Implement Discounts and Promotions Like a Pro
Offering your future and existing customers coupons, discounts, and other promotions can be an effective way to bring customers into your restaurant and keep them coming back. However, all too often, restaurants develop a habit of keeping the same deals and coupons in place for far too long. They lose efficacy and potential customers because of this.
Want to learn how to avoid this and implement promotions like a pro? Keep reading for easy tips to start a successful discount program today!
Skip the Coupon Websites
Although coupon sites like Groupon and Living Social can bring in herds of customers, there are many drawbacks that come with it. For starters, most businesses will see no profit from establishing these deals. Coupon sites like Groupon take up to 50% of the revenue per deal. Couple this with savings to the consumer of at least 50% and most businesses stand to lose money on these deals. In addition, these sites have a low conversion rate of repeat customers. So, although you can get customers through your door – you will be hard-pressed to find them coming back.
Lastly, featuring huge discounts like those on Groupon and Living Social can hurt your brand. Once a customer gets a product at a greatly reduced price, they become less inclined to purchase at full price. If you do wish to use these coupon sites, be sure to limit the number of coupons available. This will put a cap on the profit losses your restaurant can face. Otherwise, it is best to offer coupons and discounts through your own website and newsletters, thereby dramatically reducing the advertising fees.
Tips for using coupon sites without hurting your brand:
- Offer new menu items on coupon sites – not your best-sellers
- Limit Offers for exclusive sale events
- Weigh the advertising and discount cost against your profit when calculating discount offers
- Treat Groupon and other coupon site users with the same level of respect and customer service as full-priced customers.
- Provide value in your social coupon offerings, and larger discounts to larger groups to attract crowds.
Consider Your Business Model
Before implementing a discount program, be sure first to consider your business model. If you run a fine dining or full-service establishment, for instance, a BOGO dinner offer may be a great promotion that diners would use. Fine-dining and family dining experiences usually lead to couples dining out, who would love a free meal, while still paying full price for one of their entrees.
But, if you are running a pizza joint, a BOGO large pizza might simply be too much food to bring customers through the door. You’ll see BOGO requests for delivery more often than for in-store orders. For fast-casual and fast-food restaurants, try sticking with dollar increment discounts, which tend to be seen by consumers as higher-value deals. Check out how Papa Johns is giving out free pizza without losing customers through its loyalty program.
Focus on the Draught
Whether it is the dreaded lunch shift or quiet Tuesday nights, every restaurant has a time of the week that is slower than the rest. If you are starting a coupon program, try paying special attention to these times. You may consider offering a weekly $1 Taco Tuesday night, or BOGO lunch specials to entice customers to come in.
It is also advised not to offer promotions during your most profitable times. So, if Saturday nights and Sunday brunches are usually fully booked, be sure to forgo the coupons during these shifts. This way, you can keep your profits steady during your most important times.
When focusing on slow times for your restaurant for discounts and promotions, look at hosting events. Add entertainment to your restaurant to attract new customers with these 13 entertainment ideas for restaurants. When new patrons come to your restaurant during an event, they are more likely to share their positive experience and come back with more friends next time they visit.
Even if you are offering discounts and promotions, don’t forget about upselling. When advertising restaurant coupons, consider offering different tiers of coupons. For instance, you may offer 20% off Sunday Brunch as the first tier, 30% off Sunday Brunch with a glass of champagne as the second tier, and 45% off Sunday Brunch with unlimited champagne and mimosas at the third tier. Offering a greater percentage of discount for the highest ticket items will entice customers to spend more, and in turn, you’ll generate more revenue.
Tiered Discount Value Ladder for Upselling Brunch Specials Example
- 20% off Sunday Brunch.
- 30% off Sunday Brunch with a glass of champagne.
- 45% off Sunday Brunch with unlimited champagne and mimosas.
Use this template to create a tiered discount ladder that upsells your priciest menu options — pairing food and wine often? Learn how to upsell your restaurant’s food and wine pairings.
Know Your Bottom Line
Discounts and promotions can be great at getting customers in the door. However, overuse of coupons and overly steep discounts can hurt your restaurant more than it will help. To prevent your restaurant from losing money, be sure to pay special attention to profit margins when deciding on discount amounts.
A good rule of thumb is not to discount more than the profit you take per dish. Another thing to watch out for is over-couponing. Keep in mind that couponing sites like Groupon take a cut on each deal that they users snag. Their cut will decrease your profit margin and is a major factor in determining the best discount amounts to offer.
You don’t need to offer a promotion every night of the week to increase restaurant traffic. Try starting light – one promotion on your slowest night. Too many promotions can cheapen your brand and drastically decrease your profit potential.
You may have great promotions, but if you don’t market them, they won’t bring in customers. To create buzz, be sure to advertise on all your social media platforms, and send out newsletters to your existing clients. To generate even more attention, try promoting a Facebook post or tweet on Twitter. For just a few dollars, your posts can be seen by thousands of prospective customers in your area.