Restaurants using discounts to drive traffic

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Permalink Reply by Eli Chait on July 5, 2010 at 11:06pm

If performed incorrectly, discounting can be very dangerous to the brand of a restaurant. You could develop a reputation for being a heavy discounter and train even the most loyal customers to wait for discounts before visiting.

You could also attract the wrong clientele. I did a quick study of $$$ restaurants that ran Groupon promotions and found that on average their Yelp reviews from Groupon users were a 1/2 star lower (http://blog.eatmetrics.com/2010/05/groupon-externalities/).

I believe unique item based promotions (Free Sweet Potato Fries, Pomegranate Margarita) to generate off peak traffic or targeted specifically at first time customers are much healthier. Not only are you exposing new people to your brand by offering an item and experience that is unique, but you're giving a good excuse for running the promotion (I want new customers vs. I am desperate).

Hope that helps.

Eli

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Permalink Reply by Mark Moreno on July 6, 2010 at 10:25am

Eli,

I think that your comment is extremely well informed. I think that your unique item based promotion suggestion is dead on the money. I am interested in seeing how EatMetrics develops and wanted to thank you for your comments as well ast the Linkedin connection.

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