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Did you know that about 60% of restaurants fail within their first year of operation?
It’s a sobering statistic, isn’t it?
Even if you’re serving up mouthwatering dishes that would make Gordon Ramsay shed tears of joy, success in the cutthroat restaurant industry isn’t guaranteed.
Without a solid marketing strategy and the funds to back it up, your culinary masterpieces could easily get lost in the sea of dining options.
So how much should you be spending on marketing? And, where should you allocate those precious dollars for maximum impact?
In this comprehensive guide, we’ll dive into the nitty-gritty of restaurant marketing budgets and industry benchmarks, providing actionable strategies to help you optimize your spending.
Here’s a breakdown of the average restaurant marketing budget based on industry benchmarks and other elements:
On average, the marketing budget for restaurants hovers around 3-6% of total revenue.
This range is often cited as a general guideline.
Remember that your specific marketing spend may differ based on various factors (more on that later in this post).
For instance, a newly opened eatery might want to allocate more than the national average to create brand awareness and establish its presence in a competitive market.
On the flip side, an established restaurant with a loyal customer base could potentially get away with spending less on marketing, at least for a while.
The takeaway?
Don’t treat that 3-6% figure as gospel. It’s a useful benchmark, but your restaurant’s unique circumstances should ultimately dictate how much you shell out for marketing.
The ideal marketing budgets differ across restaurant segments and geographies. Let’s break it down.
Fast casual chains like Panera Bread or Chipotle hover around 2-4% on average. These restaurants rely heavily on brand recognition and convenient locations to draw customers in.
Thus, they divert less of their budget to external marketing and more toward high-quality ingredients and services, which essentially market themselves.
Still, new fast-casual locations in saturated markets may rely more heavily on grand opening promotions to stand out early on.
QSRs, like your favorite burger joints and pizza places, typically allocate a higher percentage of their revenue to marketing.
With a median spend of 4.6%, these establishments focus heavily on local store marketing and digital advertising to drive foot traffic and online orders.
For example, pizza chains like Papa John’s and Domino’s often spend more than 6% of their sales on marketing to stay ahead in the competitive fast-food landscape.
Coffee shops and bakeries tend to spend the least on marketing. They contribute an average of 2.6% of sales to marketing efforts.
These businesses often rely on word-of-mouth, local store marketing, and social media to attract customers.
Industry experts suggest that new restaurants allocate 25-35% of their gross revenue to marketing in the initial stages.
In a highly competitive area, this leans towards the higher end of that range. Think of it as an investment in your future success.
Established restaurants should aim to spend 12-18% of their gross revenue on marketing. The exact percentage depends on factors like competition and profit margins.
If you’re operating with a slim profit margin, you might need to spend more to stay competitive.
Michelin-starred restaurants and upscale steakhouses cater to a high-end clientele.
Though there are no direct statistics on the marketing budget for such establishments, branding and reputation are everything for them. Thus, they invest heavily in experiences to attract their target audience.
Population density, demographics, tourism levels, and competitive landscape all impact optimal marketing budget allocation.
Here’s an overview:
Restaurants in big cities like New York, Los Angeles, and Chicago face fierce competition. Thus, they often need to allocate more of their budget to marketing. The high cost of living and business in these areas can also drive up marketing expenses.
In big cities, restaurants might spend closer to 10% of their revenue on marketing. This budget can cover a mix of digital advertising, local sponsorships, etc, to stand out in a crowded market.
The competitive set is likely more manageable in suburban strip malls and office parks. Lower rent costs free up more dollars for marketing tactics like direct mail postcards, community event sponsorships, and local TV or radio ads.
Successful suburban restaurants rely heavily on retention marketing to nurture repeat business. We estimate that 4-7% goes toward marketing here.
Restaurants in rural areas often have lower marketing costs due to less competition and lower advertising rates. Here, restaurants can ideally spend around 3% to 5% of their revenue on marketing.
This budget can be used for local newspaper ads, community events, and social media campaigns targeting nearby towns.
At Restaurant Growth, our data-backed marketing solutions are tailored to help restaurants of all types and sizes maximize ROI.
We take care of the heavy lifting so you can focus on delighting patrons with irresistible cuisine and hospitality.
A restaurant’s marketing budget depends on several pivotal factors. When determining an appropriate level of investment, it’s important to analyze:
QSRs, fast-casual chains, and independents—marketing budgets fluctuate across restaurant types. Generally, larger enterprises and multi-unit brands allot more funds compared to single-location, mom-and-pop shops.
The bigger the brand, the greater the budget.
However, for smaller restaurants, marketing remains crucial and should still receive adequate attention.
Understanding your core customer is step one. Based on factors like age, income level, values, and behaviors, certain tactics may better capture their attention.
A restaurant catering to college students may emphasize social media and influencer marketing over print and radio ads. Ultimately, the marketing mix must align with the target demographic.
The number of restaurant options in an area also impacts marketing strategy and budgets.
Places with minimal competition may not demand aggressive tactics. But in dense, urban locations fighting for customer acquisition and retention – the marketing battle rages on.
Marketing initiatives should align closely with your business objectives, whether those are increasing annual sales, traffic goals, or enhancing brand awareness.
Your budget should fuel key strategies to meet growth targets, whether that’s boosting community engagement or acquiring new customers through geotargeted social advertising.
As goals shift, marketing investments should, too.
Instead of relying on static budget levels, use data-driven insights to guide your optimal marketing spend.
Creating a marketing budget can feel overwhelming. But by following a few key steps, you can craft a budget that sets your marketing up for success:
Start by looking at numbers from the past year. What was your annual revenue? How much did you spend on marketing initiatives like social ads or printed menus?
Crunch these numbers to calculate your marketing ROI.
If you spent $5,000 on Facebook ads and earned an extra $15,000 in revenue, then your ROI was 300%.
Analyzing these metrics shows what worked previously and where there’s room for optimization. Use this info to shape future budget decisions.
With current metrics and historical data in hand, you can now define targeted marketing goals for the next 12 months.
Using the SMART goal framework sets you up for success:
✅Specific – Get 50 new email subscribers per month
✅Measurable – Increase Instagram followers by 20%
✅Achievable – Generate five new positive online reviews per quarter
✅Relevant – Drive $2000 per month in gift card sales
✅Time-Bound – Boost website traffic by 30% by Q4
Setting clear objectives aligned to business growth makes it easier to allocate budget, track progress, and demonstrate marketing’s impact.
Say you’re the owner of a cozy neighborhood bistro that raked in $1.2 million in revenue last year. Following the 3-6% guideline, your marketing budget for the upcoming year could range anywhere from $36,000 to $72,000.
A pretty wide gap, right?
To narrow it down, you’d need to consider factors like:
Once you’ve weighed all these variables, you can settle on a specific percentage that makes sense for your business.
Going by the above hypothetical estimate of $1.2 million in revenue, let’s say you decide to allocate 4% of revenue to marketing. This comes out to $48,000 for the year (or $4,000 per month).
From there, you’d need to determine how to divvy up that $48,000 across various marketing channels and initiatives.
Maybe you’ll spend $1,000 a month on social media advertising, $1,500 on email marketing, $500 on local print ads, and so on.
The key is to continuously monitor the performance of each channel and adjust your spending accordingly.
Streamline your budget planning and ensure every dollar is spent effectively.
🎁Download your FREE Restaurant Marketing Budget Template by Business.com!
Once you’ve settled on an overall budget based on benchmarks for your restaurant type and location, it’s time for the fun part—figuring out how to divide the funds!
Here’s a quick cheat sheet on how to allocate a marketing budget for a restaurant:
➡️ Paid Ads [30-50%] – This includes search, display, and social media advertising
➡️ Website [10-20%] – Invest in design, development, hosting, SEO, and analytics
➡️ Social & Content [15-25%] – Focus on organic social media, email marketing, PR, and creative assets
➡️ Offline Efforts [5-15%] – Covers print, mailers, signs, sponsorships, and community events
Within that framework, day-to-day and month-to-month allocations will shift depending on your current initiatives and seasonal demands.
Just keep a close eye on performance and continuously optimize based on data and response rates.
Once your marketing activities kick-off, be diligent about tracking performance.
Monitor metrics like website traffic, online bookings influenced by ads, and social engagement.
Compare these against your identified goals and adjust budget allocations accordingly.
For example, if a social contest drives 1000+ new followers for $100, keep funding it! But if a $500 mailer only gets 10 bookings, reconsider spending.
Refine based on ROI data, not guesses. This allows you to optimize budget distribution across top-performing initiatives.
Following these steps helps streamline building your annual marketing budget.
Of course, expert guidance can simplify things further. Marketing agencies like Restaurant Growth specialize in creating data-driven marketing budgets tailored to help restaurants like yours thrive.
Here are some tips to help you nail budget adjustment:
You can’t improve what you don’t measure. Keep a close eye on your marketing metrics, from website traffic to social media engagement. Use tools like Google Analytics to see which channels are driving the most reservations.
According to a study by Toast, restaurants that track their metrics are more likely to be profitable.
You can also use premium analytics tools such as Restaurant Growth’s in-house dashboard. It can help you track each and every penny spent on your marketing efforts and see the return on investment.
Be ready to shift your budget to the channels that are delivering results.
For example, if your Facebook ads are falling flat, but your email campaigns are killing it, it’s time to double down on those newsletters.
Try A/B testing different ad copy, images, and targeting to see what resonates with your audience.
Even small tweaks can make a big difference in your ROI. In fact, a study by Invesp found that A/B testing can increase conversions by 25%.
Acquiring new customers is important. But don’t neglect your loyal patrons.
According to a study by Bain & Company, increasing customer retention by just 5% can increase profits by 25% to 95%. Use your marketing budget to reward your regulars with exclusive offers and personalized experiences.
Monitor your competitor’s marketing efforts and adjust your budget accordingly. If they’re doubling down on Instagram, you might want to do the same.
But don’t just copy them – find ways to differentiate yourself and stand out from the crowd.
Want to take your restaurant’s marketing to the next level? Restaurant Growth can help.
Our team of experts will work with you to create a custom marketing plan that delivers results. From local search ads to mouth-watering display advertising, we’ve got you covered.
To recap, an average marketing budget of 3% to 6% ideally aligns with restaurants’ unique goals and available resources.
However, there is no one-size-fits-all approach to creating a marketing budget for your restaurant. Thus, it is important to invest some time and resources into creating an effective plan.
Remember, a well-planned marketing budget is an investment in your restaurant’s future.
By taking the time to create and manage your budget effectively, you can set your restaurant up for long-term success in an increasingly competitive industry.
Restaurant Growth creates budgets that stretch your investment through analytics-based optimization. We consider emerging formats like geo-targeted social ads, unlocking exposure, and engagement.
Through continuous evaluation of performance data and customer insights, we adjust allocations across channels to accelerate growth.
The bottom line?
Prioritizing marketing investments generates a loyalty loop, fueling referrals and retention. By strategically spending today, your restaurant secures sustainable success tomorrow.
Let our budget mavens create a marketing plan to help you maximize your marketing dollars.
Book a consultation with our marketing experts today!
A good marketing budget for a restaurant typically ranges from 3-6% of total revenue. This allows for a balanced approach to promoting your brand and attracting customers. Consider your specific goals, target audience, and competition when determining your budget.
A reasonable marketing budget for a restaurant depends on various factors, including your location, target market, and overall goals.
As a general rule, allocating 3-6% of your total revenue to marketing is a solid starting point.
For small businesses, including restaurants, a marketing budget of 7-8% of total revenue is often recommended. This slightly higher percentage allows you to establish your brand and gain a foothold in your local market.
Focus on cost-effective strategies, such as social media marketing, Google Business Profile optimization, and targeted email campaigns. As your business grows, you can adjust your budget and explore additional marketing channels.
Restaurant advertising spending varies widely based on factors such as location, target audience, and business size. On average, restaurants allocate 3-6% of their total revenue to advertising efforts.
This can include a mix of traditional (e.g., print ads, billboards) and digital (e.g., social media ads, Google Ads) channels. The key is to find the right balance that works for your specific restaurant and market.
New restaurants should allocate a higher percentage of their revenue to marketing in their first year – typically around 10-15%. This increased investment helps establish brand awareness, attract customers, and generate buzz.
Focus on a mix of grand opening promotions, local PR, social media advertising, and community engagement. As your restaurant gains traction, you can gradually reduce your marketing spend to a more sustainable 3-6% of revenue.
A typical marketing budget for a small restaurant is around 3-6% of total sales. This means if your restaurant generates $500,000 in annual sales, you should allocate $15,000-$30,000 for marketing.
However, this can vary depending on factors like location, competition, and growth stage. New restaurants often spend more (up to 10%) to establish their brand and attract customers.
When it comes to allocating your restaurant’s marketing budget, it’s all about balance. You want to spread your funds across various channels to maximize reach and impact.
A good rule of thumb is to allocate:
From strategic marketing planning to seamless execution, we’ve got you covered!
