Three Long Term Effects of Coupons & Discounts for Your Restaurant
In our blog post Should You Be Running Coupons for Your Restaurant?, we discussed some of the pros and cons of running coupons for your restaurant. In that post, we mentioned that restaurants are particularly susceptible to the negative outcomes of coupons. Modern computer systems for restaurants can make it easier than ever to run coupons or discounts, but that doesn’t mean that they are the right way to go for every restaurant. Today, we wanted to delve a little deeper into three of the long term effects that can result from running coupons and discounts in your restaurant.
Coupons and Discounts Can Eat Into Your Existing Revenues
When running a restaurant, it’s important to remember that anybody can use a coupon. Your regular customers can use coupons just as easily as people who are trying your restaurant for the first time. If too many of your regular customers redeem your coupons or take advantage of offered discounts, it can actually eat into your existing revenues without increasing your customer base. You have to make sure that the possible short term benefit of bringing more people into your business has to balance with maintaining your existing customer base long term. You can try to limit coupon use to new customers, but this is particularly difficult in restaurant settings and making the attempt can actually make your regular customers feel unappreciated. A customer loyalty program, on the other hand, rewards your regular customers for returning to your business and might be a better option.
Coupons and Discounts Can Impact Customer Return Visits
When coupons and discounts are run on a regular basis, it can lead to an unsustainable business model. If your customers feel like they can always take advantage of a special deal, they may begin to wonder why they should ever pay full price for your food and drink offerings. This can result in a large portion of your customer base only visiting your restaurant when a coupon is available. If you do choose to run coupons or discount programs for your restaurant, you should make sure that you are not doing it regularly enough that people become unwilling to pay full price for your food.
Coupons and Discounts Can Negatively Impact Your Brand Image
The unfortunate truth is that coupons and discounts, especially when they are run regularly, can actually have a negative impact on your brand image and the perceived value of what you offer. Short term, you may have more people in your restaurant. But long term, you may find that people begin to ask questions that lead to a negative impact on your company’s image. They may begin to wonder why your regular prices are higher than the discounted offer. They may begin to wonder if there is any value in buying your food at menu price. They may even begin to wonder why they should ever pay full price for your food. When people start thinking this way about a restaurant, it can actually cause them to discount the quality of the restaurant in their minds and they will no longer be willing to pay full price for your food. In the long run, consistently providing true value on good food is infinitely more important than getting a few more people to come into your restaurant.
If you are thinking about running coupons or discounts in your restaurant, make sure you weigh short term gains against long term effects before you make your decision. Using a good Point of Sale (POS) computer system for your restaurant can make you better at accounting for your business, helping you determine when and how often you can afford to offer discounts on your products. On occasion, offering coupons or discounts may be the right course of action. But, in our opinion, providing true value and quality service trumps any gimmick you can come up with to bring in a few more people. We also think that rewarding your loyal customers can be a much better idea for long term gains.