Introduction
Opening a restaurant business is one of the complex tasks that have several specific features. Having started opening a restaurant, owners must consider many factors and possible events that will help them start a successful business launch. Therefore, a start-up business should take into account a wide range of elements such as marketing campaigns and the calculation of profits for the first time of work.
Main body
A start-up restaurant’s digital marketing plan has the following resources, revenue streams, and cost structure. Today, digital marketing is the best and fastest start to the expansion of the enterprise, high success and prosperity (Johnson, 2021). First of all, the key and critical resources for implementing the digital strategy are an experienced team, a sufficient budget for work, and a specific time for execution (Muninger, Hammedi, Mahr, 2019, p. 117-125). As a rule, the sources include promoting a restaurant using a first-class website, blogs, social networks, the feedback system on Google and other platforms, and, indeed, a set of SEO activities (Simsek, 2020). The revenue streams could be income from advertising on the Internet on the personal pages of a particular restaurant, as well as various affiliate programs for a certain percentage (Chaffey, 2021). The company’s revenue can also be increased through Internet services, transactions, and other projects.
The cost structure required for the digital marketing of a start-up restaurant should be approximately 10 to 20 % of the initial budget (Barraclough, 2021). Undoubtedly, it is impossible to give a clear idea of the figures it will be necessary to pay. For example, in 2021, advertising on social networks will be at least $4,000-7000, and the most “profitable” type of advertising, SEO Agency, does not exceed $ 1,500 (Barraclough, 2021). Hence, 10% of the amount of $50,000 is $5,000, which allows the business owners to choose the preferred and most effective option – the restaurant’s promotion through social networks.
Additionally, the success of the creation and development of any business is determined by approximate forecasting of sales, profits, money circulation and movement. Often, the sales forecast includes the number of seats in the institution, the distribution of seats, the average size of the check and the table turn (Rohlfs, 231-260). For example, considering the fact that the restaurant will be open every day, and the average amount of the check is $7, the following scheme will turn out: 5 (tables) x 3 (guests per table) x 7($) x 1 turns per day and night = $105 (per one working day) x 365 = $38,325 (per year).
Cash flow is the restaurant’s income, accounting for all deductions and costs within a certain period (Price, 2020). In fact, restaurant expenses include one-time, monthly, and periodic expenses. For example, one-time expenses are purchase of equipment ≈ about $5000. On the contrary, monthly expenses include employee salary, production costs, payment for the rental ≈ $16000. So, buying products and advertising are periodic expenses ≈ $7000 ($5000 for advertising in social media + $2000 for products). If one calculates this amount, which the restaurant owners will spend, then one will get $28000 from $50000 – so this is only the cash flow for the first month. Thus, 56% was spent on implementing the project; 44% will remain for the following periods.
When setting a reasonable price for the products sold, profit projections for the first time should be about $105-150, considering that the average check amount is about $7. As practice shows, the payback period of the organizations is calculated based on the principle of the initial investment in the business, which is divided by the estimated annual income (Graybeal, Franklin, Cooper, 2018). Consequently, if one tries to calculate this, one will get this picture of the situation: $50,000/38,325 ≈ 1,3 – this is the result obtained is the number of years required for a refund.
Conclusion
In conclusion, calculating the profits and expenses of the restaurant business and making plans for marketing companies is a rather complex and painstaking process. Digital marketing determines further actions regarding business promotion in the Internet space at the expense of specific resources and the calculation of income and advertising costs. At the same time, the forecast of sales and cash flow will help outline the potential growth of chances and opportunities and examine existing shortcomings within the business.
Reference List
Barraclough, D. (2021) How much does digital marketing cost in 2021?
Chaffey, D. (2021) Revenue model options: 10 revenue generation techniques for digital businesses.
Graybeal, P., Franklin, M., and Cooper, D. (2018) Principles of accounting, volume 2: Managerial accounting. Web.
Johnson, T. (2021) The shift from traditional marketing to digital marketing campaigns.
Muninger, M., Hammedi, W., and Mahr, D. (2019) “The value of social media for innovation: A capability perspective.” Journal of Business Research, 95, pp. 116-127. doi.org/10.1016/j.jbusres.2018.10.012
Price, A. (2020). 9 restaurant cash flow tips for your recovery and beyond.
Rohlfs, K. V. (2020) ‘Restaurant revenue management: Basic concepts’, in Szende, P. (ed.) Hospitality Revenue Management. New York: Apple Academic Press, pp. 231–260.
Simsek, Y. (2020) 8 effective digital marketing strategies for restaurants: Attract customers and drive sales in 2021.