Episode Transcript
[00:00:00] You are sitting on a gold mine and you don't even know it. Every customer who's ever eaten at your restaurant, every person who's ever signed up for your newsletter, every phone number you've collected. That is a database worth thousands of dollars in revenue. And most restaurant owners treat their customer database like a forgotten filing cabinet. But today we're talking about email and SMS marketing that actually drives revenue. Not spam, not generic blast messages, but targeted campaigns that will bring customers back and will increase their lifet.
[00:00:32] All of that on today's episode of Restaurant Strategy.
[00:00:36] There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking.
[00:01:07] Hey everyone, Chip close here. This is the Restaurant Strategy podcast. Two episodes every single week. All meant to help you level up and build a more profitable and a more sustainable business. We're diving into direct marketing today, specifically email and SMS campaigns that actually generate measurable roi. It's not about fancy automation software or complex funnels. This is about basic fundamental marketing that works. Before we get started, quick reminder about the P3 mastermind. If you want help implementing these marketing strategies to actually increase profitability of your restaurant, then let's talk. Go to restaurantstrategypodcast.com schedule set up a free 30 minute call with me or someone from my team. We'll get to know about you, you'll get to know about the program and let's see if you are a good fit. Again. If you want help with profitability, if you want to help grow your restaurant to then set up a call restaurantstrategypodcast.com schedule as always, that link is in the show notes.
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[00:02:24] With Margin Edge you just get to snap pictures of your invoices as they come in and you get real time data in every area of your business. You can see play costs in real time. You get daily panels. Your inventory count sheets are automatically updated. It saves you a ton of time and lets you make informed decisions. So I got a client P3 member gather brewing down outside of San Antonio. They started using Margin Edge a month after they joined my program and within one month of them bringing on Margin Edge, their food costs went from 38% to 28%. It was incredible savings. That's 10 points that dropped straight to the bottom line. There's a reason I recommend Margin Edge to so many of the P3 members. It's because I know it works. If you're interested in learning more or you want to see how Gather brewing went from 38% to 28% food costs, head over to Marginedge.com chip. There's an incredible video there that talks about their story, talks about their journey with the platform. Again, margin edge.com chip see a really great see a really great story about the folks at at Gather Brewing. Go do that now. Of course, that link is in the show notes.
[00:03:33] Let me start with a story that's going to sound familiar. So I'm working with a P3 member. He's been in the program for a while, right? His name's Marcus. Marcus runs a, I think it's like a 90 seat Italian restaurant. It's down in North Carolina. Good food, great location, steady business. Been steady for a while.
[00:03:49] But Marcus was frustrated because he felt like he was constantly chasing new customers while his existing customers weren't coming back often enough. So I asked him, marcus, how many email addresses do you actually have in your database? And he thought for a minute and he said, I don't know, maybe 800.
[00:04:05] I said, okay, when was the last time you actually sent an email to your customers?
[00:04:10] And even longer pause.
[00:04:13] I think maybe like six months ago we sent something about our new menu.
[00:04:17] And what was the response? I asked. And he said, I don't know. I don't think we really tracked it.
[00:04:24] And there's the problem. Marcus was spending, right, $2,000 a month on Facebook ads trying to attract new customers. But he was ignoring the 800 people who had already eaten at his restaurant and enjoyed it enough to give him their email address. This is backwards thinking. It costs five times as much money to acquire a new customer than to retain an existing one. Yet most restaurants, just like Marcus, spend all their marketing budget on acquis and very little on retention. Those of you guys who have come out to my Marketing summit know that one of the first things I say on the first day is retention beats acquisition every single time. Because you've already done the hard work, you've already convinced them to come in, you've already shown them a great time, and now all you have to do is stay friends with them, remind them what it is they liked about you. Right. So let's talk about the foundation of email marketing. It has to do with building your list. You can't market to people that you can't reach. So every customer interaction is an opportunity to capture contact information at the host stand. Ask for email addresses when taking reservations. Can I get your email address in case we need to reach you about your reservation at the table? Offer to send receipts via email at the bar. Promote your newsletter for drink specials and events. Have opt ins. The key is to give people a reason to share their information. Right? So you can't just ask for their email address, tell them what they'll get in return. Right? As all marketing goes back to most consumers will automatically think well, what's in it for me? So joining a VIP list for exclusive offers or first access to special events, being part of a loyalty program, et cetera, et cetera. I worked at a steakhouse out west just outside Denver and they increased their email capture rate from 15% to 47% simply by changing their mindset, by changing their approach to data acquisition. So instead of just asking for email addresses, they started offering free appetizers and the customer's next visit. In exchange for joining their email list, they started doing gated wi fi. All of this was a way of getting things right. So the appetizer, when they gave this away, cost them four bucks to make, but the average customer who redeemed it would spend $65 on their return visit. That's over a 1500% ROI on their list. Building investment. It's such an easy way to do it. However you want to optimize that, however you want to run that promotion, whether it's a free appetizer, a discount, a dollar amount next or, or some other cool thing they get, you have to just make sure to put in there what they get.
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[00:08:09] Now let's talk about segmentation, because this is where most restaurants fail. Most other industries, right? E commerce, hotels, airlines have done this really well. They segment their audience. But restaurants have been late to the party. So they send the same message to everyone on their list, right? Birthday promotions to people who had birthdays six months ago. Lunch specials for people who only come to dinner. Wine club promotions to people who don't eat, even drink.
[00:08:33] You need to segment your list based on behavior, preferences, frequency. Recent customers versus laps customers. Lunch diners versus dinner diners. High spenders versus just occasional visitors. Wine lovers versus beer lovers.
[00:08:48] Most email platforms nowadays make this easy. You can tag customers based on what they order, when they visit, how much they spend. Then you can send targeted messages that are relevant to to each segment. So let me give you an example, right? So I'm working with this breakfast and lunch cafe out in the Bay Area and they segmented their list just into four groups. Daily regulars, weekend brunchers, business lunch crowd, and the special occasion diners, right? Daily regulars get messages about new coffee blends and loyalty program updates. Weekend brunchers get promoted on bottomless mimosa specials and other brunch events.
[00:09:25] The business lunch crowd gets information about catering and private dining and the special occasion diners. And yes, even a breakfast and brunch place gets those special occasion diners, right? Take mom out or grandma out for a birthday.
[00:09:38] You're celebrating a kid's elementary school graduation. These breakfast brunch places kill it with that. So the special occasion diners get promoted on holiday menus, on gift cards, on other things like that. And the result of all of this by Simply segmenting into four different lists is their open rates increase from 18% to 42%. Their click through rates more than doubled. More importantly, over the course of these six months, they saw a 40% increase in repeat visits from those email recipients. Not by doing some fancy thing, not from getting some expensive piece of software, but just by segmenting their list into four separate groups. And you can do it. Now let's talk about automated campaigns, because this is where you can really maximize your roa, your ROI with minimal effort. You set these up once and they run automatically based on customer behavior. You do a welcome series again. Those people who have come out to the P3 Marketing Summit know that we talk about this, how important it is to have a welcome sequence. So a welcome sequence, right? Whenever someone joins your email list, they automatically would get a series of five or six emails over the course of two or three weeks, right? Email one would be a welcome and oftentimes since it's going to first time diners, it's a certain dollar amount off or a discount on their visit. Email two might be your restaurant story and what makes you special. Email 3 might be a menu highlight, right? Something about a signature dish. Email 4 might be an invitation to follow you on social media or join loyalty program.
[00:11:12] Number five might be an introduction to the chef or some of the people in your restaurant. Right? All of these are so easy to build and you make it your own. It's five or six emails that are sent out over the course of two or three weeks where you're slowly introducing yourself to, to the diner. You can do birthday campaigns, right? So automatically send a birthday offer five days before the customer's birthday. Not a generic happy birthday special or like a celebrate with us free dessert. With any entree purchase during your birthday week, you can, you can cater it to who they are and make it special to who you are. Don't make it look like all the other stuff out there. Make it unique to you.
[00:11:52] Win back campaigns are huge. So when a customer hasn't visited in 60 days, let's say they automatically get a we miss you email with a compelling offer to return. When they haven't visited in 90 days, they get an even stronger offer. At 120 days, they get your best offer to try to win them back. So I worked with a pizza place up in Portland, Maine and they implemented a simple win back sequence. Customers who hadn't ordered in 45, 60 and 90 days got different messages trying to get them back. And we made it 45, 60 and 90 because we know the frequency of when people and how often people order pizza. So they needed to tighten it 120 days. These people were gone, long gone. So 45, 60 and 90 days was the sweet spot.
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[00:13:25] All of those links will be in the show notes.
[00:13:29] Now let's switch gears. Let's talk about SMS marketing because this nowadays is where you can really drive immediate action. So email is great for building relationships and yes, sharing information. It is the preferred mode of communication that most consumers believe about the brands that they follow. But SMS is immediate, there's urgency, and it's perfect for time sensitive offers and last minute promotions.
[00:13:54] Text Messages have a 98% open rate compared to an industry average of about 20% for emails.
[00:14:02] On average, text messages are read within three minutes of being received. And they're perfect for filling seats during slow periods or driving revenue during a slow day, meaning rainy day. Run a promotion, right? If people aren't out and about and walking past your little taco shop, give them a reason to leave the office and come down to visit you. But, and this is important, SMS marketing requires explicit permission. You can't just start texting people who gave you their address. You need separate opt ins for text messages, right? So I'm working with a sports bar down south that uses SMS brilliantly during those slow periods, right? Tuesday afternoons, weekday dinners, late night. They send targeted text messages to customers who live within a radius like 10 minutes of the restaurant. And it'll say, hey Sarah, it's quiet tonight. Come in before 7pm or come in after 9pm and get 50% off all appetizers. Or a certain beer is $3 all night. After 9 o' clock it's a reverse happy hour. We'd love to see you. It's personal, it's time sensitive, and yes, it's valuable to the people who receive it. Their SMS campaigns at that sports bar generate on average $850 in real revenue every single time they send that message. Right now they've got it dialed in where it's about a 25% redemption rate. So 98% open rate, a 25% redemption rate because they're not sending it to everybody, they're sending it to a specific group who lives right around them. And they know that because they've gotten to know their people.
[00:15:30] Let's talk about frequency and timing because I think this is where a lot of restaurants may go wrong. They either send too many messages and annoy people or they send too few and get forgotten. For email, for example, one email a week is perfect and you can even do two emails every once in a while. It's okay. One promotional message, one value add message, right? Recipes, behind the scenes stuff, staff highlights, all that stuff, you know, and then feature an event or a special announcement or a signature or, or your catering, whatever it is, send an email every single week and don't be afraid to send two emails a week, right? I always talk about this, the one to one to one principle. One message, one right. One email, one message, one call to action, right? So here's an email about this. This is what we want you to do about this. Don't stuff it with a whole bunch of stuff. You can use pss, right? A PS at the very postscript at the bottom of the email, right? So now taking, you know, now taking Christmas reservations, blah blah, blah. Also our holiday bon bons are available for sale, right? So if people aren't going to come to you for Christmas Eve, they can maybe buy a gift to share with their family. That's super, super important.
[00:16:42] For SMS from most restaurants I recommend once or twice a month for a casual quick service, fast casual, maybe once a week. But max, right, only send SMS for time sensitive offers for important updates, something urgent, right? Don't use SMS texts for general promotional content. Don't do it. And timing matters, right? So what I usually recommend is think about before the meals, right? So 10 to 12 most days because leading up to lunch and 3 to 5 in the afternoons leading up to dinner. It's also you're not fighting with the early morning crush of people's inboxes at 8 or 9 o' clock. And as people get to the end of their workday, they start flagging, they start getting distracted, they go to their email more. So 3, 4, 5 o' clock is the perfect time for that. It makes a difference. Now I want to talk about measuring success because you can't manage what you don't measure. Your email platform obviously should track open rates, click through rates, unsubscribe rates. But the real metrics are restaurant metrics, redemption rates, average check size from those email customers, from those promotions and revenue per email sent. Track which campaigns drove the most revenue, not just the most opens. Track a campaign with a 15% open rate that generates $500 in revenue is better than a campaign with a 30% open rate that only generates $200 in revenue. It's obvious, but sometimes we forget that simple thing that's right in front of us. Let me tell you about a technique I call revenue attribution. You create unique promo codes for each email campaign, especially when they're promotional. So that you can track exactly how much revenue each campaign generates. So let's say an email goes out in March and gets the promo code. March 25th birthday campaign should get a promo code bday25. Win back campaigns get a promo code comeback25. This way you know exactly which campaigns are working and which ones aren't. So I work with this Greek restaurant that implemented this tracking system, the one we're talking about, and they discovered that their chef's special emails generated three times more revenue than their happy hour emails. Even though the happy hour emails had higher open rates. Even though the happy hour emails were a better deal, the chef special was the thing that spoke to their customers. So they shift their strategy to focus more on those food promotions and less on the drink promotions, more on specials and sometimes high end specials rather than the deep discounts. The result?
[00:19:19] A 35% increase in email driven revenue over the course of our six months together.
[00:19:24] Now let's talk about common mistakes to avoid. First, do not ever buy an email list. These are full of people who didn't opt in to hear from you specifically. Your delivery rates will be terrible. They will go down. They will damage your reputation.
[00:19:40] Second, don't send the same message to everyone.
[00:19:43] Segmentation is critical for relevance and engagement. Third, don't ignore mobile optimization. 65% of emails are opened on mobile devices. So if your emails don't look good on phones, I promise you you are losing customers.
[00:19:57] Fourth, do not neglect your subject lines. Your subject line determines whether people will open your email. Test different approaches, questions, urgency, personalization, benefits, emojis.
[00:20:10] You have to test it out and see which works for your audience. Here's a framework for successful restaurant email marketing. Monday, plan your week's campaigns based on your sales goals and inventory needs. Tuesday, send your primary promotional email to your full list. Thursday, send a targeted offer to a specific segment. Saturday, send event announcements or special offers for the following week. Keep it simple, keep it consistent, keep it valuable. Some version of that will work for you. But get organized every single week. So beginning of the month, look over and sort of map out what you're going to do over the course of the month. But then every week, sit down and get deliberate. Get specific. Now your homework for this week. First, audit your current email list. How many addresses do you have? When did you last email them and what was the response? Meaning open rate, click rate, click through rate.
[00:20:59] Second, set up a simple welcome sequence for new subscribers. Again, five to six emails I recommend that are doled out over the course of two weeks. You can always spread it out to three weeks, but five or six emails is perfect, right? Remember we talked about that structure? Third, create a birthday campaign. This is so stupid. Easy. You automatically send birthday offers to customers based on the information you collect at signup. And yes, when you get them to sign up, you should be collecting name, email, phone number and birthday. It's such an easy thing. If you start with those basics, I promise you will see immediate results and then you will be eager to try more. Email and SMS marketing isn't complicated. It just requires consistency. It requires a mindset shift and yes, an attention to detail, a desire to actually do it. But it doesn't have to be complicated, right? Remember Marcus's restaurant? The one I mentioned at the beginning? When he implemented these strategies? Over six months, his email list grew from 800 to 2,400 subscribers. His monthly email revenue went from $0 to over $3,200 per month. His customer retention rate increased by 28%. All from Simply treating his customers like the valuable assets they are.
[00:22:13] That's email and SMS marketing that actually drives revenue. It's about being intentional with what you do and how you do it.
[00:22:21] Next week we're going to talk all about why social media marketing is dead. At least traditional social media marketing, the kind we used back in 2012 and 2017.
[00:22:30] And we're going to talk about what you should be doing instead. Thanks for listening again. My name is Chip Close. Appreciate you guys being here. I will see you next time.
[00:22:38] It's Sam.
