Rory Martin

Social Media ROI for the Restaurant, Cafe, and Lounge

Return on Investment Projection


Introduction

In order to measure Social Media ROI you must define clear measureable goals. RoryMartin.com’s online marketing campaigns deliver both measureable revenue as well as ancillary brand building benefits for your company. In the restaurant industry, knowing what guests are saying about your brand is the single most important aspect of your business. This is measured as “ancillary” even though it directly affects your financial bottom line.

It is important to understand the value of a visitor. Each visitor becomes one of three things; a browser, an influencer or a transacting customer. We can infer and assign an estimated value to browsers and influencers but these values are subjective at best.

For the purposes of this document we will focus on transacting customers and the projected Return on Investment.

Background

Restaurant industry sales are expected to reach a record $604 billion and post positive growth in 2011 after a three-year period of negative real sales growth, according to the National Restaurant Association 2011 Restaurant Industry Forecast. Social media savvy consumers (frequent users of at least one social media tool, including Facebook, Twitter, mobile phone applications such as Foursquare or Urban Spoon, or online review sites such as Yelp) are more active in the restaurant community and dine out more frequently than the general public. 92 percent eat a meal at a sit-down restaurant at least once a month (compared with 84 percent of all adults).

In addition, 51 percent of social media savvy individuals say restaurants are an essential part of their lifestyle, while among all consumers that number is 43 percent. On average fans spend an additional $71 on products for which they are fans compared to those who are not fans. Fans are 28 percent more likely than non-fans to continue using the brand. Fans are also 41 percent more likely to recommend a fanned product to their friends.

According to new research from Rice University's Jones Graduate School of Business, Facebook fans make 36 percent more visits each month to restaurants they are fans of. In addition they spend 45 percent more of their eating-out dollars at those restaurants.

A Pew Research Center study found that about 55% of adults seek out information about restaurants, bars and clubs, and that those adults are more likely to be women, young adults, and technology adopters. Of that number, 51% look to the Internet for that information; 38% rely on search engines, 17% on specialty web sites, and 3% on social media sites or Twitter. That means that restaurants have to be very strategic with how they utilize social platforms - just trying to amass fans, “likes” or followers won’t cut it.

In general, people who fan or like a restaurant’s social media account, do so because they already like the brand. Where the old marketing mantra was “convince and convert,” a more current model for marketing is “converse and convert.” Social media savvy consumers dine out more often and show a higher level of engagement in the restaurant community than other consumers.

Since many customers don’t trust advertising as much as they do social media, it’s important to make the customer feel integral to a restaurant’s success by giving them glimpses of new items from the kitchen before the general public to get feedback from loyal fans, or to invite them to tastings.

Based upon current research and trends we are projecting a 10 percent to 25 percent increase in engagement. There will be many more benefits we can’t yet measure based on the unknown positive impact we’ll have on your target audience. We are using an industry standard of 10-25% to show you real ROI to justify your investment. However, the return could be much higher.

Outline of Deliverables on 5K monthly budget


Facebook:

Action

Fans

Monthly Calculation for Best-Case and Worst-Case Promotion Scenarios

Increase visits of current fans

3,679

Best-Case: 25%
= 919 fans dine once a month with a $20 check average
= $18,320

Worst-Case: 10%
= 367 fans dine once a month with a $20 check average
= $7,340

 

2,325

Best-Case: 25%
= 581 fans dine once a month with a $20 check average
= $11,620

Worst-Case: 10%
= 232 fans dine once a month with a $20 check average
= $4,640

 

1,200

Best-Case: 25%
= 300 fans dine once a month with a $20 check average
= $6,000

Worst-Case: 10%
= 120 fans dine once a month with a $20 check average
= $2,400

Increase Fan Base with no incentive

50 – 100 per month

Best-Case: 100 new fans per month
= one visit with $20 check average
= $2,000

Worst-Case: 50 new fans per month
= one visit with $20 check average
= $1,000

Increase Fan Base with second cocktail free incentive

50 – 100 per month

Best-Case: 100 new fans per month
= one visit with $42 check average minus $10 coupon loss
= $3,200

Worst-Case: 50 new fans per month
= one visit with $42 check average minus $10 coupon loss
= $1,600


Twitter:

Action

Followers

Monthly Calculation for Best-Case and Worst-Case Promotion Scenarios

Increase visits of current followers

481

Best-Case: 25%
= 120 followers dine once a month with a $20 check average
= $2,400

Worst-Case: 10%
= 48 followers dine once a month with a $20 check average
= $960

Increase Seattle area followers

50 – 100 per month

Best-Case: 100 new fans per month
= one visit with $20 check average
= $2,000

Worst-Case: 50 new fans per month
= one visit with $20 check average
= $1,000

Increase Seattle area followers with second cocktail free incentive*

50 – 100 per month

Best-Case: 100 new fans per month
= one visit with $42 check average minus $10 coupon loss
= $3,200

Worst-Case: 50 new fans per month
= one visit with $42 check average minus $10 coupon loss
= $1,600

Total ROI for One Month of Twitter Promotion Factoring in All Scenarios.

$7,600

$3,560

*Studies show that customers with a discount coupon for cocktails typically increase their check averages by 15-50%.
ROI calculations are based on a check average of $20 except in the instance of the cocktail incentive. This number could be adjusted to accurately reflect specific guest check averages, which may be higher than $20.

Event Promotion

Increase in Attendees

Monthly Calculation for Best-Case and Worst-Case Promotion Scenarios

Tuesday Night Events

100

Best-Case:
= 100 new event attendees spend $60
= $6,000

Worst-Case:
= 100 new event attendees spend $25
= $2,500

Tuesday Night Events

50

Best-Case:
= 50 new event attendees spend $60
= $3,000

Worst-Case:
= 50 new event attendees spend $25
= $1,250

Total ROI for One Month of Event Promotion Factoring in All Scenarios.

$9,000

$3,750

How to Track

It is important to identify ways in which a restaurant can track increased foot traffic or event attendees.

  • Track coupons downloaded and used
  • Announce special offers/coupons only through social media to see direct link in promotion and increase of sales
  • Identify promo codes for tracking through a POS system
  • Measure daily check-ins via Facebook, Foursquare
  • Measure increase in reservations via OpenTable
  • Use Twitter hashtags to monitor tweets about the event

How to Measure Social Impact

Social impact is based on many factors. The most important of which are:

SCORING:

  • 4 points or less: The business is less than optimized, missing key chances to convert potential sales.
  • 5 points: The basics are covered, which is better than most but far from optimized.
  • 6 to 9 points: The business is doing better than most but is still not fully optimized.
  • 10 points: The business is fully optimized. Consider expanding to events and other promotions.

It is important not only to use social media to promote your brick and mortar establishment, but to also use your social media establishment to promote your social media accounts. If you are not using these social accounts, you’re missing out on valuable opportunities to connect with clients who are waiting to connect with you.

Example Engagements through Social Media

Imagine your customers as they use social tools in your restaurant. These customer engagements are important because they are the best way of connecting with the people who eat at your restaurant, engaging them, and fostering word of mouth buzz about the benefits of eating at your establishment.

  • Twitter: I am eating at ___(Restaurant)___
  • Facebook: I love ___(Restaurant)___. I’m checking in at that Restaurant so my friends can see. ___(Restaurant)___ offers coupons when I check in with them.
  • Foursquare: ___(Restaurant)___ is where I eat. ___(Restaurant)___ offers coupons when I check in with them.
  • Instagram: Here’s a photo of my meal at ___(Restaurant)___
  • Youtube: I’m trying to create meal I had at ___(Restaurant)___
  • LinkedIn: Here’s a link to my blog in which I talk about the wonderful meal I had at ___(Restaurant)___
  • Pinterest: Here are several recipes and images of food like I had at ___(Restaurant)___
  • Google+: Here’s a blog post from ___(Restaurant)___ telling me how to make the meal I had the other day!
  • Foodspotting: Look at this meal I’m having at ___(Restaurant)___
  • Untappd: Join me for a drink and a meal at ___(Restaurant)___
  • Tumblr: When I’m not eating at ___(Restaurant)___ I’m doing this.
  • Wikipedia: Here’s an interesting background of the meal or ___(Restaurant)___ where I had the meal.
  • Flickr: Here are the images from said night at ___(Restaurant)___

These are 13 different ways a client may use social media to talk about your establishment. This demonstrates the channels that do garner press for restaurants looking to boost their sales through social media.

Social Solutions from RoryMartin.com

Ultimately a business’s goals should be to convert potential clients into actual clients. Using social media to promote a brick and mortar establishment, as well as events will ensure the leveraging the power of these interactions. Using social media increases brand awareness, builds excitement around the brand name, and ultimately converts conversations into customers.