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15th August 2007

The web is having a significant and positive impact on the fortunes of restaurants according to a new study.

The research by thebestof, a national network of local marketing websites, run by local people, that champion the best businesses in their area shows that small and medium sized businesses (SMEs) plan to grow their businesses by on average 38% in the coming year. However the more web-savvy SMEs including restaurants have growth ambitions that are twice those of their conventional SME counterparts (41% vs 20%).

The study is based on telephone interviews with 500 small and medium sized businesses combined with an online survey completed by a further 2,583 SMEs. The businesses were drawn from across the UK and from a mix of sectors, and included 67 restaurants.

The research which explores SMEs general approach to marketing, reveals that restaurants typically spend £3,000 marketing their businesses and 76% of them plan to spend as much if not more on marketing in the coming year. However a significant group are focusing this spend on the web and this spend is delivering results. For instance the internet-enabled restaurants get 15% of their enquiries from the web.

In general, the study paints a picture of an SME community in a bullish mood. One in five plan to launch a new product or service in the next 12 months and a further 13% will expand into a new area. One in six will merge with or acquire another business and only 3% plan to scale back their operations. Indeed when asked to score their future optimism, on a scale of 1 to 10 the average score is a creditable 7.8.

However, when analysing the businesses which are more web active against those who are not, the study shows that the companies most actively using the web for marketing, expect their business to grow twice as quickly as the SMEs who aren’t. These web-aware SMEs are also far more likely to be taking business away from larger rivals too. For instance 58% of the internet active restaurants describe their competitors as bigger than them, whereas the less internet active are more likely to say their competitors are the same size as them or smaller.

Nigel Botterill, Chief Executive of thebestof comments: “The first wave of the internet seemed to be all about the major brands and retailers, or businesses like or ebay, whose whole premise is built on the internet. What this research shows is that there’s a whole generation of ordinary small businesses – like restaurants - who have been quietly working in the background, using the Web to steal market share from their bigger competitors.”

The Report suggests the web-aware SMEs as a whole haven’t set up e-commerce operations, they are just making sure that they are doing the basics. For instance:

76% have a site
46% do search engine optimisation
30% run email campaigns
11% run affiliate programmes
9% do pay per click advertising
7% run a blog

While certain SMEs are making major online gains, the study also highlights a digital divide. For instance, 25% of restaurants report that the internet holds no potential for their business, furthermore a third don’t see it as relevant. Yet in the same sector there are restaurants generating just under a fifth of their business from the Internet.

Nigel Botterill again: “It is extraordinary to see how the internet is delivering so much for some and yet so little for others. We’re working hard to try and understand why this is.”

Part of the problem appears to be a matter of mindset. One in five (19%) reports that they don’t feel equipped to take advantage of the Internet. A further 56% simply believe it is the natural domain of the bigger business. The age of the proprietor in charge of the SME is another issue.

Nigel Botterill concludes: “Restaurants need to break out of this mindset. 69% of them turn to the web for their suppliers, so why do they think people looking for restaurants, aren’t doing the same?

“They need to realise that there are businesses exactly like theirs doing some very simple things to capture business through the Web. It’s not rocket science, it’s a basic business skill and tool, just like financial management, which they can and must harness.”

· is a national network of local marketing websites, run by local people, that champion the best businesses in their area

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