The what, and why, of ROI
Return on investment, or ROI, is a simple way to measure how profitable your investment was by comparing the money you made or lost against what you spent, usually as a percentage. Here, we’re going to discuss ROI in the context of the return on your marketing investment specifically. So let’s dig in.
Since you’re probably like most established restaurants, which allocate about 3-6% of total revenue to marketing, understanding your ROI is essential to knowing how much your restaurant earns for every dollar you invest in marketing. After all, true marketing success isn’t defined by traffic spikes or offer redemptions alone—it’s about identifying what actually drives incremental gains.
When you track your restaurant’s ROI, you quickly see which of your marketing efforts are actually working and which ones aren’t. That insight makes it easier to justify your budget and fine‑tune your strategy going forward.
And you don’t need a finance background or advanced analytics tools to measure this impact. All you need is this simple formula:
Calculating ROI step by step
↗️ Step 1: Track campaign revenue
Start by pulling the revenue from your POS or reservation system for the specific offer period. Collecting data is a must. If you can’t connect a promotion to the sales it generated, there’s no reliable way to evaluate its impact.
💰 Step 2: Subtract direct costs
Direct costs include costs of goods sold (or COGS), marketing expenses—advertising, design work, email software, etc.—and any incremental labor costs tied to the campaign.
✅ Step 3: Apply the ROI formula
As mentioned above, use this simple formula to get a percentage that reflects performance: [(revenue from campaign − costs) ÷ costs] × 100%
Marketing ROI calculator
Fill in your campaign info to see how your marketing is doing.
How we calculate ROI
ROI % = [(Revenue from campaign − Costs) ÷ Costs] × 100%
Where Net Profit = Revenue − (Cost of Goods Sold + Labor Costs + Marketing Costs)
More metrics that matter
Short-term revenue is only part of the picture. Repeat visits, loyalty, and lifetime guest value matter when evaluating long-term impact. Be sure to track these other metrics in addition to revenue to get a more comprehensive picture.
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What is a good ROI?
In 2024, the average restaurant ROI was 11.13%, with 15% ROI considered ideal. But there’s no singular benchmark, and the “right” one to track for your business depends on what you’re trying to achieve—like bringing in new guests, encouraging repeat visits, or filling slower days.
As a rule of thumb, many restaurants consider a marketing ROI of 300%–500% a strong result—that’s $3 to $5 back for every dollar spent.
Ultimately, the goal is to end up in the green, where you’re earning more than you spent, and not in the red, where your marketing investment outweighs the return. But since dipping into the red is inevitable, there’s plenty you can do to get back on track.
Quick tips for improving your numbers
- Segment your campaigns: Track results for email, social, and paid ads separately.
- Use trackable offers: Promo codes and urchin tracking module (UTM) links help tie spending to results.
- Focus on high-ROI channels: Email and loyalty programs often deliver repeat business at low cost.
- Optimize menu design and pricing: Strategic pricing along with purposeful, smart menu design and layout can help maximize profits.
- Watch out for vanity metrics: These numbers make you look good but lack substance and aren’t actionable.
Turning data into direction
Hard numbers are essential for calculating marketing ROI, but soft metrics still matter. Measures like guest sentiment, brand awareness, social engagement, and loyalty activity may not tie directly to revenue, yet they reveal how guests are responding to your marketing. Paired with financial data, these insights help you make better decisions and strengthen long‑term customer relationships.
In the end, ROI is more than just a metric—it’s the key to making smarter, better marketing decisions. When you focus on measuring what truly matters, you quickly see what’s worth repeating, what needs refining, and what’s no longer pulling its weight. That’s how restaurants turn their marketing budget into meaningful, sustainable business income.
Ready to see how Rewards Network can elevate your restaurant’s success?
Contact us today:
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(800) 617-6067
The information contained in this digital content is provided for informational purposes only and should not be construed as providing tax, legal, accounting, career, business, or other professional advice. You should consult your own professional advisors before engaging in any course of action.
