Doing Restaurant Discount Marketing
It always seems beneficial when restaurants offer discounts to customers, and it can be, but it can also be bad for business. Sure, you’re getting new customers through the door, but will your new business make up for the losses stemming from your discount offer?
When starting your own business, you should remember that price discounting is both an art and a science. When done improperly, it can negatively affect your bottom line. So let’s talk in economic terms a bit and find out a consequence of “discounting”.
There are two main problems with offering discounts:
- Profit loss
- Brand devaluing
The Loss of Profit
The profit loss is the primary and most obvious issue with restaurant discounts. Take note that the bigger the discount, the greater the loss. No matter the percentage of the discount, it will eat into your profits.
Getting more customers through the door doesn’t inevitably mean that they will return to your place. For example, if they can get a great deal on a meal at your restaurant today, they may not want to come back tomorrow and pay full price.
There’s also a good chance that your loyal, repeat customers will use your coupon or discount offer. The customers who would have eaten at your restaurant anyway, so you’re just giving margin away with your offer.
The Depreciation of Brand
Sometimes spoiling your brand’s reputation by discounting can be even more damaging than profit loss.
Discounts can cause customers to wonder about the quality of your:
- Food
- Atmosphere
- Servers
Take an important note that if your restaurant is famous for offering discounts, customers will come to expect them and will be very unlikely to pay the full price for a meal. At some point, your discounted prices become the “normal” price and anything higher will be viewed as a rip-off by these coupon customers. In the worst-case scenario, the restaurant becomes entirely dependent on discounts.
Doing Discounts in the Right Way
Let’s look at some ways of offering discounts without causing too much damage to profits or reputation.
It’s always important to make sure that it’s feasible and practical, when developing any discount strategy. Firstly, think if you can truly afford the discount you have in mind? Yes, you’re going to take a hit on your profits no matter how little of a discount you offer, but the question is: will this promotion cost you a lot more than it’s worth?
Take a look at some discount ideas that help you avoid getting stuck in the vicious cycle of offering steep discounts regularly.
First Time Customer Discount
When a restaurant offers a discount to first-time customers, it has great chances to get new customers through the door and convert them to repeat customers. The biggest challenge in the restaurant industry is verifying whether the diner is truly a first-time customer.
You can easily verify your first-time customers through implementing a loyalty program. Those who sign up for the program can get a discount on their first visit when presenting their loyalty card.
Holiday Discounts
Everybody knows that the holidays are the best times to launch discounts. For example, you may offer discounts or special pricing for:
- Mother’s Day brunch
- Thanksgiving lunch
- Father’s Day breakfast
- Memorial Day lunch
Holiday promotions can give you a chance to launch some creative promotional events and help you promote with other restaurants.
Down Times Discounts
Your restaurant may be slow during lunch hours or certain days of the week. It might be more worthly to focus your discount promotions around these periods. Don’t offer too steep of a discount. The goal is to remain profitable.
2-for-1 Offer
Recently, 2-for-1 specials have become increasingly popular in restaurants. But for this promotion to be effective and profitable, it should only apply to certain items or should be available only for a limited time. If you want to keep this promotion going, try rotating menu items to see which items customers love the most.
Discounts on High-Margin Items for a Limited Time
You can offer a discount on a premium entrée for a week. Hopefully, customers will keep coming back for more. Remember that it’s important not to offer too steep of a discount — just enough to entice customers to bite.
Discount Pricing Alternatives
Sometimes it can be difficult to figure out how to discount a price. Discount marketing is just not the right solution for a restaurant. But don’t get sad, there are other ways to lure in customers without having to devalue your food or brand.
Limited Time Promotion
The first simple way to bring in customers is to launch a limited time offer (LTO), such as a seasonal menu item. Take note that LTO should fit your brand and your menu.
If you can come up with a seasonal item for each season, you can always have something new and around for only a limited time.
Loyalty Program
A great way to reward loyal customers and convert first-time visitors into repeat customers is by launching a loyalty program.
Loyalty program members can receive promotional discounts, perks or other rewards after accumulating so many points or dining at your restaurant so many times.
Perks Offering
Some restaurants have freebies that make customers coming back on and on. In most cases, the costs of these items are negligible compared to the business they bring in. The best part about these types of perks is that customers are still paying full price for their meals.
Source: https://mcdonaldpaper.com/blog/how-to-do-restaurant-discount-marketing
