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Restaurant Marketing:
Marketing A Restaurant During The Economic Slow-Down: 5 Surprising Restaurant Marketing Lessons
By Alex Makarski

Last week I decided to pop in on the Darden Restaurants shareholder conference call. When a company like this is sharing what they do and why, and what they see going on in the market place, I sit up and listen. Nobody gets to be a 170,000-employee company by sheer luck. There is always a reason and a method.

Apparently, I wasn't the only one listening to that call -- the next morning food-service & restaurant publications were super-prompt to announce that Darden was "finally" experiencing a slowdown because of the state of the economy (big deal). And they entirely missed the point that I found the most important.

Yes, pretty much all of Darden's concepts were down by about 3.7%, which is on par with the overall foodservice industry index. But...Olive Garden (one of Darden's concepts) was doing extremely well.

Olive Garden grew 5% compared to the same quarter last year!

Not a single analyst noted this very remarkable fact - Olive Garden is doing well. In fact, so well compared to the rest of the industry, it deserves a look to understand what specifically they do and how they get to be so successful.

So here's a list of 5 things that you should do in your restaurant to replicate the success they are experiencing (loosely based on the information of that conference call, with my interpretation):

1. When the economy is slow, step up your marketing

When the cold winds of the economic slowdown come to the city, most businesses respond by canceling their advertising. They crawl into the shell and try to wait it out, hoping for a miracle.

Smart restaurant owners do the reverse. They ramp up their marketing: It's so much easier to get heard in the market when everybody else is hiding. Smart restaurant owners also know better than to equate marketing to advertising: There are marketing methods that are more effective and less costly than advertising.

2. Stay on their minds

Olive Garden uses creative advertising to remind their customers they are still here. They manage to stay at the forefront of their customers' minds via TV ads.

As much as this approach could be good for a large company like Darden, however, such a stunt could be suicidal for a small restaurant: Running image ads on TV is a costly and arguably the least effective way to advertise. It is called "branding," or more specifically, "macro-branding."

The other, less expensive, and more targeted way to stay on your customers' minds is called "micro-branding." This includes a variety of ways to "touch" them, via email newsletters, event announcements, greeting cards, phone messages, and printed newsletters. Many of these tools are either free or inexpensive. And they are relatively easy to track. There is no excuse not to use them.

3. Create reasons for them to come in again and again

Olive Garden keeps coming up with new items and specials, and they synchronize promotions with the release of the new menu item. You can do the same. And it's easy to inform your list about new menu items. That is, if you have a list (see strategy #2 above). Also, you can create many more reasons for your customers to come back - many of which may have nothing to do with the food (e.g. special events and "happenings").

4. Expand into new markets

Olive Garden has seen a lot of response from their Hispanic ads targeted at the new, fast-growing, and dynamic market. This endeavor also includes Hispanic menus, and (since there was no mentioning of that in the conference call, I'm extrapolating) Hispanic staff, effectively positioning Olive Garden to Hispanic clientele as "their" place to eat out at.

There could be at least two possible takeaways for you:

a) The Hispanic market is less saturated by other advertisers but is as hungry as any other. You may get a better bang for your marketing dollars by expanding into it.

b) Too many businesses in general, and restaurants in particular, are too stubborn to try to find a new market. The correct approach is to tackle one market at a time. Once you have won over one market, regroup and stage a crusade on another one. Examples of markets include particular occupations, age groups, hobbyists and enthusiasts. For instance, if you've built a successful VIP Club for golfers, you can create an additional VIP Club for children that take up golf.

5. When consumers tighten their purse strings, they go to fewer restaurants but frequent their favorite place almost as often as before

This is a very important pattern to observe and is a direct result of "winner takes it all" rule in action. In other words, you don't have to win by a mile, you just have to win.

A restaurant that provides slightly better food, slightly better service, and does a slightly better job of staying in touch with their customers will do disproportionately better than their competition. And given that most restaurants don't bother to revamp their boring food, never get around to properly train their staff, and have no concept of investing into a relationship with their customers, you just need to do a few things right (not perfect, just a teeny weenie bit better than the next guy) to do well while your competition is crushing and burning.

6. (I know I promised 5 "secrets". This one is a bonus lesson in restaurant marketing, so stop complaining.) Here it is: Be ready to capture more customers when competition throws in the towel and turns the lights off

Well, this particular observation didn't come from the conference call per ce. Clarence Otis (Darden's CEO) appeared on Jim Cramer's Mad Money the night before the conference call and referenced the shut downs of Benigan's.

Turns out, several of the Olive Garden stores are located next to the now-defunct Benigan's and saw a "pick up" of consumer traffic.

When a restaurant closes in your locale, be ready to meet new customers. By "be ready" I mean "have the tools and processes in place to turn these first-timers into regulars, and regulars into raving fans". Otherwise your euphoria will be extremely short-lived.

Alex Makarski is Chief Commando of www.RestaurantCommando.com, a restaurant coaching and consulting firm.

RestaurantCommando is running a 2-day intensive Restaurant Profit Bootcamp in Austin, Texas and in Ontario, Canada in November 2008 - see www.RestaurantProfitBootcamp.com.





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