What Is Average Restaurant Marketing Budget Breakdown? + [Plan/Template]

In 2016, Domino’s launched an innovative marketing campaign to attract younger demographics who prefer online ordering. The campaign allowed potential customers to order pizzas entirely through emojis! Domino’s partnered with Twitter to develop a custom emoji keyboard featuring various pizza ingredients and functionalities. Users could tweet their pizza orders using these emojis, with Domino’s interpreting and fulfilling them.

The campaign was a massive success! It generated significant buzz on social media. The campaign garnered over 25 million online mentions, with a 20% increase in online orders in the first month and an 8% rise in sales within the first quarter. They spent 33.5 million US dollars on marketing in 2016 and kept increasing their budget until 2018 to acquire a dominant position in the U.S. market.

This is a classic example of a creative and targeted marketing campaign to boost restaurant sales and brand awareness among existing customers.

Of course, not all restaurants can afford to go for mega advertisements like Domino’s, but it’s not about deciding on the ideal marketing strategy alone. Restaurants also struggle to decide on the right budget for their preferred marketing strategies.

Read this blog to understand various possibilities of restaurant marketing plan, know how much money each method of marketing requires, and learn effective budgeting methods to craft a plan that maximizes your marketing investments according to your business objectives and fuels your restaurant’s success.

Explore popular restaurant marketing channels tailored to the restaurant industry now!

What is Restaurant Marketing Budgeting?

Restaurant’s Marketing Budget (RMB) is the process of allocating financial resources to promote your restaurant and achieve specific goals. It helps you create a roadmap for your marketing efforts so that you spend wisely to attract customers and boost your bottom line.

Importance of Restaurant Marketing Budget:

A well-defined RMB allows you to prioritize initiatives that align with your business goals to fuel strategic growth.
RMB helps you track your spending and measure the ROI of your campaigns to optimize future efforts with ease.
A clear budget prevents impulse spending and keeps you focused on cost-effective strategies.
Market expenses can quickly spiral out of control. RMB sets spending limits and allows you to forecast marketing costs within your financial plan.

How much should a restaurant spend on marketing?

Though there is no definite answer, experts recommend considering 3-10% of sales as a common benchmark. New restaurants or those in competitive markets might allocate closer to 10% of their total sales.

Budget Breakdown: Digital Vs Traditional

The allocation between digital and traditional marketing depends on your target audience and marketing goals. Here is a flexible approach:

Digital marketing (50-70%)

SMM (organic and paid)
Website optimization and online ordering
SEO and PPC advertising
Email marketing and loyalty programs

Traditional Marketing (30-50%)

Public relations and media outreach
Print advertising (flyers, menus)
Local sponsorships and community events
Signage and in-store promotions

Buffer or Unexpected Expenses (5-10%)

It is also imperative to allocate a buffer to handle unforeseen opportunities or marketing needs such as:

Responding to negative reviews
Special promotions
Capitalizing on seasonal trends

Factors Influencing Restaurant Marketing Budgets

1. Social Media Budget

Surprisingly, 94% of diners look for reviews before trying out a new restaurant. In this regard, social media platforms are credible sources of review. Around 82% of restaurants in the United States leverage social media channels to promote their services. Organic promotion is free but it takes a few months to generate results. On the other hand, paid ads can bring instant traffic with CPC varying between $0.50 – $2.00 per click on your ad.

Influencer marketing can offer a competitive advantage as well. The pricing can change based on the level of influencer you’re hiring for the job. For instance, nano-influencers (<10K followers) might charge $10-$100 per post, whereas mega-influencers (500K+ followers) might charge $10,000+ per promotion.

2. Google & Search Engine Ads

According to the Global Search Network, 63 out of 100 people have clicked on Google Ads. That’s why businesses (including restaurants) spend seven times more on PPC (pay-per-click) than SEO (search engine optimization). Google Ads work in two basic ways: search ads and display ads. Search ads are more expensive than display ads yet offer an immediate return on investment. Here is a quick comparison of different ad metrics for Search Ads and Display Networks for the hospitality industry as per Wordstream.

	Google Search Ads	Google Display Network
Click Through Rate (CTR)	4.68%	0.47%
Cost Per Click (CPC)	$1.53	$0.44
Cost Per Acquisition (CPA)	$44.73	$99.13

3. Website Optimization and Online Ordering

To make the best use of your digital marketing efforts having a well-optimized website & online ordering system is of utmost importance, after all, once your potential customers click on any add/post they should be redirected to either your website that lets them explore your menu and place orders, or directly take them to your online ordering system that takes their order.

The cost of building a restaurant website varies, with DIY website builders costing $0-$80 monthly, while hiring a professional could range from $500 to over $5,000. Costs depend on complexity, features, and ongoing maintenance, with an average spend of $1,000 to $3,000 for a site with moderate features. Beyond the initial setup, there are hidden costs for website maintenance, hosting, domain registration, SSL certificates for security, and potential fees for online ordering systems or reservation platforms.

4. Email Marketing & SMS Marketing

Do you know restaurants make $36 profit for every $1 spent on email marketing against an ROI of $2.80 on social media marketing? Creative email campaigns can be a great way to engage users. It’s not possible to send emails to each subscriber manually. So, when you leverage email marketing software, the subscription price increases with increased subscribers. The average price range for email marketing software is shown in the table below.

List Size	Price Range	Average Cost
0 – 1000	$0 – 39	$18
5000	$0 – 99	$62
10K	$25 – 155	$100
50K	$45 – 345	$270
100K	$65 – 540	$420

Reference

SMS marketing is a great tool to run promotion campaigns, build loyalty, and receive customer feedback. Costs range from a few cents per message to $50-$500 monthly, depending on message volume and platform features, with the potential for high engagement and return on investment.

5. Community Events & Sponsorships

Regarding community events and sponsorships, various factors come into play. For instance, sponsoring a charity bake sale will cost much less (Free – $500+) than becoming a main sponsor for a local music festival ($1,000 – $10,000+).

Also, the target audience is crucial. Events with your ideal demographic will require a higher budget than a mixed audience demographic. You should also consider the additional restaurant marketing costs apart from sponsorship fees. For example, promotional materials may cost you another $50-$100. If you’re providing food or drinks at the event, it is also imperative to factor in the costs of ingredients, preparation, and staff wages.

6. Video

As per a survey, nearly 80% of consumers love watching restaurant-related video content on their social media feeds. That shows the ROI potential of a well-planned video marketing strategy for restaurants. If you’re outsourcing the task to a video production team, the average cost of video production for restaurant marketing can range between $500 to $3,000, depending on length and quality. For instance, if you’re aiming for Shots on YouTube or Instagram, it can cost around $500, and each additional minute will cost you a few dollars. However, it might involve additional costs as well. If you’re planning on hiring an on-camera talent, prepare to add a few hundred dollars extra to your budget.

7. Print Ads

Print ads have always successfully attracted potential business customers. You will be surprised that 73% of consumers prefer receiving print advertisements, and 82% trust print advertisements to make their purchase decisions. If executed correctly, print ads can fetch a whopping 112% ROI for restaurants, making it the most cost-effective way to increase sales.

Allocate your restaurant marketing dollars strategically by considering the effectiveness of paid advertising through print media, alongside other marketing tools such as search engines optimization, to maximize your reach and impact.

There are different levels of print advertisements. Low-end small B/W ads on local newspapers or community flyers can cost between $200 – $500. The same ad in color may cost between $1,000 – and $3,000. If your marketing budget for the restaurant is high, you can opt for a full-page color ad in a national magazine for $5,000+ minimum.

8. Loyalty Programs

Nearly 41% of consumers feel encouraged to visit restaurants when entitled to loyalty programs. However, running loyalty programs requires strategic budget allocation without hurting your restaurant’s financial bottom line.

New restaurants with limited budgets use simple point-based programs with basic rewards like discount coupons, free items, complimentary mocktails, etc. On the other hand, if you have a good budget, you can choose to go with tiered loyalty programs that offer free meals, merchandise, or passes to exclusive events to enhance customer experience. Additionally, you have to run the entire program through a software application and promote it on social media for marketing. The software cost might range from $100/month with basic features to $1,000+/month for advanced features and integrations. Additionally, as previously discussed, the marketing cost can range from $50 – $500+ per month, depending on chosen marketing channels.

How can you calculate the budget you require?

There are different methods of calculating your restaurant marketing budget. Let’s briefly understand them.

1. Percentage of Sales Method

This is a revenue-based budgeting approach where a fixed percentage of your projected sales revenue is used for marketing. For instance, if you plan to make sales worth $10,000 and allocate 20% (fixed) of your total sales into marketing, you will spend $2000 on various marketing channels. That means your marketing budget will be proportional to your sales performance. The percentage can be determined based on industry benchmarks, historical sales data, and your data-driven niche market insights. As it is simple and easy to use, many small to medium-sized restaurants opt for this method.

2. Goal-Based Budgeting

As the name suggests, under this marketing strategy, you allocate funds for marketing based on measurable goals/objectives rather than sales revenue or projection alone. It is also known as the objective task method of budgeting. There are three steps to objective-based budgeting.

For instance, your goal is to boost restaurant sales by 10% by the end of the next quarter. Then you might discover that the restaurant business has to place 3 ads per week, for the next twelve weeks in seven local newspapers. If each advertisement costs $100, the average marketing expenditure for the restaurant would be $25,200.

3. Competitive Analysis

If you don’t want your restaurant to be out-advertised by your competitors, consider their advertising spending as a benchmark to decide your marketing budget. This is called competitive budgeting analysis. You can consider analyzing direct competitors (restaurants with similar cuisine and price points), and indirect competitors (different niche restaurants with the same demographic). It might take you to run through competitor websites, social media campaigns, customer reviews, and loyalty programs to develop unique marketing USPs for customer acquisition. Alternatively, it could be passive marketing, like matching competitor pricing for key menus or offering competitive wages to attract and retain staff.

4. Zero-Based Budgeting

Zero-based budgeting starts from scratch and forces you to justify every single cost for an upcoming period, like a month or year. This budgeting method will be your best bet to streamline your restaurant marketing spending and maximize its efficiency. So, the core concept is that every expense category of your marketing begins with a zero budget. For the expense category, you must build a case for why that funding is necessary and how much of the budget is required. This justification aims to encourage management to evaluate spending critically.

This method of budgeting has numerous advantages. As your team is forced to scrutinize every marketing expense, it potentially leads to great cost savings. It also improves process efficiency as the team critically evaluates where resources are underutilized or wasted. However, it’s a strategic process requiring collaboration from all departments to review expenses comprehensively.

5. Return on Investment (ROI)-Focused Budgeting

This approach ensures your marketing budget is directly tied to achieving measurable results and maximizing the financial benefit of every dollar spent. The scope of results should be realistic, such as increasing sales by 10%, improving customer retention by 20%, or reducing food costs by 15%.

Restaurants managing their budget on this method continuously implement various mechanisms to track ROI. This might include analyzing sales data, reviewing customer loyalty program metrics, or monitoring food costs through inventory management software. As this budgeting method relies on data-driven metrics, it directly contributes to the restaurant’s financial bottom line.

How to Allocate Budget to Marketing Channels?

With so many marketing channels to try, deciding on budget allocation for various marketing campaigns may feel overwhelming. How much do restaurants spend on marketing channels?

You can try the 70/20/10 method, and find the perfect balance between your tried-and-tested restaurant marketing strategies, and new ideas.

Allocate 70% of your budget to the tried & trusted, conventional marketing methods that have worked well for you earlier. Keep 20% of your budget to continue the campaigns that were recently launched but were not prioritized in the past and 10% to fresh ideas. (Keeping this approach in mind will help you ensure consistent results with the flexibility to try new things)

Here is a restaurant marketing budget breakdown to help you get started.

Marketing Medium	Budget allocation
Online advertising	25%
Print Ads	10%
Social media marketing	15%
PR and brand awareness	10%
Email marketing	10%
Events or sponsorships	10%
Loyalty programs	10%
Video Marketing	10%

This is only a reference to help you assemble your restaurant marketing budget. The ideal budget distribution may vary depending on your marketing goals and needs.

We’ve designed a template to analyze your current channel spending and forecast your budget based on your desired spending percentage. Click on Download now to get started!

Creating Your Restaurant Marketing Budget: A Step-by-Step Guide

Here is a quick guide to building a marketing budget to attract hungry customers.

Step 1: Define Your Buyer Persona

Who is your ideal customer? List every key factor such as age, demographics, interests, and online behavior. Identifying your buyer persona will help you tailor marketing messages to target through the most effective channels.

Step 2: Set SMART Marketing Goals

Specific: Be specific about your goal (e.g., increase online orders by 20%).
Measurable: Identify metrics to track progress such as website traffic, conversion rates, etc.
Attainable: Set realistic goals that stretch you but are achievable.
Relevant: Create marketing goals that align with your overall business objectives.
Time-bound: Be serious about achieving goals within set deadlines.

Step 3: Research Marketing Costs

Explore different marketing channels (digital and traditional) to understand their effectiveness for meeting your marketing goals. We have already discussed how to plan your budget for marketing through different mediums. Additionally, consider getting your final budget plan reviewed by an expert to further optimize costs for maximum ROI.

Step 4: Factor in Seasonal Marketing

Keep some buffer for seasonal marketing during summer, winter, or other holidays. A buffer amount will help with those marketing pushes during slower periods or capitalize on seasonal ingredients with targeted promotions.

Step 5: Choose Your Budgeting Method

Decide whether you want to go ahead with revenue-based marketing or goal-based marketing. The former would require you to allocate 3-10% of your sales into marketing to meet simple goals. This is an ideal way of budgeting when you’re just starting with no clearly defined marketing goals. On the other hand, go with the goal-based method when you have a clearly defined SMART goal to achieve.

Step 6: Track Performance, Analyze ROI, and Adapt

Once you roll out your marketing campaigns, constantly review sales reporting and analytics on your restaurant POS. Calculate the ROI of your marketing campaigns using any one of the following two methods:

ROI = Net return on investmentCost of investment 100%

ROI = Final value of investment – Initial value of investmentCost of investment 100%

Finally marketing ROI = Gross ProfitMarketing Expenses

Periodically monitor your ROI and be willing to adjust your budget allocation based on what’s working and what’s not.

Compliance and Legal Considerations in Restaurant Marketing Budgeting

Truthful Advertising

Budgeting is just about allocating resources. Remember, there are legal and compliance aspects to consider as well. For instance, according to the FTC regulations, all your marketing claims should be truthful and not misleading. You need to mention all terms and conditions for discounts, specials, or loyalty programs.

Food Labeling and Claims

Also, according to the FDA regulations, any health claims about your food (such as low-fat or heart-healthy) should comply with FDA labeling requirements. Every description on your menu should accurately reflect ingredients and avoid using misleading terminology.

Data Privacy Compliance in Online Marketing

If you’re going for influencer marketing, make sure, you disclose sponsored content on social media platforms. It is also imperative to comply with data privacy regulations like the General Data Protection Regulation (GDPR) if you collect customer information for marketing purposes.

Final Thoughts

The restaurant marketing budget is strategic work. There is no one-size-fits-all approach. Some big brands may utilize up to 50% of their gross profit on their marketing efforts, while small, local diners may only manage 3% of their profit. In this regard, utilizing objective-based, competitive analysis and ROI-focused budgeting can ensure your resources are allocated effectively. A lot of factors may surface during budget preparation with these methods. All it takes is to understand the effectiveness of different marketing channels for your restaurant and decide the ideal budgeting method to allocate funds for your chosen strategies. The budget allocation table will clarify how to prioritize your budget distribution for maximum effectiveness. However, remember, you can always tailor your budget distribution to your specific needs to maximize your marketing impact for your restaurant.

Frequently Asked Questions

1. How much should a restaurant spend on marketing?

Restaurants usually spend 3-6% of their total sales on marketing. However, new or growing establishments might invest more (around 6-10%) to build their presence.

2. What is the average budget for marketing?

For most industries, the average marketing budget ranges from 7-10% of the company’s total revenue, with some changes based on the business stage and sector.

3. What should be in a marketing budget?

A marketing budget should encompass costs for digital marketing, traditional advertising, promotions, events, staff, and any tools or software used for marketing purposes.

4. What is an example of a marketing budget?

An example: A restaurant with $500,000 in annual sales allocating 5% ($25,000) to marketing, dividing it among digital ads, social media, event sponsorships, and print advertising according to their requirements and objectives.

5. How much does advertising cost for a restaurant?

Advertising costs vary, with digital ads costing a few hundred to thousands monthly, and traditional media ads (radio, TV) potentially reaching higher, depending on the scale and reach.

6. What is a typical marketing budget for a start-up?

Start-ups often spend a higher proportion, around 12-20% of gross revenue on marketing, as they focus more on brand establishment.

7. How much do fast food restaurants spend on advertising?

Major fast food chains can spend hundreds of millions annually on advertising for example – Domino’s, while smaller chains and independent restaurants will have lesser budgets.

8. How much do small restaurants spend on advertising?

Small restaurants may spend anywhere from $2,000 to $10,000 monthly on advertising, depending on their marketing strategies and target audience and their total monthly sale.

9. What is the budget portion of a marketing plan?

The budget portion outlines the financial allocation for all marketing activities planned over a period, detailing costs for campaigns, materials, and external services.

10. How much does a restaurant pay for advertising?

The amount varies widely, from a few hundred dollars a month for digital marketing efforts, to larger sums for broad media campaigns.

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What Is Average Restaurant Marketing Budget Breakdown? + [Plan/Template]