Have you ever used discount tickets for a restaurant? Such as a ‘two diners for the price of one’? A discount ticket that you earn by saving stamps (typically Dutch) at the AH supermarket?
I was curious to find out how restaurant managers think about such ‘discount actions’. In order to find out, I surveyed a number of restaurant managers about their willingness to participate in such actions.
Devil in disguise
Closing a restaurant because of ‘low season’ has become the exception, especially in the big city.
So there you are as a new restaurant manager facing empty tables and empty chairs and suddenly you are confronted with a rep from IENS, Tripadvisor or another platform who promises you solemnly that they will fill your restaurant to the gills!
So what do you do? Hand over 50% of your income to your guests? And a substantial part of the leftover margin to the platform as well? A platform that proclaims to ‘own’ your target group? Doesn’t that feel like selling your soul to the XXX?
To attract new guests and to get them acquainted with your restaurant, your kitchen, your food, that is typically the motivation for joining such discount actions.
Actions that cost deer margin, but should pay themselves back in the future, because your restaurants has now become ‘famous.’
This seems straightforward, but as a guest with a discount ticket from the supermarket, I noticed that not all restaurants share the same view.
At one restaurant we got a ‘special’ menu with only two meals to choose from, while at another restaurant we could choose whatever we liked from the standard menu.
As a guest it makes you wonder, why is the restaurant manager doing this? Does he want us to enjoy the kitchen at its best? Or does he want us to discover the ‘ambiance’? Whatever! We never had a really, really great experience! So don’t count on my loyalty!
In my survey I asked the six managers about the results of such actions. I was surprised to hear that nobody knew if these ‘action guests’ were willing to return or even recommend their premises (in spite of the survey sent afterwards by IENS, the organizing platform).
Two-third of the managers don’t believe in such discount actions. Let me share some of their remarks with you:
o ‘When I heard that my colleague was going to do this, I’ve put an immediate stop to it.’ ‘Discounts are the death of hospitality’. ‘It only generates bargain hunters’.
o They take up seats from regular guests who come for the good food we serve.
o We can easily outdo this.
Do it yourself!
The actions that restaurants keep are mostly related to a ‘theme’ or a ‘period’ like Christmas, Easter, etc. That seems to be much simpler than offering a discount during low season. Most adds I found are period-related.
Financially, doing it yourself is attractive because one can manipulate the discount (and raise regular prices), so I was told.
The primary goal of setting up a ‘discount action’ is to fill the chairs. But virtually nobody knows if such actions drive more recommendations or repeat visits. Moreover, neither names nor mail addresses are registered, so there is no way to give a follow up to these ‘potential’ new guests.
What is it YOU want?
Participation in an organised discount does not have to be a financial disaster, but you must have a clear goal when you decide to participate.
- Is it your goal to ‘fill up the joint’? Then make sure you get an acceptable margin and focus on up-selling, for instance by selling a more expensive wine or a special desert, not included in the ‘action menu’. However, and I write this from experience, don’t exaggerate. Because exaggeration gives a bad feeling which reflects negatively on your restaurant.
- Is your goal to attract new guests? Then don’t promote yourself to the ‘bargain hunters’ with an exceptionally low price. Make sure to measure if your action reached its target. And register the personal data of your new guests, so you can reach them in the future!
What do you think?
Recognizable? Do you have an opinion about ‘restaurant discounts? Please share your experience with us!
Jan Mulder, researcher at Market Vision (specialist in hospitality research), wanted to know how restaurant managers think about discounts via platforms. He conducted a qualitative survey among six very different (Dutch) restaurants with at least 150 seats. He surveyed them about the loyalty of the guests, the use of new techniques and discount actions.