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Rhode Island Hospitality And Tourism Association Presentation

By Rick Nagele
President, Advantage Marketing Information

Transforming Research Into Insight

Advantage Marketing Information
35 Steamboat Avenue - Historic Wickford, RI, USA 02852
(401) 294-6910 | Fax (401) 294-6661
Affiliated Offices: Pasadena, Calif., USA and Niigata City, Japan

Rhode Island Hospitality And Tourism Association
Rhode Island Convention Center Presentation
May 4, 2004

By Rick Nagele
President, Advantage Marketing Information

In Rhode Island, we live in interesting times.

Big budget deficits that could impact the taxes we pay, the services we receive, and the fee structure of every interaction with state and municipal governments.

Housing costs that are increasing at such a rate that many of our employees can no longer afford to live near our properties.

Our market place has never been more competitive. Hotels are sprouting up like weeds in the springtime in West Warwick, Warwick and Providence. New restaurants are opening their doors – it seems – almost daily. Of course, this seems normal now.

Immigration continues to change the nature of our workforce – if we can find one at all for many of our jobs.The fire code and terrorism. And all the issues this raises.

And with the stroke of a pen, what was once illegal may become legal. The level playing field may cease to exist. Millions of dollars in investment based on what was thought to be a quantifiable reality may be put at risk in a change as big as prohibition. Casino gaming.

Not all is doom and gloom. The economy never got as bad as the critics suggest. And it’s improving. The baby boomers have money and are spending it in our restaurants and on travel.

What do we do locally to take advantage of the positives in the situation and better prepare ourselves to deal with the negatives?

You may have heard the following conversation at some point in your life:

Q: What is the secret of success?

A: Success comes from good judgment.

Q: Well, where does good judgment come from?

A: Good judgment comes from experience.

Q: OK, but where does experience come from?

A: Experience comes from bad judgment.

I don’t know about you, but when it comes to my restaurant, I’m pretty tired of just volunteering for yet another valuable learning experience. So what to do?

The smartest restaurant people I know offer what amount to three recommendations:

1) Know the numbers

2) If you’re not a marketer, become one. If you are a marketer, re-focus…and as Emeril says,
“Kick it up a notch”

3) Ask questions and change things. Change based on strategy. But change.

Remember the an old saying, “If you outgo exceeds your income, your upkeep will be your downfall.”

Know the numbers: Think through the opportunity.

What’s the potential? What are the costs?

Lead your staff to help you manage the costs.

As part of your participation here today, anyone who wants one will get an information package about their site. This will include a restaurant potential report for the area immediately surrounding their site, the demographics of the residents, and just for fun – a satellite picture.

The marketers tell us that 80% of your business comes from 20% of the customers.

This means – focus!

They also tell us that, for most restaurants, 80% of the business comes from within a 5-mile radius. Sure there are exceptions.

Formula: Potential = money from residents spent in the area – money from residents spent outside of the area + money by from tourists and business visitors.

Goal:

Get some estimate of these numbers for your area. Further, divide the final number by the number of competitors – and you get an indication of how competitive the market is (the amount of revenue per restaurant)

Number of restaurants in US: 878,000

US population: 293,166,182

Persons per restaurant: 334 persons per restaurant

Rhode Island restaurants: 3,091

RI Population: 1,076,164

Persons per restaurant: 348 persons per restaurant

RI is slightly less competitive than the market overall.

You can do this with your trading area as well with the reports you will receive combined with your competitive knowledge or research. Depending upon the type of market you have, you can get estimates for hotel occupants (and whether they are tourist or business) from the State Tourism department, in some cases the hotels themselves, your local tourism marketing bureau, chamber, etc…depending upon where you live and work).

Marketing:

Focus. Do not try to be all things to all people. And understand the business you are in. And understand that not all customers are the same (in demographics and in consumption)

Focus on your customer – and what they want. Not necessarily what is easy for you to do. One of my early partners in the restaurant industry defined our mission as doing what our leading competitor did, but less. This is not a recipe for success.

What is a restaurant…

The positioning story…a restaurant is not about food, about ambience, or even only about the experience. Restaurants are primarily about relationships. If you are in the restaurant business, you are in the relationship business. People go to restaurants primarily to facilitate relationships – to meet, to reconfirm, to end graciously (hey, you can hit me, we’re in a restaurant).

When you are thinking marketing, think 5-things (it used to be 4, soon 6): Product/ Place/ Price/ Promotion/ Permission/ Technology

Be creative. But be relevant to the target group you are after.

Ask questions – and change.

In the restaurant and hotel business – one of the critical issues is to meet or beat the expectations you set. Managing expectations is critical.

Advantage Marketing Information - Main office: 35 Steamboat Avenue - Historic Wickford, RI, USA 02852
Affiliated Offices: Pasadena, Calif., USA and Niigata City, Japan