Restaurant Marketing: What Does An Empty Chair Really Cost?

I’ve always talked about the costliest item in a business being an empty chair. Now we take a little peek into what it actually costs you.

But first, some math:

  1. Calculate the difference of where your sales are now and where they need to be in order to achieve the profit level necessary for you to grow your business organically.
  2. Divide that number by your per person average (not your average check). This is how many guests you need to attract in order to generate that profit difference.
  3. Next take your guest acquisition cost (GAC)  or the amount of marketing dollars it takes to generate one new guest. [Total Marketing $ Spent ÷ New Guests generated = GAC] and multiply that times your answer from #2. This is how much you need to invest in marketing your current business (given your existing mix and ROI) in order to generate that profit difference which will give you the growth you desire.

A Few Questions:

  • Do you even know how effective ($) your marketing is?
  • What metrics are you utilizing in order to recalibrate your marketing to be more effective?
  • Do you have the talent to accomplish this or do you need to invest in it? (don’t forget to add in the talent acquisition costs).
  • What can you do operationally to help increase your ROI and allow you to invest less and still hit your goal?
  • What can you do differently with your marketing mix in order to achieve an even greater ROI and thus decrease your GAC?
  • Do you have the resources to invest in either of these?
  • Will your existing marketing mix do the job? If not, how does it need to change? (don’t forget to factor in the change cost).
  • If not, can you obtain the resources at a marginal cost that will still give you the needed ROI?
  • How much of the needed profit can be generated through price increases? Added value?
  • What lost opportunity costs exist if you simply do nothing but maintain the status quo?

This is what a little strategy looks like if your goal is to grow your business and not just sustain it and hope things get better.

Now there is a lot more to a marketing strategy than this brief and minimal exercise here, but it should help you understand what it takes to drives best outcomes from your marketing efforts – and not just in bottom line dollars but also in terms of information you need in order to make best marketing decisions.

There is an lost opportunity cost to your business if you just continue to float by and fail to grow your business by any means other than just working harder (or smarter) while all other variables remain the same.

So now what are you thinking?

Jeffrey Summers
For four decades, my coaching, consulting, public speaking, workshops, management team retreats and articles have helped hundreds of hospitality leaders worldwide, build successful Hospitality businesses. The Summers Hospitality Group is a global full-service hospitality consulting firm best known for its unique results-driven, strengths-based system for developing extraordinary leaders and demonstrating the performance impact they have on their organizations.