Updated: Jun 21, 2020
Coupons can be an effective marketing strategy that you can use to promote your products or your restaurant as a whole.
However, you have to make sure that you use it properly, otherwise, you may be losing instead of gaining profits.
Here are the pros and cons of offering coupons that you need to consider:
The pros of using coupons
🖐Coupons can bring new customers to your restaurant when properly marketed to a cold market.
For instance, a restaurant does a mailer and sends it to the whole neighborhood via zip code, most likely it is hitting a cold market.
A cold market is comprised of people who are not currently your customers.
Another example is when you publish a Facebook Ad. A lot of people, who are not your customers may see this.
The reason why it works is that you are simply giving them a reason to come and check your restaurant out.
You are removing any possible obstacle or barrier for them to go to your restaurant by offering a coupon, maybe a discount, in a limited time, as it will expire in the next two weeks.
There might be people who are just passing by your restaurant before, but then, you give them a reason to drop by and check your restaurant now because of the coupon they have.
🖐Offering coupons can also keep your current customers interested and help bring back former customers.
You must have a limited time offer, a sense of urgency so that they can check it out as soon as possible. When you bring customers back to your restaurant over and over, your sales grow, and coupons can help you with that.
🖐It builds interest and launches a new menu item.
If you can offer a coupon every time you have a new dish that you are adding to your menu, it's a good way of marketing strategy to introduce new items.
🖐Coupons are used to have a quick boost in sales.
For instance, we tried offering a dish that is severely discounted for a day, between 5 to 8 PM only, dine-in and pick up. Coupons are good for that kind of promos.
The cons of using coupons
🤞Coupons can attract the wrong customers.
These are customers who do not value your food and just because you are lowering your price, they come to try your restaurant. You are somewhat devaluing your food.
If people get too used to coupons, they tend to complain if you charge extra.
They would be arguing for 30 minutes with the manager for a difference of 30 cents.
This happens if you offer too many coupons. And we don't want this.
What we want is for the people to generously be able to spend on the value of good food, and they are willing to pay more for it.
🤞Couponing can affect your logistics.
Every time you offer a coupon, you have to update your website or social media accounts, tell your staff about it, update your POS, etc. It takes time to do all of those.
🤞It can generate higher sales but lower profits.
You need to consider the restaurant's profit margin if it is low.
If you do 20 % off, buy 1 get 1, you are lowering your profits, and that could be a problem. If coupons are done the wrong way, they will decrease your sales.
So what is the correct way of viewing coupons?
👏It's not necessarily about growing your sales in an evening.
It is about the start of a long term relationship with new customers and families.
The goal is to be okay with losing money for the short term but win for the long term by getting new customers for life.
If a family pays $25 every time they eat at your restaurant, and they visit at least twice a month, you have $50. In a year, that's $600.
So make an effort to keep customers for life.
👏Simply genuinely serve your existing customers by giving them reasons to love your restaurant.
For example, we offer discounts on a special day we called PI day, and people enjoy it. They share it with their friends through their social media because it is a fun promotion.
👏Coupons could be a way of serving your existing customers more deeply.
When they get together in your restaurant, to gather over a meal, you cut them some slack because you're not there just to squeeze money from them.
Every now and then, probably every couple of months, give discounts to your loyal customers so you will be able to serve them in a better way and again, making it a fun experience for them.