Q: My business is growing sales at 2-3% annually only because of price increases. As I’ve raised prices guest counts are dropping.  I don’t think I have any room to increase prices and the cost of running my business continues to escalate. What is the next move to make? 

A: While the economy continues to expand, the workforce has gotten more expensive, commodity prices are on the rise and inflation is knocking at the door for nearly everything else. Add to that the noise a restaurant is competing against such as grocery store prepared food programs, box and delivered meal programs, in home third-party delivery, and new restaurants sprouting up, competition for guest counts is stiffer than ever. If 20-40% of sales come from new or infrequent guests it’s time to yell louder and drive new guest acquisition which, if attracted and converted to regulars, replace lost guest counts. To acquire new guests consider the following:

Act like your livelihood depends on it

When a restaurant gets a makeover on the Food Network, what happens to that location? The star of the show beats the street with a megaphone and screams to the community a makeover is on the way. He/she puts the restaurant back on the map by providing all the social media and local media possible to fill the restaurant and give it another chance. New restaurants tend to be in the community building momentum by marketing and selling the concept to others and building buzz. Building that momentum takes effort and getting outside the four walls. A new restaurant, before opening, doesn’t have four walls to distract from the task of building excitement and winning new guests. Get out of the restaurant and connect to influencers. Take the approach that your restaurant is going to close if new guests are not coming in. Get desperate.

Own your community  

Spend at least one day per week in the community. Join the chamber of commerce to stay in the know and connect with area businesses. Hold fundraisers for local schools and causes people care about. Visit area businesses and offer to host a happy hour at a mutually convenient time to get crowds of people in, every business is a target. Develop a concierge program for the local hotels and reward the concierge well for sending guests to the restaurant. Hold charity donation events by partnering with popular charities particularly tied to something your community cares about greatly. Send a personal letter to people new to the area inviting them in for a visit. Be seen and heard in your community.

Be in the conversation  

According to Nielson Global Survey of Trust in Advertising, 84% of word of mouth advertising from friends and family is considered the most trustworthy of all advertising. With 10 conversations about food taking place around the water cooler in the workplace, being part of the conversation with great brand awareness will be integral to new guest acquisition. Give them something to talk about.

Be socially active

Facebook, Twitter, and Instagram are the social platforms of today. Who knows what’s coming tomorrow but using these social networking platforms actively is a must. Be interesting. Put people into posts not just another boring picture of food or drink. Create emotion by posting beautiful pictures. Highlight food and beverage in the moment with video featuring the chef or mixologist making the product and explaining what is being prepared. Use a product like GoPro to make inexpensive, authentic videos that resonate with the public. If a post were to be shared and re-shared by 250 people the multiplier would be well over 50,000 people that see it.

While raising prices is an immediate impact to sales, restaurant prices tend to be elastic or sensitive to increase with an adverse effect on product demand and, therefore, are finite. It’s important to do more than talk about lost sales and all the competitive issues, it’s time to do the work and fight for your business. To keep sales growing take a new restaurant, “your life depends on it”, approach by focusing on driving new guests into the restaurant then converting them to regulars.

For a more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, a Seattle restaurant accounting and consulting firm specializing in helping companies grow profitability.