Slade Sherman

OK, so you own a restaurant or café, you have been approached by a local discount program, you have read my last post, followed the 8 guidelines, decided discounting is for you and now you ask yourself ‘what discount should I offer?’

The best advice I can give for coupon restaurant promotion is to (1) limit your exposure and (2) use ‘perceived value’ to your advantage. Attracting new customers with a discount coupon is great for business as long as the terms of the offer limit your exposure by not giving away too much margin. You also want perception of value so potential customers feel compelled to use the coupon.

So here are some suggested marketing tips to attract customers and limit your exposure:

1. Put a maximum on the value of the discount. If you are offering a 25% discount on the food bill then consider applying a cap to the total saving. As a guide the cap should be equal to 25% of the value of four average full price main meals. So if your average main meal is $30, the cap on the saving should be ($30 x 4) x 25% = $30.
2. Structure a discount that is easy for your staff and customers to understand and calculate. It’s much easier to understand the value of 20% compared with 22.5%.
3. Limit the discount to ‘food only’ or ‘main meals’. The perception to the customer of ‘25% off the food bill’ and ‘25% off main meals’ compared with ‘25% off the bill’ is the same. In their mind they are saving 25% but options 1, 2 and 3 in table 1 illustrates how a perceived saving of 25% can actually only result in a 10% reduction in the bill.
Discount Calculation

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4. Consider BOGOF deals as opposed to percentage discounts. BOGOF deals are ‘2 for 1’ meal deals and are usually worded “Buy one main meal and get the second equal or lower priced main meal at no charge”. They have excellent perceived value as 2 for 1 implies a saving of 50%. In reality most people purchase more than just two main meals so the actual discount is less. Table 1 shows that the difference between the perceived saving and actual saving for a BOGOF offer is significantly better than other options reviewed so far. The chart below represents the perceived saving vs. actual saving for the four options in Table 1.
   Restaurant Promotion
   
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My example in table 1 relates to a typical bill for four people but every restaurant is different so I encourage you to review the options and how they relate to your restaurant. Measuring your offer: Once you are promoting your offer, hopefully it’s resulting in increased patronage, but if not here are some things you can review:

1. Measure how many coupons you collect and ask customers who come in with coupons why they selected your restaurant.
2. Ask the local discount program to give you an indication of how many members are in your area. Check if the members match your target market (this also applies to paid advertising in which you are promoting a discount).
3. Ask the local discount program what sort of usage other restaurants in your area are getting and what discounts they are providing. If possible, change your offer so that you are more competitive.
4. Review the ‘perceived value’ of your offer. The best way to do this is to ask customers what they think of the offer and ‘listen’ to their feedback.
5. Test discounts by doing local letterbox drops or promoting your offer with local retailers and measure which coupons yield the best results.

Technorati Tags: Discount Coupons, Marketing Tips, Restaurant Promotion

Posted on April 26th, 2009 under Marketing Plan. Tags: Discount Coupons, Marketing Tips, Restaurant Promotion. RSS 2.0 feed. Leave a response, or trackback.