As you stated there is no out of pocket expenses. For me to put out flyers in the neighborhood, it costs me $250 for printing and distribution. I can tell you that most of those get thrown in the garbage. I am in my third year with "Entertainment" and might drop it for one year before doing it again, but I have found that there some benefits.
Mr. Bradley is correct in is description of the typical buy one get one free customer. I have seen and heard enough stories. But he fails to recognize some intangibles.
How many restaurants have been kept in business because of the exposure these programs bring. Granted their core customer is a tight wad but - all of the customers? What about the extra cash from the diner. What about looking a little busier. What about turning over the food quicker, What about the extra tips (all be it lower than it should be).Trust me I am not in love with two for one programs- as a matter of fact I compete with them.
The signs telling customers they are not honoring the card anymore is usually a restaurant trying to get all of the good out of a two for one book and not have to pay for it. The customers know the restaurant is dishonest and perhaps on the verge of going out of business. I work with almost 100 restaurants daily and I know the pattern.
The biggest problem restaurants have in the marketing end of the business is that they do not capture the names and addresses of their customers to create a database of customers to promote and market to. If they'd do this they would not need much more.
J.C. Somerville Jr.
I have read with great interest the responses concerning 2 for 1 deals and advertising in general. My family has been in the restaurant business for over 50 years and with a combined experience approaching nearly 150 years. My personal experience includes 5 years of running my own restaurant, 20 years of retail store management, and about 5 years in advertising sales, including owning an advertising & marketing firm.
Before saying anything about the responses that have been posted I would like to point out that I am not an expert...I simply have my own feelings about advertising, owning a restaurant and what I think should be the common factor in these two items.
I have seen 2 for 1 deals put many outstanding restaurants and their competent owners out of business. These are dangerous ways of advertising for any restaurant. The basic trouble by advertising this way is it does not generate return business....they only way that these coupons work is if that customer returns again and again to your establishment.
Now here is a fact for you, as one of your respondents stated, word-of-mouth advertising is the best way to advertise. Very true! But along with that statement should be the words, "the best way to get word of mouth started is to advertise!" If you want to get people talking about your restaurant...then you need to give them something to talk about!
Now here is the problem, most people don't know how to say what they need to say to attract attention to their establishment, or they don't know where to say it at to create the most attention. I have found that most owners don't want to take the time to develop an advertising program that is effective and reaches the people with messages that want to make them respond. Hit and miss is their only advertising program.
I love to hear restaurant owners say, "I don't need to advertise" or "advertising doesn't work". This is funny and absolutely ridiculous! If advertising doesn't work then why are we bombarded with messages on TV, Radio, and every other medium available.
One of the examples I used with prospective clients was why does Crest Toothpaste need to advertise? It is a product that we need and shouldn't really need to advertise. Everyone needs to brush their teeth...why advertise a product that should sell automatically. Crest Toothpaste realizes that to maintain their market share they have to advertise and keep their name in front of the public.
Many restaurant owners feel that their competition is the other restaurants in their area that serve the similar menus and offer the basically the same atmosphere that they do. This is very wrong! Your competition is every cash register in the same area that you are. If I have $50.00, I can spend it in your restaurant, or I could go to a movie, or I could spend it at the local grocery store, or I could spend it at the hardware store. Your competition and the people you need to beat at advertising is every other cash register around you! Whose pocket am I going to put that $50.00 in?
Now let me give you my personal example. The restaurant that I own has been here 41 years, the last 5 under my direction. People know where its at, they know what we serve....and they know what to expect when they get here. If anyone has a reason not to advertise...it would be me. Why should I waste advertising dollars to get people that know where I'm at to come back in??
Our complete advertising program revolves around one idea or slogan, "Our customers say...the best burger in town!" This is our advertising program that we use in newspaper, television and other medium that I feel will reach an appropriate number of people compared to the cost of reaching them. Our slogan is seen and heard by people because I hear people talking about it. WE HAVE BUILT THE REPUTATION of having the best burger in town!
We don't give anything away, we don't discount anything...but we have built a reputation and its increasing our business everyday. We are increasing even though we have seen restaurants like RJ Gators, Hooters, Hayden's, Chili's, CC's Pizza, T-Bones, several new McDonalds, and many other restaurants come into our area just in the past two years. We have more and more competition but we are maintaining our market share and increasing!
We simply found the message that would make people respond! We advertised the heck out of it so it would get word-of-mouth advertising started. It's worked here and it can work for any restaurant. The restaurant owner that says he does not need to advertise...I say bull! There is no restaurant owner that can give me an example of why he should not be advertising in some form or fashion. You cannot tell me that their is not something you need to tell the public about your business!
I agree that 2 for 1 deals are dangerous for our business...but not advertising a business is just as dangerous! Give them some good stiff competition and watch them scramble to find ways to advertise.
What amazes me is the number of comments from supposed "consultants" that are presented with a really dumb 2 for 1 strategy and fail to see or mention the many variations that could make a coupon strategy HUGELY profitable. Not one "consultant" mentioned capturing names, addresses, e-mail, or targeted psychographics that mirrored your current "best" customers. One person complained that only 10% would become regular customers. Holy #!@#@! do you know what I would spend if you could guarantee that 10% of the respondents would become regulars! My top 100 loyalty club members visit 16 times a month! They get a 5% rebate in the mail after they reach a $10.00 reward. Go ahead and just admit you don't know how to use coupons as an effective marketing tool. I would rather spend $12.00 and guarantee getting my food in their mouth than throw away thousands on "image" marketing. Nice critiques, now how about an idea.
I began my restaurant in 1980 in a rural location. I started off with only ice cream and sandwiches. I expanded my menu to include light dinners but had a lot of difficulty drawing customers to my rural location. I joined a dining club and offered my customers 2 for 1. My restaurant grew from a volume of 450K to 1.6 mil in 5 years! Yes the profits were less, but training of the waitstaff to up-sell increased the volume. Also cash awards to the waistaff for 1 month contests to sell the most desserts, wine, apps, etc. paid off with amazing results. Paying your top server an extra $100 cash for a months sales of 112 bottles of wine was well worth it. Think about the other servers who didn't win but still produced! We did however, have 2nd and 3rd place finishers. Also the customers were very happy to have servers who weren't order takers and knew their job! Proper pouring by the server always produced a 2nd bottle of wine.
Getting customers to come to your place is better than them going to another place. Having a full dining room sends out a strong message that this is a great place to be. Full parking lots create curiosity. People are like cattle, they follow the leader. Oh, you also have to have a positive attitude about your discount diner. They are spending their hard earned money at your establishment. Everybody likes a bargain! A piece of pie is better than no pie! Just sold my restaurant after 24 successful years for much more because of the sales volume! I am now in the process of developing my own dining program to improve the programs on the market today.
Ok, before I post my comments, I will state that I am not a restaurant owner, however my wife is a waitress, and I am working part time for kicks and experience as a host at a fairly new restaurant...Asian Fusion and Sushi.
I am studying many sites like this with the hopes of educating myself on restaurant ops, so that in 2008 or 2009 we can open our own restaurant. In my favor, I have been in sales for the past 25 years, and owned my own insurance agency and have worked with all kinds of people, incomes, lifestyles, and personalities.
That being said, I agree with the original post. If you are trying to attract the fine diner, or more upscale customer, 2fers, discounts, and freebies are a great way to kill business. Perhaps a surprise dessert on the house for a repeat customer on his/her birthday is ok. But otherwise, free is a no-no, and is disaster.
Upscale, successful folks want quality, experience, and service. They want to spend and show off to their friends, associates, lover, or whoever that are with. They want others to know that money is no issue. In fact, successful people abhor the word 'free'. They have earned the money and want people to know that nothing was given to them, it was all their success. They also reward others with good tips.
On the other end are people who love 'free'. They try to get as much as possible for as little as possible. They tell their friends with similar tastes. Give them something for free, and they wont appreciate the gift...but rather will get mad at you for not doing it again, as if it is an entitlement to them.
In the past few months, I've watched a transformation occur at this Asian/Sushi restaurant my wife and I work at. When we first started, it was fairly new and attracted an upscale customer. Not 'rich', but perhaps an upper-middle-class customer. They tipped well, bought wine, dessert, appetizers, and a lot of sushi. They associated with others of similar status and style. There were many wearing business casual clothing, suits and ties, dresses, and very few jeans.
Being a new business (as well as having owners with no clue about running a business) they ran into some tough spots after about 6 months.
Since they never had a theme, brand, or focus for their venue, they don't know who they are or who they want to attract. So, in response to the slowdown, one of the owners started giving away free soup and pineapple to take-out customers waiting for their order. They'd order $12 food and get treated like kings and queens.
The owners also responded by doing a direct mail of their takeout menu. No coupon, but the mailing hit all kinds of homes and apartments with no target demographic, subsequently attracting a different customer than what they had before.
More family and budget oriented, blue jean type, with kids. The free soup and pineapple attracted others who liked low price and free. Little by little, per-person sales has dropped substantially, tips dropped from 20 to 25% to 10 to 18%, sushi sales are waning, wine and mixed drink sales have nose dived, and instead they are giving more water as drinks and selling more $8.95 dinners. Instead of seeing two people spend $100 and tip $20, 5 people spend $50 and tip $7.
The old customers with gold chains, suits and ties, are coming less and less, and the blue jeans and children are more prevalent.
As a result, the restaurant is slowly being transformed from an upscale sushi restaurant to a budget family Chinese restaurant, and the restaurant is struggling even more.
I don't mean to insult any kind of customer or class of customer because they all deserve a restaurant fitting for their desires. I guess I am making more points than one: know who you are and know your target market. Learn about their demographics and psychographics. Cater to their mindset.
As for 2fers, there is a place for freebies and coupons. There is also a place for people who will pay through the nose for high quality.
One loves the word free. The other abhors it.
Never try to mix the two together.
As an independent and a BYOB two for ones do not work for us. We have done special promotions with the playhouse and movie theater to get customers in using a discount or free dessert. A % no more then 15%. We don't believe in giving it away. It's too costly and the customers looking for this type of deep discount are more difficult. They want more bread, more butter, more water, larger portions and the list goes on.
When they are in the restaurant the staff knows it, they get beat up by them, and yes they are lousy tippers and they do not come back unless you give them something else for free.
Considering the increases in food, utilities, labor, and just about everything else I don't see how a small independent without liquor can afford to give away an entree or would want to!
There are no silver bullets for getting people in the door, it's a process and takes consistency, lots of consistency.
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