“The ROI Is Incredible”
Seasonal business fluctuations are unavoidable in the restaurant industry. For restaurants in popular tourist destinations, the calendar’s peaks and drop-offs can be especially steep. In places like Cape Cod, summer tourism brings a crowd and the landscape continues to draw visitors through October’s Indian summer.
Then comes November and suddenly there are empty tables. No one knows the cycle better than Peter Troutman and his brother David, who for 31 years have operated the popular Scargo Café, in Dennis, Massachusetts on Cape Cod.
But Troutman has found a way to take some of the whiplash out of the cycle: a scratch-off promotion card printed by H&H Graphics and distributed to 9,000 to 10,000 diners in October brings 1,800 to 2,000 of them back in November. Scargo is now full in November and the promotion has generated a return on investment of 1,931%.
Keeping the Tables Filled in the Off Season
Named for a mythical Native American princess, the restaurant is a mile from the Corporation and Mayflower beaches and features a menu that Peter Troutman describes as “eclectic New England American.”
The restaurant is a consistent favorite with locals and tourists, who flock to the beaches and the summer stock theater across the street. But seasonal adjustments pose a challenge that affects everything from staffing to purchasing. From the peak of the season in June through August when the restaurant serves 400 to 500 guests a day and waits for a table can be as long as 90 minutes, to the end of tourist season in November when revenues fall by 25%, it’s a business ruled by the seasons.
The problem is as predictable as the seasons: With the tourists gone and the temperature dropping, a restaurant – even one that regularly makes the “Best of Cape Cod” lists – starts to see fewer customers. Last year regular revenues of $270,000 in October shrunk to $202,000 in November.
“Historically, November was the bottom of the cycle,” Troutman says. “Sandwiched between the shoulder season and the December holidays, it was previously one of our very slowest months hovering at about 125 to 225 guests a day.”
The trick was finding a way to draw the locals back in November. At a restaurant marketing seminar more than a decade ago, Troutman first learned of the promotion that has been his seasonal go-to ever since, with an impressive and reliable return on investment.
It’s a scratch-off card, handed out to diners in October for redemption in November. Diners who return in November present the cards at the end of their meal and a savings of between $5 and $100 is revealed when the scratch-off ink is removed.
Over the years, Troutman says, the redemption rate is consistent at about 20%: of 9,000 cards distributed last year, 1,800 were returned by diners enticed into fighting off the hibernation instinct and coming back to the restaurant. The average transaction value was $30.
The promotion also draws interest from other restaurant owners, curious about how well it works.
“I get phone calls from people all the time asking about this,” he says. “The biggest question is redemption rate. It’s 20% – and pretty steady. If we hand out 10,000, 2,000 come back.”
ROI Doesn’t Get Much Better Than This
After the cost of the cards and the value of the discounts, the promotion netted the restaurant nearly $40,000 last year. That’s an ROI of 1,931%.
Here’s how the numbers break down:
- Number of Transactions: 9,000
- Average Transaction: $30
- Regular October Revenue: $270,000
- November Revenue (25% down): $202,500
- Tickets redeemed (20%): 1,800
- Revenue for Transactions $54,000
- Prizes (discounts): $13,380
- Artwork, Printing and Shipping costs: $2,000
- Total revenue for November: $241,920
- Net increase in revenue for November: $38,620
- ROI from $2,000 investment: 1,931%
A Winning Formula for Building Excitement in the Slow Months
Troutman has tinkered with the program a bit from year to year, changing the wording, adding a rule or two, “Please no crybabies or whiners, this is supposed to be fun!” – and switching printers.
Three years ago he found Winning Promotions, a division of H&H Graphics, where Troutman says he likes the personal attention and found the company “a little easier to work with during the design process.” A redesign features the scratch-off layer in the shape of a leaf matching the restaurant’s logo. The leaf appears beneath the promotion’s total value in an oversize can’t-miss-it font: $60,000. Two pictures on the back depict a couple of signature appetizers. The cards are screen printed with scratch-off ink over four-color ink on 3×5 card stock.
Mike Thomas, Director of Games & Promotions at H&H, says the promotion works in part because of the suspense built in.
“One of the reasons it works so well is you don’t know what you’ve won” until you return to the restaurant, Thomas says. “There are $60,000 worth of prizes.”
Troutman works hard to make sure that the cards are distributed to everyone who visits the restaurant in October when the restaurant still draws 200 to 300 people a day. “The hard part is making sure everyone is on board and not forgetting to give out a card and talk about it,” Troutman says. “Engagement, coaching and management is key.”
Reminders help too. “We have a large illuminated sign right at the door as people depart the building that lets them know that if they did not get a ticket, their check is on us,” says Troutman. “I’m very adamant with my staff. I give them a week of practice.” The goal is to get 9,000 to 10,000 cards distributed by October 31.
It’s an effort that Troutman says has never failed him. “It works beautifully for marketing in a busy time followed by redemption in a slow time,” he says. “The ROI is incredible.”