Promotion Wars!! Should Restaurants Participate?

A: “Hey, my restaurant is awfully quiet. What should I do?”

B: “Why don’t you offer promotional discounts? Maybe about 20%? If not, then how about offering a promotion where four people pay for three? Go ahead and do it. Lots of big restaurants do it, and they’re crowded with people.”

We believe many entrepreneurs have probably suffered from poor sales or low customer traffic before.  And entrepreneurs who have never faced this situation probably have great karma. For many people, the go-to solution is promotional offers.  And popular promotional offers used to attract customers are discounts ranging from 10-50%, paying for three of four people and buy-two-get-one-free offers.

Are these huge discounts and promotional offers a mistake? The answer is “No” [that is, if the promotional objectives are clear and truly resolve the problem of poor customer traffic].

However, huge promotional discounts based on the idea of following what other people are doing are dangerous and might make the restaurant’s situation even worse, because you don’t know what objectives others have and what advantages permit them to offer their promotions.

For example:

– Some restaurants offer 30-50% promotional discounts for some menu items because they receive ingredients at particularly low prices and can still keep a fairly low food cost per plate, even as they offer their promotions.

– Some restaurants offer promotions over short periods where they allow groups of four customers to pay only for the cost of three people, because they have discount deals with their suppliers in advance that allow them to buy larger quantities of ingredients.

– How come some restaurants can offer 30-50% discounts every month? It’s because they have already set their sales prices above the average prices, and huge monthly promotional discounts attract interested customers with little impact on their food costs or profits.

These are all just a few examples of some advantages we might not know about.
In addition to business advantages, what you should also find out before offering your promotions is why customers are not coming to your restaurant. Doing so will enable you to resolve the real problems at the source, because the reasons for customers to not visit restaurants have nothing to do with prices at all in many cases. Instead, they are related to the following…

– The restaurant’s quality is sub-standard. This causes customers to avoid repeat services.

– The flavors offered fail to match what the target groups want where the restaurant is opened.  It’s not that the food doesn’t taste great. Rather, it might be that what people like are different, and the flavors offered by the restaurant might be unsuitable for the location where the restaurant is opened. In this case, customers will probably not visit the restaurant, no matter how large the discounts are.

– The restaurant’s PR activities have not reached the target groups.

– It is difficult to travel to the restaurant. For example, the Google Maps location might be incorrect, parking spaces might be unavailable, or signs might be so unclear that the storefront can’t be spotted.

So, what entrepreneurs need to figure out before offering promotions is why customers aren’t visiting. Only then will it be possible to identify solutions, which might not involve marketing through promotional offers at all.