How $150 a week in Facebook Ads WILL increase your restaurant revenue by at least 20%
Updated: Mar 9, 2020
There has been a lot of talk that Facebook is dying and that it is not delivering results. That is not necessarily true and here we will post the data to prove it. No digital or social strategy is complete without advertising. As such, all our programs contain an advertising solution and we do this because we know it is needed. You can get organic growth but targeted campaign with clear goals don't get you likes or followers, they get you seats in the chairs.
Now like everything else, for any digital strategy to work, all the components must be in place. Having great ads that lead to a terrible website where you cannot find a reservation link won't work. Same with spending money on ads on Yelp when your review score is 2. No one will go. However, if you have your ducks in what I would call a moderate row, you can achieve great success, if the ducks are in marching formation, you will achieve phenomenal success.
Finally, if you put money on ads, you should know how they work and how to execute them properly. Putting $150 a week on Facebook Ads without a plan also won't work. You have to think about the images that will go out, the copy, the type of delivery, platforms to put it on and then the demo; age, distance from venue, interests, spending patterns and upcoming life events.
We know most restaurant owners don't have much time and want to see how something works before looking into how to do it so here are the results. Below you will find out how we did it.
Let's unpack these results.
First, let's look at the campaigns, we spent $140.25 in 7 days (Jan 12-18 inclusively). $10 per day is allocated to general reservations and $5 per day is allocated to each of the birthday campaign and anniversary campaign for a total of $20 per day.
The campaigns themselves are performing exceptionally, the birthday and general reservation ones have a 9 and 10 relevance score and the anniversary one has a 7. But beyond that, the campaigns have generated 1013 clicks, 950 of which are unique for an average cost per click of $0.14. That is right, where can you get a click cost of $0.14 nowadays not to mention the $0.09 click cost on the general reservation campaign. The Click Thru Rate (CTR) is equally as impressive as it is at 7% averaged while being at 11% for the general reservations. Finally, even the length of time people are watching the video is incredible, the average is 41.77% of the video which is 5 seconds while the general reservation campaign has an average of 64.73% at 9 seconds.
Sure, that is great, you have amazingly performing ads (some would say impossibly) but how does that translate into money in the pockets. See below - numbers never lie.
The beauty about OpenTable is that it allows us to classify the source of a reservation which is not something every reservation system can do. This allows us to set some baselines and then compare data to see how something is performing.
In 2018 between Jan 1 and Jan 19, the restaurant had 1680 seated covers (meaning people that showed up at the restaurant). Out of that 1680, 510 came from OpenTable platform and network, 26 came from the restaurant's network, 727 were by calling in or from staff and 417 were from walk-ins.
In 2019, between Jan 1 and Jan 19, combining the ads with the complete 360degree Digital strategy put in place at the restaurant, 2343 seated covers showed up at the restaurant. An increase of 663 covers in 20 days which equated to 33 covers per day. That is an increase in revenue, based on the restaurant's average spend per cover, of $1749.00 per day!
This is an increase of 39.4% in covers year over year!
Furthermore, the OpenTable reservations were actually down by 15 covers, meaning 100% of this increase in covers and revenue is attributable to the restaurant. 179 covers extra just from the restaurant's network. If the entirety of the ad budget spent during those 20 days ($20/day) be attributed solely on this and would exclude the increase of 135 walk-ins and 397 called-in covers, that would still give you a cost of acquisition of $2.23 for brand new guests. Incredible. If you were to actually count the other metrics, that cost of acquisition is in reality $0.56.
** As a side note, the increase in 76 covers from OpenTable covers comes exclusively from TripAdvisor and our optimization of that platform for $39 per month.
Onto the ads, we do everything by hand, intuition and based on our experience working with the platform, nothing is done via 3rd party software, algorithms or AI. The first reason for this is that most of those tools are built for fortune 500 companies and what works for them doesn't work for Small Medium Businesses and certainly not for restaurants. The second reason is that we don't over complicate things, it is better to keep it simple and cover the bases with fundamentals than trying to be fancy and strike out.
This case study will be on a restaurant located in Edgewater NJ. Since working with them, we have revamped their website, built a concise digital strategy based on their goals, engaged the community, started an interactive and engaging monthly newsletter with tons of content, did a fresh photo shoot, collected data and started doing digital ads AFTER all the basics were covered.
The ads themselves, as mentioned, are fairly simple. We do 3 campaigns, 1 for general reservations, 1 for birthdays and 1 for anniversaries. We pick birthdays and anniversaries as we know for the most part, people celebrate their anniversaries and birthdays so those are low hanging fruit. Birthdays also have the added advantage that they are usually are larger group reservations. The general reservations is so we can get butts in the seats on a consistent basis.
We typically set the radius at 2-3 miles from a venue (when in a densely populated area) and about 10 miles in lesser density areas. We don't want to waste ad money so we go on the sure things. We target people that eat out and visit restaurants frequently both online and in real life. We use spending habit patterns as a behavioral targeting condition. We also target the age and income level based on the restaurant.
In this case study, for the general reservation campaign, we did a 2 mile radius from the address of the restaurant, targeted 25-65yo that make an average of $70,000 or more a year, had an interest in restaurants and fine dining and spend over $300 a month in sit down restaurants.
For Birthdays, we changed it to 24-65yo that make an average income of $40,000 or more a year, had an interest in restaurants and that had a birthday in the coming 2 weeks. The reason we lower the threshold is that we found that even people with less disposable income will splurge on a birthday.
For anniversaries, we kept it at 25-65yo with an average income of $50,000 or more a year, had an interest in restaurants and who had an anniversary coming up within 30 days. Again the reason for the decrease in revenue is that we find that people will go outside their comfort zone for anniversaries.
In every case, we never target a person that is a regular or likes the restaurant's social media.
We only display Facebook Ads on Facebook. If we want to run ads on Instagram, we will do specific ads for Instagram. We find that it is best to optimize your ad to do something really well on one platform than to do average on multiple platform.
Our favorite type of ad is video but most restaurants do not have budgets to do videos so we suggest they invest in a great photo shoot (1 great content shoot will generate 250-300 pictures - enough for a whole year of content) and we do slideshow ads with captions.
We recommend keeping the text outside the captions to a minimum, put a CTA of Book Now and encourage people to book or visit the website.
For this case study, all three were slideshows with captions. The slideshow is 7 pictures of 2 seconds each, square format with a fade changeover. There are 6 captions for the 7 pictures, the last caption stays on for the last 2 photos (so 4 seconds) and is the call to action. The text outside of the captions is quite simple, for general reservations, we put "Welcome to xxxxxx, click to book a reservation or for more info". For anniversary and birthday campaigns, the text simply says "Celebrate your Birthday/Anniversay in Style at xxxxxx. Click for reservations or for more info."
Important to note that we monitor the ads on a daily basis and tweak them as needed, we always keep a relevance score of 9 or 10.
Advertising your restaurant is protecting your initial investment. That is simply what it is, it is often forgotten but it is surely needed, especially if you want to the be the market leader and dominate the region. The way you do advertising is how a great culinary experience should be. A great experience includes a warm welcome, attentive service, a great ambiance, amazing app, main, dessert and a comprehensive wine list that is explained by a knowledgeable Sommelier. If anything goes amiss, the whole experience can go amiss. Digital Media and Digital advertising is the same. Sure if you do one thing it can work but you may be swimming up river, if you have a strong foundation and a 360 approach to your brand and marketing, you will have exponential results and each result will feed on each other.
In this case, this restaurant did not start doing any advertising until it had a beautiful, well SEO'd website with easy CTA to reservations, a comprehensive Social Media strategy, great ratings on each review platforms, consistent and fast community management, email collection portal, great marketing assets and photography, a newsletter with amazing content, a reporting tool and strategic plan on how to accommodate the increasing guest count.
Once the restaurant had all those things in place, it increased revenue by 15% without doing advertising. With the advertising, it increased another 23%.
For all the above services and a bit more as well as the total cost of their digital advertisement, the all in cost of this restaurant is under $2000 per month (1320 pro rated on 20 days). The increase in revenue based on their average spend per cover of $53, the restaurant increased its revenue by $35,139.00 in the first 20 days of January. The pro-rated ROI on this is 26.62:1. I must remind you that this is also the supposedly dead season for restaurants.