Introduction
Choosing an appropriate marketing strategy is particularly crucial when starting a new business that needs to win its first customer and retain them. A restaurant with a starting capital of $50,000 is bound to face intense competition from many similar small businesses, and, as such, the choice of the right approach to marketing becomes essential. Research suggests that direct marketing and advertising are of limited use in such a context, and PR, search engine optimization (SEO), point-of-sale (POS) promotion, and social media represent the best options available to a small start-up restaurant.
Main body
With a starting capital of $50,000, the first thing one needs to take into account is financial limitations. Statically speaking, small businesses rely on in-house resources in their marketing efforts (Ritz, Wolf, and McQuitty, 2020). It means that the time-consuming process of distributing physical ads to mailboxes as a part of a direct marketing campaign is ill-advised, and the intrusiveness of direct e-mail marketing makes it a poor option for a hospitality business. Small restaurants’ advertising expenses tend to be higher than those of bigger restaurants (5% vs. 2.4%), but it most likely reflects the fact that smaller restaurants are limited-service, which means they have to use ads (listed as advertising expenses) instead of the front-of-the-house employees, which are listed as staffing expenses (Moon & Jang, 2018). Thus, the advertising in question is actually POS promotion, and costly traditional advertising is most likely out of the picture.
Among the more cost-effective marketing strategies, a start-up restaurant may rely on PR, social media, SEO, and POS promotions. Hiring locals or giving them internships may be a viable PR strategy for a small restaurant because they rely on word-of-mouth to a considerable degree – according to some, up to 75% of revenue (Lepkowska-White, 2017). SEO is a particularly important marketing channel because it is not extremely time-consuming, can be handled with in-house resources, and targets the desired customer base by default (Chaffey and Smith. 2017; Demers, 2021). Effective use of social media will raise brand awareness and synergize with both SEO by promoting relevant keywords and hashtags and with PR by encouraging “existing customers to act as advocates” for the business (Chaffey & Smith, 2017, p. 239). Finally, POS promotion and analysis allow to proactively identify and satisfy trends and preferences of the customer base, which is important because, statistically, attracting a new customer is five times costlier than retaining the existing one (Anya, 2019). Among these strategies, social media deserve more in-depth treatment.
For the best effectiveness, a social media marketing strategy should focus on a limited number of channels. Facebook is a must for a restaurant operating in America because it has the greatest penetration of all social networks in North America and Europe (Kingsnorth, 2016). The second channel of particular importance is Instagram because it has, by far, the largest percentage of food-related content (Kusumasondjaja & Tjiptono, 2019). Research suggests that 30% of millennials avoid restaurants with a weak or non-existent Instagram presence (Austin, 2021). Twitter is also a viable option for creating and maintaining dialogue with customers (Austin, 2021). It is worth considering that small restaurants often use social media marketing in a chaotic ad-hoc manner (Lepkowska-White, Parsons, and Berg, 2019). In order for it to be successful, the start-up restaurant in question needs to have a well-developed strategy instead.
Summary
To summarize, a start-up restaurant with a starting capital of $50,000 should choose its marketing outlets carefully. Given the financial and staffing limitations, direct marketing and advertising are not the best options. Conversely, PR, SEO, POS promotions, and particularly social media, which can enhance all of the three above, may prove viable options if approached correctly and as the components of a well-developed, coherent strategy.
Reference List
Anya, M. (2019). Point of sale marketing strategy for restaurants. Web.
Austin, K. (2021). Guide to restaurant social media marketing.
Chaffey, D. and Smith, P. R. (2017). Digital marketing excellence: Planning, optimizing, and integrating online marketing. 5th edn. London: Routledge.
Demers, Y. (2021). SEO basics: Complete beginner’s guide to search engine optimization.
Kingsnorth, S. (2016). Digital marketing strategy: An integrated approach to online marketing. 2nd edn. London: Kogan Page.
Kusumasondjaja, S., and Tjiptono, F. (2019). ‘Endorsement and visual complexity in food advertising on Instagram.’ Internet Research, 29(4), pp. 659-687.
Lepkowska-White, E. (2017). ‘Exploring the challenges of incorporating social media marketing strategies in the restaurant business.’ Journal of Internet Commerce, 16(4), pp. 1-20.
Lepkowska-White, E., Parsons, A. and Berg, W. (2019). ‘Social media marketing management: An application to small restaurants in the US.’ International Journal of Culture, Tourism and Hospitality Research, 13(3), pp. 321-345.
Mun, S. J. and Jand, S. C. (2018). ‘Restaurant operating expenses and their effects on profitability enhancement.’ International Journal of Hospitality Management, 71, pp. 68-76.
Ritz, W., Wolf, M. and McQuitty, S. (2019). ‘Digital marketing adoption and success for small businesses: The application of the do-it-yourself and technology acceptance models.’ Journal of Research in Interactive Marketing, 13(2), pp. 179-203.