Several months ago, before the good times ended, many restaurant managers and owners were espousing the belief that discounting and/or couponing of any sort was a bad thing, yet it’s now virtually impossible to turn on the TV, radio, or any other media, including email, without being inundated with discount offerings of one sort or another. Most people agreed months ago more damage than benefit results from couponing/discounting, yet now it’s so commonplace that if you’re paying retail you’re in the minority. Some methods of discounting and/or creating value are cleverer than others. Is “a-discount-a-discount” irrespective of how it’s positioned and are some discounting methods better than others? Can customers discern the difference between an outright discount, a two for one, BOGO, or multiple-meal special and does it make a difference?

In my opinion and I think most would agree, before any discount offer is positioned the underlying operation must be excellent. It also seems restaurant management should be front-and-center, thanking new, or increased frequency guest, otherwise what’s the point. Strategies giving people more than before (discount) are not a one time panacea. A discount buys another transaction and that’s it pure and simple, another opportunity to remind that customer why he/she should “trade” (the exchange of money for food) with you.

This week I used two discount offers with mixed results. One coupon was redeemed at a national chain restaurant that definitely gets it; one was used at a local operation that didn’t get-it. The national chain was friendly with staff and managers leading the way towards customer satisfaction. We were thanked multiple times, the food was great and when we left the manager was near the door, thanking guest as they departed. He also presented a free appetizer card for our next visit; I’ll definitely be back, not for the discount or coupon but because the team was so focused on guest satisfaction.

The other discount offer was a different experience, after my guest and I entered it was very clear nothing had changed or prepared guest or another new and fresh look at the operation, the food was good as it always is, but management made no special effort at welcoming or thanking potential new customers, it was pretty much business as usual. When we were presented with the bill, I placed the coupon on the tray with my credit card and you should have seen the look of disgust on the waiters face; I felt like a beggar rather than an honored guest.

Another story; a friend who operates a local chain restaurant, asked my opinion about a value promotion his franchisor is requiring franchises participate in. It goes like this; a smaller version of a popular sandwich has been placed on the menu as a special. This sandwich sells for two dollars less than the one which has been on the menu for thirty years, when packaged as a combo meal the customer saving is greater still. Talking through the details we arrived at the conclusion that the transaction could be reduced by as much as $3.00. This local fast casual operation has an average per person check of about $11.00 and as a result of the new addition my concern was that many would opt for the smaller and less profitable sandwich combination and as a result not only would profit suffer on each transaction.

Here’s the kicker, no advertising will take place other than in-store collateral (POP), which by the way costs about $400.00. I think this is a lousy promotion and will only serve to hurt those it is intended to help, there’s no TV, radio, billboard, newspaper or direct mail advertising supporting the promotion. Am I right? Will frequency of use increase with only in-store marketing driving the promotion?

These are difficult times; none of us need be told that and those who survive will be those who used creativity to get new customers and or increased frequency of use, these tactics also need to make money otherwise what’s the point. Excellent operations, friendly people, clean and attractive facilities and value are now ‘greens fees’, doing less is unacceptable.

Your thoughts on value please.

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Tags: customer, marketing, operations, restaurant, value


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Comment by Mark Frank on January 28, 2009 at 10:03am
Right-on brother. Marketing gets them in, operations keeps them coming back. That is the way it is and will always be.

Comment by David Herfkens on January 28, 2009 at 2:27am
Superior Guest service should not be a "value" in this day and age but a neccessity. Getting the guest in the door and then bringing them back has got to be the main concern of any busness in todays economy. Value based items gives them that much more incentive to come back, the service should be the reason you ARE still in business. Superior guest service is still not a "priced item" on your tab. Unless you are that "Party of eight or more" you are not charged for service. A superior trained staff gives the guest just that one more reason for comming back, maybe to try a more expensive item on the menu.

Comment by James Kohn on January 26, 2009 at 2:20pm
As my business name (the Customer Service Solution) implies, I feel as strongly as ever that providing superior customer service is the most efficient way to "add value" to a restaurant transaction. We all know that the quality of the service is as important a factor as any in how our customers assess our restaurants. Compare, for example, the experience of two hypothetical parties. They oth come in on the same evening, order the same food, and pay the same check. One of the parties receives less than average service. Maybe they even get the old "sorry, I'm new here" line. The other party receives extraordinary service. So good, in fact, that they might be expected to mention it at work the following day. Which party got more (i.e. value) for their dollar? What was the net expense to the restaurant for providing superior service? Discounting is, more often than not, the beginning of a downward spiral. It's the easy way out, like placing another ad. Creating a superior customer service program requires some effort, but it's worth it because it reduces your customers' price sensitivity, reduces employee turnover, increases productivity, and most of all increases repeat business and creates powerful positive word of mouth. It's good value for the restaurant and the customer! - Jim Kohn,




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