Restaurant Strategy: When To Discount Vs Not To Discount

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There’s a lot of opinions out there about this restaurant strategy. Discounting.

Do you do it or don’t you do it? Is it going to effect your brand and make people think your cheap, not good enough?  Or are you going to see double the amount of customers walking in your doors and put more money in your pocket and your staffs pocket

Here’s my view.

When You Shouldn’t Discount

I’ve talked to a handful of owners who’ve told me they do zero marketing, zero discounting because they don’t need to. They are busy enough. They’ve built their brand. They’ve built a massive loyal following. So if you’re lucky enough to have a bar or restaurant that’s just smashing it, out-beating the competition, then hell no you don’t want to discount. For what? There’s no need. And that’s the goal to get to.

When You Should Discount &
How To Do It To Maximize Your Profits

The truth is, out of all the restaurants and bars out there, only a small percentage are lucky enough to have all the business you want, without having to spend a penny on marketing. So what about the rest?

Let me tell you.

The only time you should be doing steep discounts is when you’re trying to attract new customers in your doors and it’s been a struggle for you to make that happen with your current marketing strategies. However, you MUST also have a backend marketing strategy in place to maximize on more profits.

Here’s what I mean.

I’m sure you’d agree with me that if you were looking at buying a new 80 inch TV for your house and you found 2 stores, right next to each other, with the same exact TV you wanted, but one was $500 cheaper because the store was running a sale, you’d go with the $500 discount wouldn’t you?

Of course you would. We’re all trying to save money. You’d have to hate your money to go buy the more expensive one.

What I’m getting at is that the better the offer / value you have, the more people you are going to convert to walking into your doors for your promotion or offer. Better the offer = more customers. Common sense.

What I’ve learned from some of the smartest business growth experts in the country is that you need to be as aggressive as you can to get a new customer to do business with you because if you do what you’re suppose to do, provide a great experience, they’ll be back for future visits., which means long term profits.

Lifetime value should be your focus, not the first time sale.

In just a second I’ll explain my view on steep discounts for new customer attraction versus the Groupon type of discounting model, but first let me share a quick story with you.

One of my clients Matt Woelfel who owns a Ground Round Restaurant in Waconia, MN got over 1,000 customers in his doors from running 50% off, good up to $20 off offer on Facebook. He had 518 people redeem, which they came in with 2-3 people. The end results was $6,000 in sales and he spent $400 on Facebook ads.

So he made a great return and got hundreds of new customers in the doors for just $400. But we also had a backend marketing strategy in place where 30 days later, we’d try to get them to book a small party at his restaurant. Out of the 1200 or so people on his e-mail list, he had over 100 people take advantage of his offer which resulted in more then $30,000 in extra sales.

It would have been impossible to do this if Matt hadn’t built his e-mail list with an amazing offer that people couldn’t resist. Matt’s just one of the few hundred owners that I’ve used this strategy with and it works! If you believe that type of offer could “hurt” your brand, I’ll get to that.

The Groupon Effect

What Matt did is much different then the Groupon restaurant strategy so many have tried and failed with and here’s why. People who are searching through Groupon are a different type of customer then those who are on Facebook, Instagram, etc. The people on Groupon are people who are looking for one specific thing – a deal! They just want to save money and that’s it and probably don’t plan on coming back again, unless they see another coupon.

When you’re offering discounts outside of “saving money sites,” your target market is much different and you have 100 times better chance attracting customers who are more then willing to come back again at full price in the future – if they had a great experience the first time in.

“But Discounting Will Hurt My Brand!”

There’s also the worry of “But if I discount, I’ll hurt my brand!” I agree with that when you don’t have to discount. When your business is booming and there’s no room for growth besides increasing your prices – yes, it could hurt your brand.

However, for those who are doing well, but have room for growth can still discount to get more new customers in the door, without hurting their brand.

For example, if you’re taking Matt’s offer and throwing around 50% off offers out there without explaining WHY you’re making this offer, you WILL hurt your brand. The strategy I use with my clients and that I used with Matt, is using what I like to call “Reason Why” copy.

How To NOT Hurt Your
Brand By Discounting

Within your marketing message, you need to explain to people why you are giving away such a great value in order for them to understand why that is, so they don’t think you’re just desperate to get people in the door.

One of the things I say within my marketing message for a 50% offer to NEW customers is that “The reason we are doing this is because we have a goal to get 50 brand new customers in the door this month. We know without a doubt we can make that happen with this offer, but our overall goal is to get you to come back over and over in the future. We believe that if we can do what we do best, provide you with an amazing dining experience, we will reach our goal.”

So what we are saying is – We’re giving away an amazing offer because we know we can get a lot more people in the door and with us giving a great experience, we will see you again at full price many times throughout the year. That right there, DOESN’T hurt your brand. It empowers your brand by saying “We’re confident enough to risk upfront profits because we know without a doubt you’ll love your experience with us.” – Again, we’re talking brand new customers here, not your existing customers.

What’s Your Opinion?

That’s my take on discounting and what I’ve done. So far I have yet to see discounting when trying to attract new customers, ever hurt my brand,  or my clients, because we are revealing the reason for the discount, which is to turn them into a loyal repeat customer by providing them an amazing experience.

What’s your opinion on discounting? What have you seen? Do you have questions? Please leave them below and I’d be happy to reply.

If you’d like to get more promotional and marketing strategies that revolve around discounting and not discounting, click here to get my new book free. Just cover shipping and handling. 

About the Author Nick Fosberg

Nick Fosberg is known as one of the highest paid, marketing and promotional consultants in the bar & restaurant industry and he owns 2 bar / restaurants in the Chicagoland area. He's famous for creating some of the highest grossing digital marketing promotions in the history of the bar & restaurant business..... without spending a penny on marketing. All done through e-mail & Facebook posts. Click here to get a free copy of my latest book.

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