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Restaurants begin phasing out 2-for-1 deals in bid to break discount bind

By Luke Nicholls , 12-Oct-2012

Related topics: Business, Venues, Trends & Reports, Restaurant Trends, Restaurants

High street restaurants are moving away from two-for-one discount deals in favour of vouchers offering smaller reductions available for more limited periods – could this be the first sign of a break in the ‘discount bind’?

Returning to standard pricing by withdrawing vouchers is now one of the biggest challenges currently faced by high street restaurant operators

Returning to standard pricing by withdrawing vouchers is now one of the biggest challenges currently faced by high street restaurant operators

According to the latest Voucher Tracker by foodservice consultancy Horizons, operators are withdrawing customers’ reliance on discount offers by limiting their availability and changing the nature of the deals.

Kids Eat Free vouchers, for example - which in 2010 were offered by high street restaurants throughout the year - have this year been issued during the school holidays only, dropping off sharply when the schools went back in September.

This August Voucher Tracker noted brands such as La Tasca, ASK, Ember Inns and Loch Fyne limiting their Kids Eat Free vouchers to the summer holidays, while Frankie & Benny’s and Whitbread brands Beefeater, Brewer’s Fayre and Table Table opted for a ‘Free Kid’s Breakfast’ offer.

“In September our Voucher Tracker research noted a shift away from discounting, particularly family-orientated discounts,” said Peter Backman, Horizons’ managing director. “Two-for-one deals and money-off vouchers are now being replaced by offers such as ‘free dessert/starter with every main course’ or discounts available at restricted times.

“It seems that we are at last seeing operators trying to wean themselves off the discount deals, which are expensive for them to run, but which consumers have become very reliant on.”

Discounting treadmill

Since the economic downturn, many of the UK’s high street restaurant operators have used vouchers and money-off deals to boost customer footfall, particularly in traditionally quieter periods. However, while discount deals may fill seats, they risk eroding the value of a restaurant’s brand image, and in some cases have a negative impact on operating margins.

The proliferation of discount deals over the past two years has meant that the pricing points of many restaurants has effectively been reduced as customers get used to paying far less for their meals because of the vouchers. Returning to standard pricing by withdrawing vouchers, without losing price-sensitive customers to the competition, is now one of the biggest challenges currently faced by high street restaurant operators.

Earlier this year, BigHospitality reported that deep discounts, special offers and the use of daily deal websites could soon become a thing of the past for restaurants and pubs as customers are becoming more attracted to outlets which offer rewards for loyalty as opposed to money off.

A survey of 2,000 UK restaurant-goers  revealed that almost half (48 per cent) of 18-24 year olds would be more likely to visit a pub or restaurant that offered a loyalty card, compared to one in four for a discount programme.

Shortly after that survey, we evaluated the effectiveness of one of Whitbread’s marketing campaigns, The Reward Club - which it has been using to promote its Beefeater brand for the last four months and question if it is a worthwhile alternative to discounting in terms of bringing in more trade.

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