Lisa D. Spiller, Ph.D.Christopher Newport University

Carol Scovotti, D.P.S.University of Wisconsin – Whitewater

DMEF/CADMEF Case Writers Workshop – October 17, 2009San Diego, California

Background: Restaurant Industry

• Economic Crisis by the numbers– U.S. sales: $181 billion in 2008– Projected decline in 2009 by 2.5 percent– 52% of Americans dining out less often– 66% no longer enjoying fine dining– Few families (with children) dining out– Smaller average check amounts– Numerous competitors…offering discounts– Harsh times for restaurants…

Nonna’s History• Family Owned Italian Restaurant• Owned & Operated by Anna and Cris• Small staff• Opened: June 2007 • New location: 2009

Situation: New Location…New Opportunities

• Old location: Not visible, limited capacity

• New location:– Excellent visibility– Spacious, patio and private dining room– Convenient location

Decision Problem: The Case Challenge

With a new location…

an expanded menu…

a new private dining room…

a new outside patio…

new specialty products…

many loyal customers…

Where should it begin?

Case Organization

• Case perspective– Anna Russo Coggeshall– Grew up in family restaurant business– Passion for Italian food– CNU graduate – Understands D/I Marketing

Overarching Problem

How should Nonna’s allocate its marketing budget to: Increase its guest

trafficPromote its catering

businessLaunch its specialty

product marketing

Decision #1 – Increase Guest Traffic to Nonna’s

• Spent more than $30,000 on direct response promotions– Cooperative mailings– Discount mailers– Special invitation dinner events– Yellow pages advertising– In-house bounce back coupons

Nonna’s Discount Postcard Mailer - Front

Nonna’s Discount Postcard Mailer - Back

Direct Mail Special Event Postcard - Front

Direct Mail Special Event Postcard - Back

Nonna’s Promotional Offers - MetricsOffer Quantity

MailedQuantity

RedeemedResponse

RateCost per Piece

Print. Post. RedemptionCosts

Valentine’s Day Special

300 175 58% $0.88 $0.42 $ 20.00

Family Feast Day Special

600 225 38% $088 $0.42 $ 25.00

Discount Offer 2,000 1,200 60% $0.88 $0.42 $ 10.00 (Ave.)

Cooperative Mailings

Buy one/Get one Free

3,600 100 2.8% --- --- $ 12.00 (Ave.)

$ 5.00 Off 250 20 8% --- --- $ 5.00

What works best?

Case Question: How might Nonna’s use its customer database to increase guest traffic?

Bounce-back coupons

CRM…Database-driven marketing!

Decision #2: Increase Nonna’s Catering Business

Nonna’s Catering Services

• Dine-In Parties– Restaurant - 250 seat capacity– Private banquet room – 35 seat capacity– Private patio – 60 seat capacity

• Casual Catering– Off-site catering services – Business meetings, lunches, parties, etc.

• Formal Catering– Off-site catering services for up to 500 people– Weddings, showers, formal events, etc.

Case Question: What lists might Nonna’s rent to increase its catering business?

Decision #3: Generate Sales for Nonna’s Specialty Products

Based on consumer demand Marketed within the restaurant

Nonna’s Specialty Product Costs and Prices

Product Retail Price Packaging Ingredients/

Processing

Dipping Sauce $9.00 $3.50 $2.00

Italian Dressing $8.00 $3.50 $1.50

Tomato Sauce:

(16 oz container) $8.25 $0.75 $5.25

(32 oz container) $10.25 $1.50 $7.00

Case Question: What might Nonna’s do to launch its specialty products & generate sales?

Case Summary This case demonstrates how…

• D/I marketing methods are used by a family-owned restaurant business

• The multitude of objectives D/I marketing can address

• The need for:“Shark marketing

On a Minnow’s budget”

Teaching Suggestions

Suitable for lectures & team projects associated with:

– Market planning & coordinating

– Entrepreneurship & small business

– Relationship building/loyalty, offer strategy, creative strategy, or lists/database portion of direct marketing courses

– Segmentation or promotional strategy portion of upper-level marketing courses

– Integrated marketing communications

– Brand building & sales promotions

– Quantitative analysis & direct marketing math

Thank you for your attention.Any questions?

Lisa D. Spiller, Ph.D.Christopher Newport University

Carol Scovotti, D.P.S.University of Wisconsin - Whitewater