Want A Sales Boost? Put Up Christmas Lights

It pays to be festive, apparently.

Last year, Golden Corral performed an unusual test: it put Christmas lights on six restaurants around the country and measured the sales numbers. The results of that test were enlightening—a 5-percent sales increase compared with the chain's restaurants that had no Christmas lights. Most of that increase came in the form of higher traffic.

That's a big difference at a time when sales growth of any kind is tough to come by. "We were tickled with it," said Bob McDevitt, senior vice president of franchise operations for the North Carolina-based chain. "That's pretty darn good for this industry." He also suggested that the increase continues even after the lights have been taken down.

Christmas decorations are big business. Americans are expected to spend about $6.8 billion on decorations this year, and more than two-thirds of consumers participate in holiday festivities, according to the National Retail Federation. In short: consumers love Christmas, and they love Christmas decorations. So it only makes sense that a well-decorated restaurant would lure more business from customers simply looking for a more festive experience.

But that's not the only reason: the decorations draw attention to the restaurant, like extra signage. Indeed, it's the one thing companies can do to draw more attention to themselves without running afoul of local sign ordinances. "This is the time of year when you can raise your street level presence aggressively," McDevitt said. "It's the one time of year when you can brighten up your building and everybody loves you for it."

The idea came about three years ago, when McDevitt visited Sacramento. There, franchisee Joe Sacca decorates his restaurant aggressively, with multi-colored lights and white lights and giant Santa Clauses on the roof. "I was driving up to the restaurant, coming up the road, and the first thing that got my attention was the restaurant was beautifully decorated for Christmas," McDevitt said. "The street presence was that much better."

While most Golden Corrals do something inside during the holiday, like indoor lights or Santa hats on staff, Sacca was the only one to put the lights outside. What's more, Sacca told McDevitt, business improved when he put the lights up.

Thus, last year's test, at restaurants in New Jersey, New Mexico, North Carolina, Missouri, Illinois and Arizona. While McDevitt acknowledged the test was small, he said the numbers were stark.

There are a couple of caveats. First, multi-colored lights seem to work better at getting sales than plain old white lights, he said. And the decorations have to be done right. "You can't hang a few lights off the downspout and expect a result," McDevitt said. "You have to hire a professional."

Professionals cost money. Golden Corral stores are 11,500 square feet, on average, and a professional installer could cost $2,000 to $3,000. Nevertheless, it's safer if the job is left to the pros. "We'd lose a lot of franchisees" if they installed the lights themselves, McDevitt said.

Still, more franchisees are installing the lights this year. As of now, 30 to 40 franchisees are putting lights up this season, "and we're still counting."

"I'm sure we'll get more next year," McDevitt said.

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News, notes and commentary on franchise financing, including SBA lending, both the SBA 7(a) program and the SBA 504 program, franchise finance programs, development incentives, big deals and startup lending.

  Mary Jo Larson is the publisher of Franchise Times Magazine and its sister publication, the Restaurant Finance Monitor. She is a frequent speaker at meetings and conferences, and at the Restaurant Finance & Development Conference. You can find her on Twitter at @mlarson1011.
  Reporter Jonathan Maze covers restaurants and finance for Franchise Times. He also writes for our sister publication, The Restaurant Finance Monitor, and writes a daily blog on the restaurant industry at www.restfinance.com. You can also catch him on Twitter at @jonathanmaze.




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