January 7, 2019 |
In the world of retail, there’s nothing like a decent discount to get people salivating. Just look at the footage of in store Black Friday deals, where going to buy a television often looks more like running the Gauntlet in The Hunger Games and requires nerves of steel. Retail is one thing, but can discounts translate well into the restaurant industry? Or do businesses risk devaluing their brand?
At the lower end of the market, discounts can work very well. Whenever McDonald’s puts out one of it’s buy-one-get-one-free offers, people are lining up around the block. However, they don’t frequently do this, and the feeling of scarcity is key. Subway found that out to their detriment. For years they offered customers a $5 footlong. A simple and appealing round number that offered excellent value for a whole lot of sandwich. But over the years the company found the offer was unsustainable, and when the price was upped to $6, customer’s were furious and took to Twitter in their droves to voice their feelings. Subway closed 355 stores in 2016, and a further 900 the year after.
Other eateries in need of a boost often flock to online sites such as Groupon and LivingSocial to get the word out about their deals, with the perception they’re creating a new customer base. But if you’re offering something like a 50% discount, customer’s will surmise that you’re either desperate for business because your food isn’t up to scratch, or that you’re trying to fool them by jacking up the original prices and creating the facade of a discount to try and snare them. It’s not a good look. I’m reminded of a local clothing store growing up in my home-town, which had a 70% off closing-down sale in its window. All well and good, but the store stayed open for over ten years, as did the discount offer, and it became a running-joke at the company’s expense.
Of course, some discounts do work incredibly well. ‘Happy hour’ has been a long-standing feature of many pubs and bars for over 100 years, and with alcohol the benefits are obvious. It gets people into your establishment earlier than they’d normally travel there, and once they’ve sank a couple of rounds and are feeling merry, they are much more inclined to keep on drinking. But with restaurants, people can only eat so much before they’re full and their needs are met.
Successful discounting is complicated. The key is to make a discount feel like a perk, rather than incentive. Incentives are things parents try to coax unruly children into doing in exchange for effort required on their part. You don’t want your diners to feel like they’ve been led to a restaurant purely by a carrot on a stick. But if something is marketed as a perk, it feels more like you’re rewarding the customer with a discount in gratitude for their business. For example, surprising diners with complimentary free bread or a shot of liquor at the end of their meal is a discount that feels kind rather than forced, and your customers will remember you fondly for it.
There’s no doubt many ways to market restaurant discounts effectively pre-visit, but the important thing is the feeling of scarcity. A well-timed discount at a fiercely competitive time over christmas or other notable occasions to make you stand out above rest if your establishment is in need of new customers. But if you’re advertising a range of offers every single week, you run the risk of devaluing your whole business.
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