Discount dining: Help or hindrance for the restaurant sector?

By Luke Nicholls

- Last updated on GMT

Discount vouchers have traditionally proved an effective tactic by some operators in encouraging consumers to eat in their outlets and have risen in popularity since the recession. But the popularity of these schemes has raised concerns that some operators are now becoming reliant on them.

As restaurant owners look to remain profitable during the tough economic climate, the temptation to lower prices and offer coupon deals can be so irresistible that it becomes a difficult habit to break.

A recent review of discounting activity in the casual-dining sector by Restaurant magazine showed that many restaurant chains who pledged to shake off their old deep discounting habits this year have already fallen off the wagon.

In this short audio podcast, BigHospitality spoke to Peter Backman, managing director of foodservice consultancy Horizons, and Andrew Guy, director of Ed’s Easy Diner – a restaurant that has forever strived to stay away from discounting and daily deals.

We asked them about the positives, the negatives and the potential risks of special offers and deals for restaurants, in a bid to find out if it is actually possible for a large chain to escape from the treadmill of discounting.

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4 comments

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Good and Bad

Posted by Miss Marketing Dragon,

There are good points to using voucher sites and also bad ones. Having worked in this media marketing industry business owners are pressured into getting them to believe it will bring customers WHO will return as a full price paying customer!
Really all you get are "Deal Hoppers" just looking everyday where they can get a cheap dining out offer.

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Good to launch your Business Only as a one-off

Posted by director - marketing dragon,

I agree with the comments raised - having previously worked in this industry, I dont't think that business owners realise or even know how much damage it can do to a business. They are not taking time to review there own marketing strategy and look at other ways to drive it forward.

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Breaking the discount habit

Posted by Petra Clayton,

I couldn't agree with Peter Backman more - if discounting/vouchers are used tactically they are a great marketing opportunity for restaurants suffering with Monday lunchtime lulls for example. Treated carefully and within a strategic marketing approach, restaurants can create and generate custom through carefully planned discount/voucher campaigns. Peter is absolutely right - if this is done in a blanket fashion and a regular discount, then the restaurant is in grave danger of repositioning itself in the market and will suffer long term consequences by being forced to dilute the service/food and delivery to stabilise profit margins. I would say that if discounting is driving business during down periods, please don't be tempted to dilute the offering. If you are trying to attract a new market or boost monday bookings, don't skimp on the portions or limit the menu. It's your opportunity to shine and deliver outstanding service and food to make customers come back and not just when offers are valid. It's time the industry really got back to the essence of loyalty marketing and relationship building and recognise that whilst the customer has changed, the attitude to good food and service has improved and we demand both at a greater level than ever before. If restaurants charge less for this, the customer will still leave unhappy if the promise hasn't been delivered. Regardless of price. We say bring back loyalty and delivery and only use discounts/vouchers to highlight new menu's, push the down periods and reach new markets.

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