The pros and cons of coupons in the restaurant space
When an eatery is interested in attracting new customers, one option that often comes to mind is issuing coupons. Offering consumers a chance to get a discount at the restaurant can be a great way to pique the interest of new guests, and might even drum up business from lapsed customers.
Restaurants that are considering the use of coupons should look at the facts, as well as the pros and cons that some restaurateurs see when utilizing them.
Although many consumers enjoy visiting their tried-and-true favorite restaurants repeatedly, they are willing to be swayed to try a new eatery if the deal is good enough, according to Valassis’ 2018 report Tempting the Dynamic Restaurant Customer. In fact, the study found that about 30% of consumers switch their casual dining and fast food choices when they can save money doing so, while 25% made the switch for pizza and fast casual dining.
In addition, the study found, buy-one-get-one-free offers and special limited-time or new offers spur the most new restaurant visits.
Restaurant staffers also see many positives in offering coupons. “We like coupons as a way to fill in the gaps where business is slow,” said Tuni Cho, manager of Taste of Seoul in Charlotte, N.C. “We had a lot of customers on weekends, but not as many on Tuesday through Thursday, so we issued coupons just for those days and we were able to increase business on those nights,” she said.
The same can be said about coupons for specific dayparts, like deals just for breakfast or lunch if those periods are slow. The upside to coupons is that they can be tailored to exactly what your business needs.
In addition, coupons can allow you to target new customers, keep existing customers happy and boost your restaurant’s visibility via the fresh messaging opportunities. Plus, coupons don’t always have to be clipped and presented physically anymore. Many discounts and deals have gone digital, reducing the cost of printing and delivering them to customers.
A restaurant that has an active coupon deal in the works must always be at the top of its game, because one detail out of place could prompt those new guests to never return, says David Masterson, who has managed four restaurants in Ohio and also worked in the past as a district manager with a large fast food chain.
“When I was managing a sports bar and a family dining restaurant, the coupons would always work to bring people in, but keeping them can be an issue if the restaurant gets busy and the staff is spread thin, or if there’s an issue with the service being slow. On nights after you’ve sent out a coupon, make sure you don’t miss a beat,” he says.
In addition, he notes, issuing coupons for fast food customers can prompt new visits but may not spur repeat customers no matter how good the service is. “When I was in fast food, we found that about half the people who used them would come in for the inexpensive item and only buy what was on the coupon, and then leave. In some cases, we could upsell them to a higher priced item, but a lot of people are looking to use coupons to get almost free meals in the fast food space,” he notes.
However, Masterson says he would still utilize coupons in a future restaurant role because of the market insights they provide. “Coupons were one of the best ways, outside of surveys, to see what promos would work with our specific populations, so I would use them again,” he said.
- Where does the food industry stand on romaine lettuce?
- A new wave of plant-based food makers is focused on fish
- How the gig economy is changing how restaurants hire, manage their workforce
If you enjoyed this article, sign up for Restaurant SmartBrief to get news like this in your inbox, or check out all of SmartBrief’s food and travel newsletters as we offer more than 30 newsletters covering the food and travel industries from restaurants, food retail and food manufacturing to business travel, the airline and hotel industries and gaming.