” into the different parts of the post, with smaller more targeted topics. So, this will be the first part in a multi-part follow up series.

As consumers, when we order online from the big delivery companies (Uber Eats, Doordash, etc) we do not think about the impact our ordering through those services has on the business.

I call services like these “rip-off” services. Not because they outright steal from clients, but rather they take advantage of restaurant owners who feel they have no choice but to join these services.

And they gouge the heck out of them with fees.

The average restaurant (According to a survey completed by TOAST) makes somewhere between 1% – 15% net profit, with most in the 3%-5% range. To the “math challenged” such as myself, that means most restaurants only keep 3-5 cents out of every dollar in profit.

Ouch!

Not a lot of wiggle room there, we can agree.

However, when we order from delivery-services they have fees ranging from 10% of that order to 30% of that order that they will charge the restaurant. So, you can see that using these services is a “loss leader” in great times, and a TERRIBLE way to do business if this is the only way for you to serve your customers. 

This is exactly what restaurants are dealing with during this pandemic.

Recently there has been a unified outcry by restaurants across the US asking these services to reduce their fees (San Francisco, New York and Boston restaurants for example).

All the major “rip-off” delivery services refused to lower their fees.

Now we have all seen the commercials from these services, tugging at our heart by telling us we should use them to help keep restaurants in business.

By using these services in these times, all we are doing is expediting the demise of most restaurants.

But the restaurants are desperate.

I spoke with a restaurant owner in New Jersey on Monday and he explained to me that he never thought the majority of his business would end up being through these services and it is killing his profitability.

As he explained it to me, he never knew he had options besides these services and quite frankly his business while very successful in his area, was not set up for being pro-active in his marketing.

Another rip off “service” for restaurants is Groupon.

Here is an example why Groupon should be banned by all restaurants:

Groupon will always suggest to you an offer…such as offering a coupon for $7.00, for $15.00 worth of food.

Now remember at $15.00 the restaurant is only making 45 cents to $1.50. For this example, let’s just say the restaurant will make $1.50, meaning $13.50 goes to expenses.

If the restaurant sells 50 coupons for $7.00 then the total revenue is $350.00.

However, Groupon takes approximately 50% of that revenue leaving the restaurant with $175.00 in revenue.

To gain that $175.00 in revenue, the restaurant will incur somewhere around $675.00 in expenses.

That is a recipe for bankruptcy.

Now Groupon will tell you that you gain new customers. That is complete BS.

What you do is increase your traffic, anger your regular full paying consumers, all while you flush money away.

And Groupon does not always allow you to cap how many you can sell.

Can you imagine if this restaurant sold 100, 500 or 1000 of these “deals”?

Also, with Groupon you do not have control of the data…the customer information is kept with Groupon.

This does the restaurant absolutely no good in the long-term.

Last week I spoke to a restaurant owner of a small cafe in New York. What I described in my example to you was nearly identical to an actual recent situation she had with Groupon recently.

Except in her case they sold over 300 and she needed to borrow money to cover her losses, because it was her first time using Groupon and she did not understand the ramifications to her business.

The solution to these “rip-off services” is to bring more of this “in-house” and take control.

Restaurants can create their own on-line ordering system for very little money and more importantly NOT have to pay 10%-30% to the “rip-off” delivery services.

Creating an in-house marketing strategy will allow you to NOT have to rely upon services like Groupon, which essentially bleed you of your profits.

Having a system to gather customer data and utilizing it to communicate with those customers when it is essential for you to do so, puts you in control of your business and that is a recipe for long-term success.

Companies like Groupon and the delivery services are taking advantage of restaurant owners who do not understand how to maximize their marketing in an efficient and effective manner.

If you would like to learn more about how our Restaurant Recovery Plan has helped restaurants in many states, please reach me at:

mark@restaurantrescues.net or 774-284-0119

Thank you for reading.

Mark

www.restaurantrescues.net

RESCUING RESTAURANTS FROM THE COVID CRISIS

5 STEPS YOUR RESTAURANT WILL NEED TO TAKE

 

A DIFFERENT WORLD

For most of the U.S. (and the world) life as we knew it ended 6-9 weeks ago. When the “curtain rises” on our new normal, sadly a lot of businesses will not be there.

My focus when I work with businesses of all kinds is to have strategies in place to grow a business and to protect the business when times become tough.

If there ever was a time to have strategies in place for your business, it is now.

With my restaurant clients, I am stressing that their best plan to survive is to be extremely aggressive in their marketing.

Restaurants more than nearly any other business in the world, must pivot to a new way getting and retaining customers.

Or they will be out of business.

In this quick article I will provide strategies on how you can improve your opportunity to survive in the world after Covid and help prepare your business so that if we have a return of this in the fall or winter, you aren’t caught “flat – footed”.

 These are the same strategies I am focusing on with my clients:

  • How to Increase your: To Go / Curbside / Pick Up Orders
  • How to Generate More Delivery Orders
  • How to Generate Online In – House Orders
  • How to Properly Leverage advertising on Facebook
  • How to Generate MORE Repeat Business From Your Existing Customers 

HOW DID WE GET HERE?

Most restaurants neglected to expand their marketing channels. They opened their doors, did a little advertising, maybe some Groupon, some Facebook but very few local restaurants did the single most important thing to help with their survival…they neglected to create a database of their customers.

So, why is that so darn important?

The ability to communicate directly with your customer base can be the difference between being in business or out of business.

I can tell you unequivocally that the vast majority of restaurants that go out of business now did not have an ability to communicate with their customers before Covid.

So, let’s talk about what you can do right now:

  1. ONLINE ORDERING:

I saw an article recently about restaurants upset about having to give away 15% – 30% of their income to the various online ordering companies (we all know who they are.) 

How many of you out there are literally giving away your money because you do not have an in-house system? 

Question for you to ponder… 

If you had an in-house zero-commission service that allowed you to keep more profit by eliminating all fees, would that be beneficial to your bottom line?

 2. GET ON THE POPULAR DELIVERY SERVICES

Yes, I know I just told you these services just take your money, but you need to leverage these services to build your customer database. 

So how do you do this? 

You add coupons to the delivery bags that can ONLY be redeemed by joining YOUR restaurant VIP club via e-mail or text message. 

Building this list will put YOU in control of when and what to market to these customers.

 

 

  1. UPDATE YOUR BUSINESS EVERYWHERE!

After you get number 1 and number 2 done, its now time to let people know about you! 

Add your online ordering website to these sites:

Google my Business (GMB), your Facebook page and Yelp.

 

 

 

  1. ADVERTISE YOUR RESTAURANT ON FACEBOOK

Social media advertising has become so important to your business and to ignore it, or to do a crappy job at it, can hurt your business. 

We utilize a system that will find people in your area who are having birthdays or anniversaries and markets to them. Specifically, to them. 

Once you market to these groups, our software captures their information and now allows you to again communicate to them. 

Click to call ads are also ads you need in order to get your phone ringing more. These target only mobile phones and they literally “click to call” you. 

My team and I also utilize another Facebook marketing tactic, “check-ins”. It is a natural way for a restaurant to receive “low-cost” marketing. If done correctly it is enormously powerful.

 

 

  1. CUSTOMER COMMUNICATION

There is nothing that will be more impactful to YOUR restaurant business than having access to your customers, for direct communication. 

It ultimately costs you less in marketing and advertising dollars to have a database AND the ability to e-mail and text message to it. 

This is our “VIP” Program. 

You can now send marketing messages via text and e-mail to your customers. 

Why is this such a powerful method? It guarantees you a way to reach your customers. Customers may not see your ads, but I can tell you that they will NOT miss your text messages. 

Here are some mind-blowing stats: 

  • SMS messages have a whopping 98% open rate.
  • Text messages have a 209% higher response rate than phone, email, or Facebook.
  • 90% of SMS messages are read within 3 minutes.
  • Consumers redeem SMS-delivered coupons 10 times more than other types of coupons. 

And also, according to Mobile XCO nearly 50 million people will be accepting text message marketing in 2020.

  

 Finally if you need help with any or all of this, or you simply want to chat and see if this is a proper strategy for your restaurant to drive more sales and orders, feel free to contact me at the e-mail or number below. 

Or visit our website at: www.restaurantrescues.net 

Thanks for reading. 

Mark

mark@restaurantrescues.net

774-284-0119