Chipotle’s doing it. Buffalo Wild Wing is doing it. So are Brueger’s Bagels and BJ’s Restaurants. They’re planning to aggressively open new stores this year. This from the June 30, 2008 edition of Nation’s Restaurant News.

And they’re doing it even as consumer confidence slides. Even as people dine out less. Even though new store openings have outstripped demand every year since 2003 (there is one restaurant for every 662 people in the U.S., according to the NRA).

Why?! Two reasons: 1) because they can (good cash positions and limited debt) and 2) because it makes sense – grab market share now, cash in when the market rebounds.

Those who advertise now, who aggressively market, who open new units, have a great chance to grab market share, increase profits during the downturn, and come out far ahead of the pack after the recovery. So says nearly every study of every economic downturn since WW II. If you’re waiting it out, you might be in trouble.

So…what to do? Here are some suggestions from those in the know:
- Cut costs, but don’t skimp. Customers who perceive you’re giving smaller portions without lowering prices, or charging for items that used to be free, will make you pay for it by giving your share to someone else.

- Invest in the culture. Nearly half of all lunch and dinner diners say that excellent atmosphere and customer service would help them forgive rising menu prices. Even if your prices aren’t rising, you’ve gained goodwill (and loyalty).

- New menu items. Limited time offers and new menu items give existing customers more reasons to visit more often.

- New offerings and dayparts. Late night meals, breakfast, mid-afternoon specials, carry-out, delivery, catering – make it easy to purchase from you.

- Share, not profit. Profits matter, you’ll never hear me say they don’t. But you can’t take percentages to the bank. Do what it takes to get butts in seats, but be careful not to addict your customers to discounts. Offer an exchange of value: apps for 4 when you buy them for 2; free dessert with purchase of salad and entree; free upsize before 11:30am (start lunch earlier).

Head count, butts in seats, are more important now than percentages. The more mouths you have in your restaurant (and the better you take care of them), the more mouths there are to spread the word.

I’ve seen a lot of businesses, and some restaurants, talking about how much better life would be if only they had a Facebook page, or how to get their web site more traffic.

Everyone who knows me knows I’m a big fan of electronic marketing. Blogs, web sites, discussion boards, SEO, SEM – you name it.

But no so much for restaurants.

Sure, they’re important. Sure, they can help convince someone who has already heard of you that your restaurant is better than another. But let’s be clear: the vast majority of people eat at a restaurant for one of three reasons:

1) you have a great location and are convenient
2) people have heard great things about you (word of mouth)
3) customers have tried your food and liked it

They might check out your web site after they’ve heard of you, and before they try you, but the web is still secondary to word of mouth.

So if word of mouth is so important, why do we spend disproportionate time on the little things? Or money on advertising that doesn’t generate word of mouth? When was the last time you and your friends got into a great philosophical debate over a newspaper ad? When was the last time you tried a new restaurant based on a newspaper, television, or radio ad (unless you saw/heard it at lunch time and happened to be sitting in front of that restaurant?

Americans see more than 2,000 messages per day. Advertising the old way is out. The web is measurable, and levels the playing field, but what percentage of new customers come because they first heard about you online?

Here’s food for thought – the “hot new marketing medium” isn’t electronic, broadcast, or print. It’s on the sidelines of a soccer field, in the pediatrician’s office, at the water cooler, and PTA meetings.

Folks, if your marketing doesn’t promote word of mouth, and give those mouths the words to say, you’re chasing fads. Nothing is more effective. And because most restaurants aren’t any good at it, therein lies great opportunities for yours.

Every now and then I look back at posts to see how the conversation has evolved. I sometimes see that I get longer over time, writing articles instead of posts (I’m passionate, what can I say?).

I also notice that there’s a wide mix of readers here. Some are old hats looking to tweak their game, others are just getting started.

So here are the basics of local store marketing for restaurants, just to get the ball rolling:

1. People choose restaurants based on word of mouth, not advertising
2. The other reason people choose restaurants is convenience – if your location is great, great. If not, you need to market.
3. Given the choice, consumers purchase from someone they know and like
4. Given the choice, people will support businesses that support their community
5. The lifetime value of a customer is more important than the one-time profit
6. Word of mouth is the best form of advertising, your marketing should encourage it
7. If your product is good, and the experience is memorable, people will talk about you and come back
8. You should remove all barriers to trial of your product
9. They’re called guests for a reason, don’t treat the transaction as a transaction
10. Community involvement is good business

That should get you started. Local store marketing is how it was done in the old days. Now that customers have to pass dozens of restaurants to get to your location (usually when they’re hungry), owners are starting to realize that 90% of their business comes from the 3-5 mile radius surrounding their stores.

Successful local store marketers try to meet as many people within that radius as possible.

If you’d like more ideas, have ideas to share, or just want to discuss local store marketing with others in your shoes, visit The CommonMan Group: http://forum.commonmangroup.com. It’s like an ad agency for the little guys.