Who doesn’t love a good deal? After all, discounts are the best!
Except when it’s your business – and you’re having to offer discounts just to keep your customers happy.
There are different opinions on whether the hospitality industry should give discounts and unfortunately there’s no clear-cut answer to discounting. One thing is sure though – it could make or break a business and must simply be done the right way. So…
If you have regular customers coming in the door and keeping your cash flow, why stab yourself in the foot by offering a discount? For example, if you have a $10 item with a net profit of $7, you will need to sell 100 items to get a $700 profit. At a 25% discount, you would need to sell 156, and at 50% or a 2 for 1 deal, you would need to sell 350 to maintain the same profit level you could get without giving out discounts. At this point, the increase in production may require you to employ more staff and pay more wages. Mind = blown. Think of this when you want to give out discounts.
In saying this, throwing a discount to your loyal customers never fails to keep them on your side. Another time discounts are useful is when sales are down and you need more income or to increase the number of your regular customers. It might be a good idea to give an irresistible discount to keep them coming back. However, you need to make sure you’re sending the right marketing message ensuring you don’t kill your brand. You can invite your loyal customers to try new dishes with their friends or give out gift cards in exchange for contact information to chuck them on your promotions and mailing list.
Remember that offering discounts can change the customer perception of your brand. Who do you want to attract? Discounts can attract bargain shoppers, but wouldn’t you rather attract those who pay full price because they know you’re worth it?
It’s also important to remain consistent with your pricing. If a customer gets a meal for $10 the first time they ordered it, or if their friend gets a discount, why should they pay full price the second time around? You can also give out discounts even when you don’t have to. This is when you want to remedy a mistake or reward your repeat customers and strengthen your brand even further. Do this on your slow nights and try to make a profit from the drinks sold. Loyalty programs also reward repeat business by giving away a free appetizer after several full-price visits to build sales and customer retention over time.
If you want more tips on how to run your business effectively, give us a buzz and we’ll let you in the interesting world of hospitality. We’ve got plenty of clients in the hospitality industry, so we can give you the real score!
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975
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