Are We Reaching the End of the Restaurant Discount Culture?
Families, couples and groups of friends became adept at checking online for vouchers before they headed out for a meal, and big restaurant names like Pizza Express came to be known – almost jokingly so - for their virtually endless provision of discounts.
But is nearly a decade of discounting now coming to an end for restaurants? As we mentioned in our post on 2016 foodservice trends earlier this year, evidence suggests that restaurant discounts aren’t as effective as they used to be, as customers now seek genuine value for money over ‘money-off’. Today on the blog we’re going to be talking a little more about the change in discounting culture, and what it means for the industry as a whole.
Vouchers are (maybe) out, real value is in
According to restaurant industry insights from M&C Allegra, promotions and vouchers were presented in payment for just over one in 10 (13%) evening meals eaten out in 2015, compared to almost one in five (19.5%) the previous year. Voucher code websites and apps are still going strong, so why has this figure dipped?
While total spending on eating out has risen, the average spend per head has fallen, which suggests that customers are seeking better value for their money. Another likely factor is in the increasing market for ‘premiumised’ casual dining. Many customers are now comfortable going out more regularly to eat something like a gourmet burger and a few sides rather than a full three-course meal, so are spending less per restaurant outing, but more overall.
M&C Allegra’s research shows that American-style food chain Bills has been one of the fastest growing dine-in brands in the country of the last few years. Street food is also expected to be a major area of growth with nearly half (46%) of people in the restaurant industry expecting the small plates and informal welcome of street food to continue to grow. Eating out in pubs and bars was also predicted to be a high area of growth, with a 4.9% rise predicted by M&C Allegra’s research for 2016.
So what does this all mean? Casual, affordable eating is gaining in popularity, and discount vouchers don’t seem to hold the sway they once did. And even discount-driven Pizza Express has been changing tack. While they feature on the 02 Priority app and still promote regular offers on their website, the brand seems to be trying a new approach and caused a stir last winter with its ‘Snowball’ freebie campaign. You could say that they parted with their dough to keep their customers parting with theirs!
Today is the day! It’s #FreeSnowballDoughBallDay! Simply visit any of our restaurants and mention the magic words, ‘Free Snowball Dough Balls’. Get your free portion of Snowball Dough Balls totally free on Takeaway or with the purchase of any main course if you eat in. And please share a picture of your Free Snowball Dough Ball Day using the hash tag! More info: po.st/SBDBDay2015 A video posted by PizzaExpress (@pizzaexpress_uk) on
The potential damages of discounting
Many marketers are wary of the long term impact that discounting can have on brands, which can potentially lead to a devaluation of the food and brand experience. A discounting culture also promotes lack of loyalty, with customers heading off to eat wherever the best discounts are to be found that week. In this 2010 article, Pizza Express comes under criticism for using discounting as a long term strategy and it is suggested the brand may “take years to recover”. With well over 400 outlets here in the UK, Pizza Express have held a firm grip in and they’re currently expanding in China under their new owners too, but it remains to be seen as to whether they ever truly escape the voucher association.
Alternatives to discounting: loyalty rewards, queue jumps, freebies and more
Research from Mintel suggests that restaurants should perhaps be exploring other promotional avenues to win customer loyalty. In their ‘Attitudes towards Lunchtime Foods’ study conducted in 2015 they noted that 22% of 25–34 year old diners are ‘not comfortable’ with vouchers, and many of the groups who do use them could be moved over to the use of loyalty cards or reward schemes instead.
And of course, price is not the only factor in helping people to decide where they eat. During lunchtimes in particular, being able to order in advance or guarantee speedy service could help you win custom, which is why the payment technology arena is becoming increasingly competitive.
There is scope to combine payment technology with some form of discounts or other benefits, such as a queue jump option for regular customers, but rewards needn’t necessarily take the form of a voucher to incentivise visits. Indeed, chains are already opting to offer different benefits to returning customers. For example the Jamie’s Italian Gold Club offers frequently changing extras such as a free drink, canapé or dessert.
Don’t discount your social media efforts
Returning once again to Pizza Express, their successful Snowball campaign showed the benefit of employing social media in offering rewards or discounts. Not only were customers successfully persuaded through the door with the offer of free dough balls but they also wanted to share the news on social media, bagging the brand plenty of publicity during the key Christmas shopping period.
According to Mintel’s ‘The Leisure Outlook’ survey from 2015, social media could be used to appeal to the 15% of pub visitors who say they use vouchers for meals or drinks in pubs. Sharing up to date specials (that in turn allow you to reduce waste) or promoting early evening meal deals or similar could prove far more effective than vouchers and encourage long-term loyalty, if you can engage the audience.
We also shouldn’t forget that offering special deals during lower footfall times, rather than vouchers, could be highly effective. Customers often feel more comfortable ordering the lunchtime soup and sandwich deal or booking during ‘happy hour’ rather than sheepishly presenting a money off voucher, whether it be printed off or on an app, and promotions like these needn’t be restricted to cafes or local Italian restaurants.
The enterprising Norse restaurant in Harrogate recently announced a trial of airline style dynamic pricing, which will see its prices on Mondays discounted by 25%, with the discount reducing by 5% each day until Friday, and then the menu is full price on Saturday and Sunday. Could a similar approach keep your seats full all week long, or would it confuse customers? Finally, we should perhaps consider that consumers are now beginning to consider value that extends beyond the food itself. While it’s important that food is at an attractive price point, they may be looking for a great dining experience overall, as well as a high standard of customer service and perhaps extras that suit them such as free WiFi.
Has our article got you thinking that it’s time to change up your discounting approach, or focus more on offering value to your customers in other ways than just slashing money off their bills? We’d love to hear your thoughts on the future of restaurant discounting, as well as any innovative methods you’ve tried. Leave us a comment below to share your thoughts.
Leave a comment