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Say 'NO' to discounts for continued growth of your restaurants | Restolabs
April 30, 2019

The Siren Song of "Free" Burgers is enticing and effective. In today's e-commerce age, it has turned out to be so strong that now customers don't want to buy from a brand that's not giving any kind of discounts or running promotions on meals. Vouchers, loyalty rewards, discount coupons, and other promotional tactics have long been used as a way to drive sales, both online and offline - Yes, even small discounts are a big hit and can drive more traffic your way!

Promotions are Effective

The restaurant sector is one industry renowned for discounts and deals. Most of the restaurants plan their promotions throughout the year to fall within key calendar dates, as well as in the response to the commercial needs of the business. Brands use this incentive as a way to encourage their customers to look into first direct, to discover their products and try them out. Needless to say, a dish of $50 with a 10% discount would attract more orders than a dish originally priced at $45.

On the surface, this type of discounting makes sense. How else they are supposed to drive traffic to boost their sales? But the truth is that not all restaurants have the pricing-power, which means they can't afford to lose 10-20% per order, especially if the orders are being placed using food aggregators like UberEats, GrubHub and so on. Read here to know how food aggregators are making money at the cost of your restaurant’s sustainability? Across the board, price cuts not only put a dent in the bottom line but also devalue the products being offered by the business, limiting the restaurant's ability to increase prices in the future. On the other hand, with promotional offers like BOGO and Happy Hour Deals, customers might not take the brand seriously or feel that the price of the food is jacked up.

Can you imagine every Friday a customer returning for the same deal? The point is that over a period of time, this will make the customer reluctant ordering from your website or restaurant unless you offer a drastic deal. This is truly problematic. Of course, the customer then looks out for another restaurant selling the same dish at a relatively cheaper price and the rhythm is thrown out of whack.

So what does one do?

How restaurant owners should communicate discounts to customers that give the impression of a perk or gratitude for their business? What can you do to keep the customers coming back without resorting to offering food at a discounted rate all the time? Here are some strategies that will help you avoid the trap and regain lost ground in the recovery.

Make customers your friend

Why do you think people have their favorite restaurants to order food from or dine in? What's that experience that makes them keep coming back even if the price list on the menu shoots up? More than food and ambiance, it's the way the place makes them feel. People, especially customers who are paying to try your food and use your services want to feel valued. When they order from your restaurant try to recognize them, what is their regular order, how was their previous experience with your restaurant and how you worked on their feedback? Use customer database and analytics to get this information. You can also use this data to recommend new dishes or combos deals.

Collaborate with Influencers/food bloggers

Word of mouth has a lot of different meaning these days. Yup, it's referrals on Instagram, typically by food lovers your customers look up to for advice. For example, the screenshot below is an example of how an Influencer can help you spread the word about your food, service, and quality.

Such influencers leverage their large following on social media by posting videos, stories or images of food that interest their audience over time. Collaborate with social media influencers that live in the same cities as your restaurant(s). Make note of the accounts that interest you and compare the average likes and views of each account. Connect with them with your proposition. Chances are a lot of them would be willing to work with your brand for a fee or free meal. Many will say yes to this and start posting about your restaurant in return. We call it the “law of reciprocity”.

Take part in festivals

If there's any one marketing strategy that can guarantee an increase in sales it's Food Festivals. Food fests and related events have become quite popular in recent years, attracting millions of people from all walks of life. The fusion of social media and food make Food Festivals an excellent marketing platform for both established as well as new restaurants. Not only you get to reach new customers, but also create networking opportunities that can improve your chance to make money. Most of the times new establishments do not have a high budget to promote themselves on all major platforms. For such businesses, food festivals turn out to be the best way to get noticed and mark their existence in the market. In order to attract attention to the stall, you can plan some interactive games for your visitors and offer vouchers and coupons as a prize.

It's time to flip the switch

Sometimes creative approaches work better than discounts and offers. Understanding your audience, what are they looking for and what you could do best to meet their needs can help you multiply your sales without having to resort to discounted meals and beverages all the time. But this doesn't mean that you shouldn't use discounts as a tool to mend the sticky spots. When done right, small discounts ensure a steady supply of customers to your doorstep. Just don't overdo them, and when you do, make sure the offer fits within the brand identity.

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