Episode Overview

Episode Title: How Much Should You Spend on Marketing?
Host: Chip Klose
Date: October 9, 2025

This episode addresses a perennial question among independent restaurant owners: "How much should I spend on marketing?" Host Chip Klose breaks down common misconceptions around marketing budgets and offers a pragmatic, results-driven framework for approaching marketing expenses. Rather than viewing marketing as a fixed expenditure, Chip emphasizes the importance of treating it as an investment tied directly to measurable outcomes and return on investment (ROI).

Key Discussion Points & Insights

Rethinking the Core Question

• "How much should you spend on your marketing? The answer is $0. You should not be spending anything on your marketing. You should be investing in your marketing."
  – Chip Klose [09:55]

Chip reframes the central question, advocating for a mindset shift from "spending" to "investing" in marketing. He stresses the importance of tracking results and ensuring every dollar produces a measurable return, not just outputting money without scrutiny.

Differentiating Spend vs. Investment

• Chip compares marketing expenditures to other forms of spending:
  • Money spent on a vacation is a cost, with intangible benefits but no accountable financial return.
  • Money spent on marketing should come with the expectation of a specific, measurable ROI, similar to investment accounts.

Notable Quote:

"When I spend money, I spend money to go on vacation... With your marketing, it is an investment and we have to look at the return, the ROI, the return on the investment."
– Chip Klose [11:07]

Measuring Results & The Power of ROI

• When you treat marketing as an investment, the process shifts to:

  • Setting a budget for a campaign (e.g., $1,000)
  • Tracking the resulting revenue ($3,000 in Chip’s example)
  • Calculating ROI (here, a 3:1 return)

• This data-driven approach provides the rationale for increasing investment when campaigns prove effective—or scaling back if returns begin to diminish.

• Law of Diminishing Returns:
  Eventually, more marketing spend will yield lower incremental returns or may even outpace your business capacity, making continued increases inefficient.

Abandoning Arbitrary Budget Percentages

• Chip criticizes the old industry adage of spending a fixed percentage (e.g., 3–4%) of revenue on marketing.

Notable Quote:

"If anybody walks around and says, 'Oh, you should be spending 3.5% of your monthly budget on marketing,' they are not teaching you the right way."
– Chip Klose [16:53]

• Instead, adjust investment levels based on campaign effectiveness and tracked outcomes, not tradition.

The Role of "Flush Money"

• Chip acknowledges that not everything in marketing can be directly measured; some activities build intangible value, such as goodwill within the community.

  • Example: Sponsoring a local Little League team.
  • Suggestion: Keep measurable campaigns at 80–90% of your budget, with the remaining 10–20% reserved for "flush money"—valuable community efforts, even if direct ROI is elusive.

Notable Quote:

"As long as it's not 100% of your budget, as long as that's 10 to 20% of your budget, fine. Sponsor the Little League... If that is a way that you can stay connected to the community, I think it's a great move."
– Chip Klose [19:37]

Systems and Goals: The Backbone of Effective Marketing

• Every marketing investment should answer:
  • What is the goal?
  • What system or tactic will we use to achieve it?
  • How will we measure the results?
• If a tactic doesn't meet its goal, adjust or replace it.

Notable Quote:

"When you've very clearly stated goals and you make a hypothesis, you put a strategy or tactic into place, and then you measure to see whether it worked or not."
– Chip Klose [17:58]

Memorable Moments & Quotes

• On tracking effectiveness:

  "This is an old agency trick, right? So when I ran my agency... I would want to show them I am doing X, Y, and Z... and here I can prove the results."
  – Chip Klose [14:47]

• On the investment mindset:

  "We think about spending money different than we think about investing money. And I want you to think about investing marketing dollars."
  – Chip Klose [16:03]

• Final encouragement:

  "It's not a marketing spend. It's a marketing investment."
  – Chip Klose [21:09]

Timestamps for Important Segments

• [09:55] – The “zero dollars” answer: why marketing is an investment, not a pure spend
• [11:07] – Difference between general spending and investing; tracking ROI
• [13:45] – Scaling marketing investment based on proven results
• [14:47] – Importance of tracking; agency-style reporting on campaign success
• [16:53] – Critique of fixed percentage budgeting for marketing
• [17:58] – Systems and goals framework for marketing campaigns
• [19:37] – The concept of "Flush Money" for difficult-to-measure community efforts
• [21:09] – Recap and encouragement to adopt the investment mindset

Actionable Takeaways

• Shift your mentality from "spending" on marketing to "investing" in marketing.
• Track every campaign’s results to prove ROI and reinvest more in what works.
• Drop the old 3–4% budget rule and instead adjust spend to maximize measured returns.
• Reserve a small portion of your budget for community goodwill projects, but keep the majority data-driven.
• Always design marketing with clear goals, repeatable systems, and proof of outcome.

Summary

Chip Klose delivers a concise, practical playbook for restaurants seeking to demystify the optimal marketing budget. Dismissing rigid percentage rules, he advocates for an investment-focused, ROI-driven approach—and reminds listeners not to neglect the less tangible, relational side of marketing as long as it's a thoughtful minority of the overall strategy. Whether you’re just starting to think about advertising or reevaluating a mature marketing plan, this episode offers a clear, actionable framework for maximizing every marketing dollar.