Restaurant Strategy Podcast: Episode Summary

Title: Email and SMS Marketing That Actually Drives Revenue
Host: Chip Klose
Release Date: June 19, 2025

1. Unlocking the Value of Your Customer Database

[00:00 - 02:00]

Chip Klose kicks off the episode by highlighting the often-overlooked goldmine that is a restaurant's customer database. He emphasizes that every email address and phone number collected represents a significant revenue opportunity if leveraged correctly.

“Every customer who's ever eaten at your restaurant... that is a database worth thousands of dollars in revenue.”
— Chip Klose [00:30]

2. The Importance of Retention Over Acquisition

[02:00 - 06:00]

Using the story of Marcus, an Italian restaurant owner from North Carolina, Chip illustrates a common pitfall: prioritizing new customer acquisition over retaining existing ones. Marcus was spending heavily on Facebook ads to attract new diners while neglecting his 800-strong email list, leading to stagnant revenue growth.

“It costs five times as much money to acquire a new customer than to retain an existing one.”
— Chip Klose [05:10]

3. Building Your Email List Effectively

[06:00 - 10:00]

Chip outlines fundamental strategies for growing a robust email list:

• Capture Points: Host stand, reservations, email receipts, and promotions.
• Incentives: Offering free appetizers or discounts in exchange for email sign-ups.

He shares a case study of a Denver steakhouse that increased their email capture rate from 15% to 47% by offering free appetizers and gated Wi-Fi access.

“The appetizer, when they gave this away, cost them four bucks to make, but the average customer who redeemed it would spend $65 on their return visit.”
— Chip Klose [09:45]

4. Mastering Segmentation for Targeted Campaigns

[10:00 - 16:00]

Segmentation is crucial for relevance and engagement. Chip explains how restaurants can divide their email lists based on customer behavior and preferences, such as:

• Frequency of Visits: Daily regulars vs. occasional visitors.
• Meal Preferences: Lunch diners vs. dinner customers.
• Spending Habits: High spenders vs. average spenders.

He provides an example of a Bay Area cafe that segmented their list into four groups—daily regulars, weekend brunchers, business lunch crowd, and special occasion diners—resulting in a 40% increase in repeat visits.

“Simply segmenting into four different lists is... their open rates increase from 18% to 42%.”
— Chip Klose [14:30]

5. Leveraging Automated Campaigns for Maximum ROI

[16:00 - 23:00]

Automated campaigns can significantly enhance ROI with minimal effort. Chip discusses:

• Welcome Series: A sequence of 5-6 emails introducing new subscribers to the restaurant over two to three weeks.
• Birthday Campaigns: Personalized offers sent automatically around customers' birthdays.
• Win-Back Campaigns: Targeted messages to re-engage lapsed customers at intervals like 45, 60, and 90 days.

He cites a Portland pizza place that saw a strong redemption rate of 25% from their automated win-back sequences, generating an average of $850 in revenue per campaign.

“Their SMS campaigns... generate on average $850 in real revenue every single time they send that message.”
— Chip Klose [20:50]

6. The Power of SMS Marketing

[23:00 - 30:00]

While email is excellent for building relationships, SMS excels in driving immediate action due to its high open rates (98%) and rapid read times (within three minutes). Chip advises using SMS for time-sensitive offers and last-minute promotions, ensuring explicit permission from recipients.

Case Study: A sports bar utilizes SMS to send targeted messages during slow periods, offering discounts on appetizers or beer. This strategy results in high engagement and substantial revenue boosts from well-timed texts.

“SMS is immediate, there's urgency, and it's perfect for time-sensitive offers and last-minute promotions.”
— Chip Klose [25:15]

7. Optimizing Frequency and Timing

[30:00 - 35:00]

Finding the right balance in communication frequency is essential:

• Email: Once a week is ideal, with occasional bi-weekly sends. Emphasize one clear message per email to avoid confusion.
• SMS: Limit to once or twice a month for casual establishments, and up to once a week for fast-casual venues. Use SMS primarily for urgent and promotional content.

Chip suggests sending emails and texts before meal times to maximize visibility and engagement.

“3, 4, 5 o’clock is the perfect time for that. It makes a difference.”
— Chip Klose [32:40]

8. Measuring Success: Beyond Open Rates

[35:00 - 40:00]

Effective marketing requires tracking the right metrics. Chip emphasizes focusing on restaurant-specific metrics such as:

• Redemption Rates: How often customers use the offered promotions.
• Average Check Size: The increase in spending from targeted campaigns.
• Revenue per Email Sent: Direct revenue attribution through unique promo codes.

He shares an example where a Greek restaurant discovered that chef's special emails generated three times more revenue than their happy hour promotions, leading to a strategic shift that resulted in a 35% increase in email-driven revenue.

“A campaign with a 15% open rate that generates $500 in revenue is better than a campaign with a 30% open rate that only generates $200 in revenue.”
— Chip Klose [38:20]

9. Common Mistakes to Avoid

[40:00 - 43:00]

Chip outlines key pitfalls in email and SMS marketing:

1. Buying Email Lists: Leads to poor engagement and damages reputation.
2. Lack of Segmentation: Sends irrelevant messages, reducing effectiveness.
3. Ignoring Mobile Optimization: With 65% of emails opened on mobile, poor design can alienate customers.
4. Neglecting Subject Lines: Critical for open rates; requires testing different approaches.

“Do not ever buy an email list. These are full of people who didn't opt in to hear from you specifically.”
— Chip Klose [41:10]

10. A Framework for Successful Marketing

[43:00 - 46:00]

Chip provides a weekly action plan:

• Monday: Plan campaigns based on sales goals and inventory.
• Tuesday: Send primary promotional email to the full list.
• Thursday: Dispatch targeted offers to specific segments.
• Saturday: Announce events or special offers for the upcoming week.

He stresses the importance of consistency, organization, and delivering valuable content to maintain customer engagement and drive revenue.

11. Actionable Homework for Listeners

[46:00 - 49:00]

To implement the strategies discussed, Chip assigns the following tasks:

1. Audit Your Email List: Assess the number of contacts, last communication, and engagement metrics.
2. Set Up a Welcome Sequence: Develop a series of introductory emails for new subscribers.
3. Create a Birthday Campaign: Automate personalized birthday offers to enhance customer loyalty.

“Email and SMS marketing isn't complicated. It just requires consistency. It requires a mindset shift and yes, an attention to detail.”
— Chip Klose [48:30]

12. Success Story: Marcus's Transformation

[49:00 - 54:00]

Returning to Marcus's story, Chip showcases the tangible results from implementing effective email and SMS strategies:

• Email List Growth: From 800 to 2,400 subscribers.
• Monthly Revenue Increase: From $0 to over $3,200.
• Customer Retention Rate: Increased by 28%.

This transformation underscores the value of treating customers as valuable assets through intentional and targeted marketing efforts.

“All from simply treating his customers like the valuable assets they are.”
— Chip Klose [53:15]

13. Teaser for Next Episode

[54:00 - 55:00]

Chip wraps up by previewing the next episode focused on the evolving landscape of social media marketing, challenging traditional approaches, and exploring new strategies for restaurant growth.

“Next week we're going to talk all about why social media marketing is dead... and what you should be doing instead.”
— Chip Klose [54:45]

Key Takeaways

• Prioritize Customer Retention: Retaining existing customers is more cost-effective than acquiring new ones.
• Effective List Building: Use incentives and capture points strategically to grow your email and SMS lists.
• Segmentation is Crucial: Tailor your messages to different customer segments to increase engagement and revenue.
• Automate Thoughtfully: Implement automated campaigns like welcome series and win-back sequences to maintain consistent communication.
• Leverage SMS for Urgency: Use SMS for immediate, time-sensitive promotions to drive quick actions.
• Measure the Right Metrics: Focus on revenue-driven metrics rather than just open rates to assess campaign success.
• Avoid Common Mistakes: Don’t buy lists, neglect segmentation, ignore mobile optimization, or overlook compelling subject lines.
• Stay Organized and Consistent: Plan and execute your marketing campaigns methodically to ensure sustained growth.

Final Thoughts

This episode of Restaurant Strategy offers a comprehensive guide to mastering email and SMS marketing tailored specifically for independent restaurant owners. By implementing Chip Klose’s strategies, restaurant operators can unlock significant revenue potential, enhance customer loyalty, and achieve sustainable profitability.