Restaurants and pubs who have relied on attracting custom during the recession with discount vouchers and promotions are being urged to 'wean customers off coupons' to help build their brand when the upturn comes.
Analysis by the professional services firm Deloitte has found that discount vouchers and promotional offers have been helping to boost trade for some operators during the recession, but the company's Glyn Bunting warns that continuous discounting could ruin profit margins and damage brands in the long-term.
"Operators need to use such promotions wisely, to ensure that their initiatives genuinely increase sale rather than cannibalising profit margins on business they would have anyway. As the economy begins to emerge from the recession, a key challenge for operators will be to wean consumers off these discount deals," he said.
Research by Horizon's, released yesterday, showed that the average spend on eating out had dropped by 6 per cent on last year, which it attributed to the popularity of discount vouchers and deals.
Bunting said most areas of the economy had been hit during the recession, but pubs were suffering harder than most due to the impact of the smoking ban. However, he is optomistic about customers returning.
"Deloitte analysis of like-for-like sales shows noticeable shrinkage in 2009 for the quoted pubs sector, particularly relative to the quoted restaurants sector, but with both sectors forecast to return to like-for-like sales growth by 2011," he said. "Dining out and socialising may well be near the top of the list of activities people cut back on when times are hard, but they are the first to come back on the agenda when there is more disposable income.”
“The key challenges facing all businesses in the sector are how to adapt to changing lifestyles and shifts in consumer demand, how to appeal to a new generation of customer and how to bring the smoker back.”
Deloitte advises operators to keep prices competitive and manage their businesses well for the upturn. It predicts that restaurants and pubs offering a unique drinking and dining experience combined with real value for money will continue to show sustainable growth.