Chapter 27 — Exercises

Thirty-two problems, graduated from recall through applied judgment. Items marked with a dagger (†) have worked solutions in the Answers to Selected Exercises appendix — try them before you look.

Do the arithmetic by hand or in a spreadsheet. Almost every mistake in restaurant marketing is an arithmetic mistake wearing a creative brief, and you will only learn to see them by doing them.

A. Recall and definitions (1–8)

1. Define cost per cover acquired in one sentence. Then state one rule for what belongs in the numerator and one rule for what belongs in the denominator.

2. Distinguish organic from paid placement. Give one commercial consequence of the difference that matters to an operator with almost no budget.

3. † What three factors does Google state drive local search results? Which of the three can an operator actually move, and what does moving it consist of?

4. Name the three ceilings a cost per cover acquired can be measured against, give Bellwether's figure for each, and say which one an independent restaurant should manage to — and why.

5. What is review gating? Give two separate reasons not to do it: one about platforms and one about the quality of the data it produces.

6. † State the one-star offset identity. Compute it for an average of 4.4 and for an average of 4.9, and explain in one sentence what the difference between those two numbers means operationally.

7. What is a comp and influencer policy? Name the single element of it that matters most on a Friday night, and say why.

8. Define content cadence. Why is "sustainable" the operative word rather than "frequent"?

B. Computation: cost per cover, budgets, and offers (9–16)

9. † Bellwether's marketing budget is \$23,250 against 36,140 planned covers from 9,035 distinct guests. Compute (a) the blunt cost per cover, and (b) the cost per cover acquired. State which one you would put in a business plan and why the other one is misleading.

10. A campaign spends \$1,800 of media and carries a \$12 offer, redeemed 260 times. Compute the cost per cover acquired at 100% incrementality and at 45% incrementality.

11. † A 90-seat restaurant does \$980,000 in sales and budgets marketing at 2.2% of sales. Its plan requires 5,400 first visits. Compute its cost per cover acquired and compare it to a contribution of \$16.20 per cover. Is the budget the constraint in that plan?

12. Using the visit-count distribution in §27.7, compute what happens to total covers if 400 of the one-visit guests become three-visit guests. Express the change in covers and in contribution at \$18.40.

13. † Your offer is \$7 off and contribution per cover is \$21.00. What share of redemptions must be incremental for the offer to break even? Recompute if contribution falls to \$14.00, and state what the comparison tells you about running offers on a low-margin menu.

14. A guest at a different restaurant has a \$38 average check, visits three times a year, and the restaurant runs a 38% contribution margin. Compute contribution per cover, first-year guest value, and lifetime value on a two-year horizon.

15. A gift-card program sells 180 cards at an average \$45 face value. 150 of them are redeemed at an average check of \$61. Compute cash collected, spend above face value, and the unredeemed balance. Which of those three figures is revenue?

16. † An email list has 3,100 addresses and the platform costs \$1,320 a year. Contribution per cover is \$18.40. What percentage of the list must make one additional visit per year for the channel to break even? Comment on the size of that number.

C. Reading the artifacts (17–22)

17. Figure 27.2 records 1,640 actions against 3,842 profile views. Compute the action rate. Then explain, in two sentences, why you cannot convert that figure into covers.

18. † In Figure 27.6, 72% of the hard-attributed covers were frequency-coded rather than acquisition-coded. State the strategic conclusion an operator should draw — and then give one reason the figure might be an artifact of how the codes were designed rather than a finding about the business.

19. A restaurant holds a 4.72 average on 340 reviews. A bad week produces three one-star reviews. Compute the new average, then compute how many five-star reviews are required to return to 4.72.

20. Find the leak. Here is a ten-month extract from a restaurant's other-operating detail.

  MARKETING AND PROMOTIONAL DETAIL — 10 months          [constructed teaching example]
    Marketing (as reported on the P&L)                          $18,000

    Comps and discounts (as reported on the P&L)                $27,900
      of which, coded to a named campaign         $4,300
      of which, service recovery (manager comps)  $12,200
      of which, uncoded "promo"                   $11,400

What is this restaurant's true marketing spend, at most? By what percentage does it exceed the reported line? And what is the specific management failure the \$11,400 represents?

21. † From Figure 27.6, compute the host-stand ask rate. Propose two changes that would raise it and state the operational cost of each.

22. A press-driven Saturday runs 158 covers against a plan of 123. Compute the contribution upside at \$18.40. Then compute how many repeat guests the night would have to fail to convert — at \$220.80 of lifetime value — before the night is a net loss. Comment on the size of that number.

D. Build it (23–28)

23. † Cost this campaign. A neighborhood mailing: 1,500 pieces at \$0.22 to print and \$0.53 to mail, four hours of design at \$40 an hour, and a \$10 offer redeemed 96 times. Compute the total cost of the campaign and the cost per cover acquired at 60% incrementality. Evaluate it against \$18.40, \$73.60, and \$220.80.

24. Price this offer. Contribution per cover is \$18.40 and your best estimate is that 45% of redemptions will be incremental. What is the largest discount that breaks even? Show the identity and then state, in one sentence, what you would actually do instead.

25. † Build this calendar to a budget target. You have exactly \$9,000 for a year, a 70-seat restaurant, and soft Tuesdays and Wednesdays. Produce a twelve-month allocation across no more than six lines that totals exactly \$9,000. For each line, state what it buys and how you would measure it. At least one line must address frequency rather than acquisition.

26. Write the response. A two-star review says the food was very good but the party waited forty minutes past their reservation time and nobody acknowledged it. Draft the public reply. Three sentences, no more. Then write one sentence explaining who you were actually writing to.

27. † Write the policy. Draft a comp and influencer policy for a 40-seat restaurant, covering the default answer, who approves exceptions, which budget they come from, the disclosure expectation, and the exact sentence a host says when asked at the door.

28. Build the audit. Write the twelve-item checklist a manager runs on the first Monday of each month on the restaurant's Google Business Profile and adjacent listings. Each item should be checkable in under two minutes.

E. Judgment, ethics, and the plan (29–32)

29. † A local account with a genuine local following offers a positive post in exchange for dinner for four. Your written policy says no. Your front-of-house partner wants to make an exception because "it's only a hundred dollars of food." Argue both sides in a paragraph each. Then decide, and state what would have to be true for you to change your mind.

30. A guest posts a one-star review describing an incident that you can demonstrate did not happen: you have the ticket times, the reservation log, and two staff accounts. Draft what you post publicly. Then explain, in three sentences, why the tempting response is the wrong one — and identify the reader whose opinion actually matters.

31. † Business Plan extension. Rebuild Bellwether's \$23,250 for a different version of the concept: same 68 seats and same city, but in a stable, price-sensitive neighborhood at a \$29 dinner check rather than \$46. Recompute contribution per cover at the same 40% rate, restate the guest lifetime value, produce a revised allocation that still totals \$23,250, and state which lines you moved and why. Which parts of the chapter's argument survive the change, and which do not?

32. Business Plan extension. Write the two paragraphs about the neighborhood that belong in Bellwether's business plan, for a reader who will notice immediately if you are being sentimental. Name what the restaurant takes as well as what it adds — including the ~40% supply increase and the dependency that runs in both directions — without moralizing and without promising anything you cannot deliver.