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Making Loyalty Profitable
A discussion of how to profit from different types of loyalty functions

Introduction
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Awarding Points
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Loyalty Systems for Profit

Restaurant Discount Coupons: Need to manage when they get used

Restaurants have a special need for discounts. Discounts are a good way to fill up empty seats and many a restaurant uses them. However, deep discounts need to be managed.

There are several companies out there selling restaurants on discount programs. These companies will present a deep discount to the consumer and share the price with the restaurant. Typically, such presentations will bring a lot of customers in the door. As such, these discounts can be a way to announce to a lot of people that your restaurant is open and ready for customers.

The down side to such promotions is when they are not managed well. If consumers show up with such a discount coupon on a very busy night, they are likely to not get as good of service as you would like to present. Servers also can resent these customers as the tips are rarely as good. It is vital to educate the servers on why you are doing the promotion and how best to handle these new customers.

There are some negatives to these discounts. First off, the data suggests that most restaurants get only 2% of the coupon users as repeat customers. It takes outstanding food and superior service to get a lot more. Secondly, as the price is cut by 50% and then split with the other company, you wind up with only 23% of the menu price. If you are not managing your costs well, these coupons can cost you more money than you make.

As an alternate to such discount coupon sites, a number of restaurants are sending out coupons to existing customers, posting coupons on Facebook or sending out on Twitter.

Let us review why a restaurant would offer a coupon. The goal is to fill seats on nights that are likely to have empty seats. That points to an improvement that can be made to all such coupons: limit them to specific nights of the week (off peak times). Another improvement would be to connect the coupon with the restaurant loyalty system and send coupons to different groups of customers to see which people would respond.

Deep discount coupons can be a valuable way to entice people in at times where the additional meals will help pay the overhead. It is important to not overwhelm the staff with a ill-planned coupon or at a time when you don't need the additional meals.