How Much Should You Spend on Marketing?

Episode 488 October 09, 2025 00:13:24
How Much Should You Spend on Marketing?
RESTAURANT STRATEGY
How Much Should You Spend on Marketing?

Oct 09 2025 | 00:13:24

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Show Notes

#488 - How Much Should You Spend on Marketing?

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Marketing is not a SPEND. It is an INVESTMENT. 

Which means you have to be deliberate with what you're doing, and how you measure your efforts. 

This episode will explain how. 

 

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If you want to snag a copy of Chip's book, The Restaurant Marketing Mindset... 
CLICK HERE: https://www.therestaurantmarketingmindset.com/

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CLICK HERE: https://www.restaurantstrategypodcast.com/p3-mastermind-program

If you want a free 30-day trial of our Restaurant Foundations Membership Site...
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Episode Transcript

[00:00:01] So how much should I be spending each month on my marketing? That's a question I get all the time. And on today's episode of Restaurant Strategy, I'm gonna answer it once and for all. Don't go anywhere. [00:00:12] 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. [00:00:43] Hey everyone, thanks for tuning in. My name is Chip Close. This is the Restaurant Strategy podcast. Two episodes every single week. You know me, I wrote a book. It's called the Restaurant Market Mindset. I give talks, workshops, keynotes all over the country. I run a Mastermind called the P3 mastermind. It's a group coaching program where I help independent restaurant owners increase profits in their business. But did you know I also have a membership site? Restaurant Foundations is an incredible community. It's a library, right? We have an online course, a library of video content. We've got spreadsheets, ebooks, workbooks, all of that in there. We're putting new content up every single month. We do a masterclass every month. I do an ask me anything session for all of the members of the of the Restaurant Foundation's site. There are hundreds of members so far to date. If you want to join that community for a limited time now, through the end of the year, I'm offering it absolutely free for 30 days. It's $97 a month after that. But you get to try it free for 30 days. You can cancel whenever you want. So if you get in there, you try it for two weeks, it's nothing new, you hate it, whatever, cancel it, I don't care. Or you get in there, you watch everything, you crush all the content for 30 days and you don't need it anymore. Fine, you win. Cancel the membership. But what I hope you'll do is you'll see that it's incredibly valuable, that you'll give your team your login, that they will continue to use the resources and you'll not that we add new content every single month. Restaurant Foundations is our membership site. I'm putting the link in the show notes where you can just click on that and go sign up for free. Try it free for 30 days. Go do that now and then come on back. [00:02:14] What's the food cost for your third best selling entree? You don't know. With Margin Edge you could know instantly. Margin Edge is a complete restaurant management software that I Like to recommend to all, all of the P3 members, all the clients I work with. Why? Because it helps them improve profitability. 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 plate costs in real time. You get daily P Ls. 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 drop 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 margin edge.com chip. There's an incredible video there that talks about their story, talks about their journey with the PLAT 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. [00:03:41] Okay, so today I told you, I'm going to answer this question. This question I get all the time. How much should I spend on my marketing? It's a question you get all the time. I hear it all the time at trade shows. It's a question I get almost every single week. And I'm gonna put it to bed. I've talked about this a little bit over the last couple of years, but I'm gonna actually hit it head on on today's episode. You ready? Here's the answer. How much should you be spending on your marketing? [00:04:06] The answer is $0. [00:04:10] You should not be spending anything on your marketing. You should be investing in your marketing. When you go and you start looking at your marketing as an investment, not a spend, it changes the way you look at it. You start tracking the results more. [00:04:25] Right? So let me really, really clear. When I spend money, I spend money to go on vacation. So I buy a flight, I go there and I come back. It's not an investment. Nothing I can do. Right? Spend money on restaurants while I'm on vacation. Spend money for my hotels. That is a spend. And yes, in some abstract way, we can say that vacation is an investment. In my well being, my mental health, I am able to recharge all of that. But in a literal sense, I do not get a return on my vacation spend with your marketing. It is an investment and we have to look at the return, the roi, the return on the investment, right? We have to know that I'm trying something and I'm gonna spend a thousand dollars. But I need to track, measure the results so I can prove I spent a thousand. But that generated $3,000 in new revenue, right? That is a three to one ROI. And if I spend a thousand to make 3,000, why would I not spend 2,000 to make 6,000 or 3,000 to make 9,000? [00:05:27] You see where I'm going with this? There is no reason that if you can prove that it works that you wouldn't want to increase the spend. That is why advertisers spend more and more and more and put their ads that they know work on bigger and bigger stations, bigger and bigger time slots, bigger and bigger billboards, on and on. If you can prove that your marketing or your advertising is working, then why would you not increase the spend to hopefully increase the return? What happens? [00:05:57] What happens is that at a certain point, right? There's no reason why you wouldn't do that. At a certain point, you will, you will run out of capacity, right? You are too busy. I keep running these ads and it works too well. I have a crush of people and I no longer can serve all of the people I get coming in the door. Well, that's when you stop, right? Or when you watch the return not be as good as it once was. Meaning I spend $1,000 to generate $3,000. But when I have to spend $3,000, it only generates $7,000. So I no longer have my three to one. I have a two point something to one, right? And at that point, because you will get the law of diminishing returns, the more you spend, the higher you go, the less it will work. And fine, you back off and you say, okay, well then we'll go back to what was working. $1,000 was a three to one ROI. $2,000 was a three to one roi. $3,000 spend no longer had a three to one. So we just move it back and we go to $2,000. And then, you know, on that channel, that is the investment that sees a healthy return. [00:07:00] Everything you do has to be measured. And this is the part that drives me crazy. I mean, this is that old quote, right? I know half my marketing works. The problem is I can't tell which half as much as possible. We measure our efforts so that we can point to it, so we can prove. And this is an old agency trick, right? So when I ran my agency when I was marketing for restaurants, I would want to show them I am doing X, Y and Z. This is the spend. And here I can prove were the results I want to be able to spend. [00:07:31] I want to be able to say I spent $1,000 of your money and look, it generated $3,000 in new revenue, right? $3,000 in customer acquisitions. That is a powerful place to operate from. That is what you want to be able to do so that you can look at your, your Google search ad spend and be able to prove the roi, your meta ad spend, improve the roi, your direct mailers, improve the roi, your radio ads, your TV ads, your billboards, your print ads, whatever it is, you want to be able to look at it and prove a positive roi. In order to do that, you have to stop talking about a marketing spend because the number you hear all the time is, oh, you should be spending 3%, 3 to 4% of your budget on marketing. But man, this idea that like, well, we just have to spend it, okay, and not measure it. [00:08:18] What we want to do is measure it in everything you do. Everything. Systems and goals, right? The goals where you want to get to, meaning what you want to accomplish. The system is the series, you know, the series of actions, series of activities, right? Repeatable set of actions you do to achieve a specific goal. So I want this to happen. I'm going to do this, this and this to make this happen. [00:08:39] That's systems and goals. That's how you run a business. That's how you run a very successful business. When you've very clearly stated goals and you make a hypothesis, you put a strategy or tactic into place and then you measure to see whether it worked or not. So if anybody walks around and says, oh, you should be spending 3.5% of your monthly budget on marketing, they are not teaching you the right way. What you want is to think in terms of a return. And the only way you can think about a return is if you think about this as an investment. So I spend money to go on vacation and I don't expect a return there. But when I am invest in my retirement account, I do expect a return. And I check on that every month or so to see that I'm getting a healthy return. Otherwise, what do you do? You rebalance your portfolio, you change your investments Because I need to hit certain metrics. Every month or every year, so that I know by the time I get to retirement age, I'm going to have enough to be able to sit around on my butt. [00:09:31] We think about spending money different than we think about investing money. And I want you to think about investing marketing dollars. And the only way you do that is if you track and measure so you can prove roi. Now, when it comes to marketing, I always say this. If you have 80 or 90% of your budget that you can point to and you are measuring and you are tracking and you can prove that there's a positive return, then we have a. We earmark a portion of your budget for what I call flush money. Right? So I want you to come up to me and be like, hey, like, listen, I'm going to sponsor the Little League team, and I can't totally prove roi, but I know it creates goodwill within the community. I know parents are talking to me about me on the sidelines. I know that it just presents me as a pillar of this community. And I can't prove in a, you know, in a direct way that that helps my business, but I think it does. My gut tells me it does. Now, as long as it's not 100% of your budget, as long as that's 10 to 20% of your budget, fine. Sponsor the Little League. Put the big banner out on the. On the. The outfield wall. If you. [00:10:36] If that is a way that you can stay connected to the community, I think it's a great move. But with everything else, you need to be able to measure it. That's how we think about marketing. That's how we think about investing in our marketing. Make sure we know what we're trying to accomplish. [00:10:53] We put a plan into place, a tactic, something that will help us achieve that goal. And then we measure the results. [00:11:00] If the. The thing happened, if we accomplished the goal, then it worked. If we didn't, then it didn't work. And we either figure out how to do it differently or we scrap it and go back to the drawing board and try something new. [00:11:10] That is how we think about marketing. And I hope. [00:11:14] I hope that that resonates, and I hope you can change your perspective. It's not a marketing spend. It's a marketing investment. [00:11:21] One final reminder before I let you guys go. Restaurant Foundations is my membership community. Hundreds of members to date. It's an incredible resource. Tons of online video content, playbooks, scripts, everything you need to level up your restaurant. Most of the videos are like five to 15 minutes long. They are short. You watch one video and apply that to your business. So it's not some big long, you know course it's going to take you six months to take. No you just you know, you take it in at your own at your own pace. The playbooks in particular are a series of mini courses. Right. Mini video lessons that help you. Right. So hey I want to increase check average. Great. How do I teach my servers how to do that? There are 10 little mini lessons to get them to do that. That's it guys. The link to the restaurant foundation site is in the show notes. You get to try it absolutely free for the first 30 days and you can cancel whenever you want obviously. I hope you stick around for a long time. I think it's an incredible resource there but you use it for as long as it is valuable to you. Appreciate you guys. I know there's a lot of great podcasts for you to listen to. I appreciate you making time for this one Sam. [00:12:56] It.

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