James West, author of A Practical Guide to Placemat Advertising, explains how to start a restaurant placemat advertising business. He shares tips about how to approach restaurants, finding placemat advertisers, expanding into menu advertising, and more. [13 min.]
Can you start by giving us a little overview of the restaurant placemat advertising business?
Well sure, it’s a fairly simple idea. It’s just a matter of going to restaurants, showing them what we can do to provide a very beautiful placemat in their business at no charge to the restaurant, then my next step is to go to different advertisers within the neighborhood who would like to target the customers of that restaurant. We place ads in the placemat, and provide them to the restaurant for a period of several months. Generally six months or so is what we target, but sometimes they last longer.
How much money can you expect to make selling restaurant placemat advertising?
I advertise that it’s $60,000 and I think that’s the low end. If a person really takes the career seriously, if a person wants to really pursue this as a career, and even go to the point of perhaps hiring a couple people helping, it could go well over $100,000, if a person really wants to pursue it right and a lot of people are doing it.
What kind of start up costs are involved? What do you really need for equipment or software to be successful in this business?
I’m a very low-tech person. And I don’t do any of the design work myself, so all I really have is a computer, of course, but I don’t really need that. All you need is some printed contracts and somebody to do the design work, and then hook up with a printer, someone who can actually put the ink on paper for you, and some business cards. You don’t really need a lot more than that.
What kind of businesses advertise on restaurant placemats?
I have a listing of about 75-80 different types of businesses. I’m talking about the ones that I call on and that is everything from small businesses like hair places, bicycle shops, attorneys, funeral homes, we’ve advertised various auto repair, auto body companies, we’ve put in ads for multi-level marketing people, we’ve advertised for ice cream parlors. If you can think of a business, a small business, that wants to reach people, than that’s the one that we can put in there.
How much do these ads cost businesses to run on restaurant placemats?
I generally start my ads in the St. Louis area about $150 per ad, and that’s for up to six months exposure in a restaurant. Now I’ve sold the placemats manual to people who start at well over $200, $225 to be in their various regions. And I just feel that $150 is enough, that it’s enough to make a good living but it’s not so much that the advertisers can’t afford it.
Do you think you should design the ads yourself or outsource them to a graphics person, a graphic designer, or some other company to do the actual design for you?
Well, I’ve always outsourced it because I’m not computer literate very much, but many people that I’ve talked to who’ve started this business after they’ve gotten the manual because I offer unlimited consultation for as long as they want it, and they’ve told me that they do it themselves. And they just have PageMaker or whatever kind of software they need, and they just do their own and they can save lots of money. I mean I’m talking I spend $400-$500 generally on each placemat for all the ads. But that money could be saved and greatly enhance a person’s take-home money out of it.
What about other products such as menus, are there other types of products that you can offer advertising on?
Well, when I began the business it was placemats only. Some time later a lady in a Chinese restaurant asked me about doing menus, and I thought, well, why not? I think that would work. So I designed something, I folded a paper as many times I could think it would be the right size to accommodate standard sizes of paper, and started providing these and that became a tremendous increase in revenue because all restaurants, well, not all, but many restaurants, like take-home menus, and they’re there so we just offer that, and we tell the people when they advertise for us, if you in the placemat everybody who walks into the restaurant is going to see your ad, then when they go home they’re going to take you home with them, and the menus end up on coffee tables, or stuck on a refrigerator or in lady’s purses, or nightstand by the bed. So that became a huge additional source of income for us.
Is this the type of business you can run yourself and maybe hire a team of independent salespeople to go out and actually sell the ads to businesses?
I would recommend starting out by yourself so you can learn the business, and that’s the way I’ve done it, and I’ve done all the ad sales myself except for a couple people that I hired to work when they were between jobs or something, but for the most part this has been a one-pony show. I would meet with the designer and hand off whatever ads were sold, and then when it’s all finished I would take it to the printer and leave it with him, and then pick up the placemats and deliver them to the restaurant. So it’s been pretty much by myself. However, if a person wants to really make money in this, hire a couple of independent contractors. You don’t need employees, just independent contractors and pay them a percentage of what they sell, and you can have restaurant placemats going in several different locations. I just haven’t done that myself. I’ve been pretty much just doing it alone because I’m up in years and I don’t want to work that hard I guess.
What about printing costs for restaurant placemats? Do they vary widely from one printer to the next?
Well, yes, and it’s a good idea to do a little finding out, you know, getting some quotes. I’ve found that if you find a small printer with two-color equipment. For paper placemats, that’s all you need, you don’t want to get into four-color. This is by the way a paper placemat that is going to be thrown away. So you’re not trying to produce an expensive annual report. It’s a placemat. It gets gravy stains on it, and that sort of thing, but it conveys a message to everyone who sits in the restaurant that you can go to all these businesses to accommodate people who have paid for the ad.
How do you convince restaurants to use your placemats?
Well, all restaurants won’t do it. If you go into a restaurant that is a chain, you have to go up the chain, literally, to find the person who can make the decision, and that might be someone in another state a long ways off and it’s very difficult. There are too many restaurants privately owned, small businesses, that will want it, so I don’t even try to go after the McDonald’s or the IHOP’s, I’d rather go with the small Callahan restaurants here in our area, the Chinese restaurants here in the area because that’ll keep you busy. It’s not hard to sell them because you go in there and you tell them it’s free. I had one lady in a pizza restaurant, she couldn’t believe it. She kept saying it’s not free. I said, here is the contract, it says right there that it’s free. But it’s not hard to get them to buy it if it’s one restaurant that would like it. Now, you also find that if a restaurant has white tablecloths, linen tablecloths, that sort of thing, they generally don’t want it, it doesn’t fit into the decor. You have to be a little choosy about the kind of restaurants you call on, but there are so many of them it’s easy to do.
What about renewals of advertising? Do they advertisers typically renew their ads?
We get about a 50% renewal rate, I would think. There’s a lot of things that have happened from the time that you produce the ad until it goes back. A lot of companies go out of business, or they change hands. One of the difficulties you have is finding the owner in or the person who is the decision maker, the person who can write a check, finding them in, because sometimes it’s an absentee owner. But as a rule, when they see they can track their ads very well, and when they see what it’s doing for them, yes, renewals are very easy to do. Sometimes I just call them up and say do you want to renew? They say, yes go ahead and put me in it for another time, and we just go ahead and do it, and take them a bill.
What are some big mistakes you see people make when they get started in this business that maybe they could avoid?
Well, don’t try to be too fancy. I had one person who was going to do something for a large restaurant, I think, he’s up in Ohio, and I’m in Missouri, and he was going to print like a quarter of a million of them, and that was far too many for him to do, and you don’t want to try to make something that will not be cost effective. Again, this is a placemat. Keep it simple is the credo here. I would recommend that people stay away from certain types of advertising, that could be a killer for you. This is a kind of business that is really family-friendly. So you don’t want to get into any of the adult things, you don’t want to get into anything that might bring discredit to the other advertisers or to the restaurant or to yourself, or to the people sitting in the restaurant looking at it. This is a very family-friendly type business.
To summarize, what advice would you give to someone considering this business?
What I would do I think is go to your neighborhood, to restaurants in your area, and perhaps do a little survey. Walk in and look for yourself, see how many restaurants are there who might be using them, you’ll probably find that very few are. I have run into absolutely zero competition in this area in the St. Louis area where I’m at, and this is a big area. But I would do that, and talk to a couple people. Get your printer lined up, ask him how much it would cost to produce 10,000 or say 5,000 placemats. How much it would cost to do the menu. And then sit down with a calculator and work out your numbers before you do anything. But one thing that I didn’t mention to you is that when I started this business I did only paper placemats, that’s all we did. Later on we started doing the laminated and colorful placemat. It became a tremendous interest to people, and that came to be about the only thing we were doing because everybody liked the laminated ones. They were colorful, we could put in pictures of someone in color, and we don’t actually print those, they are copied. And they are very attractive, If anybody wants, I would be happy to let somebody see just exactly what we’re talking about.
Is that a product that the restaurant would keep on hand for a long period of time?
What we do in order to keep these turning over is we put the the date on every one of them. We put the date on the lower right corner, the month and the year that it goes in, and then I explain to the restaurant owner that this is going to be here for six months, and we put it in there in October of ‘07. This will be here for six months, which will be in April of ‘08. And then at that time I start the process over and I’ll pick up all of those and use them for samples, and bring in new ones. I’ve done that lots of times. That way they get a new look, but yet the advertisers have gotten their six months of advertising out of it, now we’re renewing it for them as well as anybody else who might want to come into it.
And it’s good for the environment, too.
Oh, absolutely. They don’t have the debris to pick up, they don’t have to worry about all the problems with paper placemats because they’re all just sitting there.
James West is the author of A Practical Guide to Placemat Advertising. He has over 50 years of experience in the printing industry.