18 February

Should your restaurant run a group discount promotion?

Synergy Restaurant Consultants | Blog, restaurant trends
Synergy Restaurant Consultants

You’ve seen their commercials and ads, their emails arrive in your inbox daily, and you’ve even purchased a few specials from their sites. It’s those daily deal websites like Living Social and Groupon that’s got consumers hooked on finding killer discounts to everything from 2 for 1 skydiving to 40% at your favorite restaurant. As a business owner, you recognize the opportunity there is for obtaining new clientele, gaining more exposure and ultimately to raking in some decent profits.

Before you decide to take the plunge and offer a group discount for your restaurant  business, think carefully about your strategy. Unfortunately, while some find great success, there are many businesses that failed to do their homework and took huge unnecessary losses by offering a deep group discount to the public that they simply could not afford. Take for example a café owner in Portland who lost $8,000 for her Groupon offer, and this London bakery shop owner who took a massive $20,000 hit during her campaign.

Before considering utilizing a daily deal site to market your restaurant business, you need to consider several things:

1)      What item will you be discounting? It makes more sense to offer a discount for a unique menu item that is easy to prepare and has few ingredients. This cuts labor time and cost yet still presents an opportunity for upselling different menu items.

2)      How much of a discount will you be offering? This is a major factor into whether or not your campaign will succeed or fail. Typically, discounts on group deal sites can range from anywhere from 25 to 50% on average. Do your math and make sure your discount will cover the cost of ingredients, employee labor, AND the daily discount deal site’s fees (including credit card processing fees).

3)      There are many deal sites to choose from. The number of group buying sites has grown huge in the last few years. From Yelp! to your local newspaper, daily deal sites are everywhere. Do your homework and make a list of several and include the fees they charge, features they provide and customer service so you can make a smart and fair comparison.

4)      Provide a reasonable cap. How many half-off smoothie coupons will you offer? 200? 1,000? What is your restaurant capable of? Figure the math and tie it into the percentage discount you’re offering and cost of producing the item as well as the deal site’s fees.

5)      Strategize. You can add stipulations of your coupon that can help increase your profitability. For example, try making your coupon valid during your least busy hours of the day or throughout your slowest days of the week. This can fill your restaurant’s down time with more customers than you had before.

 

Do your homework and create a detailed plan- you may be able to find success using a group discount platform.

If you’re still interested in creating a group coupon, compare some of these sites to one another when doing your own research: Groupon, LivingSocial, KGB Deals, Spreebird, Plumdistrict, Dealster, Dealpulp, and Tippr. Don’t forget to ask if they service your city or county!

Blog, restaurant trends