Diners are looking for great food at great prices. Large companies and third-party delivery services are constantly sending out coupons and deals to drive more orders to increase sales. This requires savvy restaurant owners to leverage the power of offers to strategically boost revenue.
Offers help acquire new customers and re-engage inactive customers. In fact, studies show that Loyal regulars spend 67% more at restaurants than new guests. Translation? Keeping your brand top-of-mind and encouraging repeat orders from guests significantly impacts your bottom line.
On the flip side, miscalculated offers without clear goals or unrealistic deliverables can lead to negative profit margins or overwhelm operations causing chaos and poor customer experience, like Grubhub’s 2022 free lunch in NYC. When Grubhub offered free lunch on its platform for 3 hours, restaurants around NYC saw 6,000 orders per minute—overwhelming kitchens and staff alike and delivering poor guest experiences from the restaurants and Grubhub.
Below we’ve outlined best practices to building a strong offer strategy that drives loyalty and revenue.
Identify your “why”
Before getting started, identify your goals—what are you looking to accomplish with your discounting? Perhaps one (or more!) of the following reasons might inform your offer strategy:
- Increase sales with a limited-time lower price
- Attract new customers
- Reward existing customers
- Run through excess inventory
- Get people through the door and more butts in seats
Know what success looks like (and how to measure it!)
There is always an upfront cost to sending discounts; understanding your restaurant’s break-even point is vital to a successful offer strategy. Put simply, the breakeven point is when total revenue equals total cost (includes fixed and variable).
From there, you (or with the help of an accountant or professional financial advisor!) can determine how many sales are required to make a profit and how that fits into your greater marketing and offer strategy.
Need some help? Our technology partner, Toast, provides a great break-even formula to determine your restaurant’s baseline revenue needed to at minimum, zero out costs.
Decide what you’re willing to offer
Here are some ways for restaurants to run effective promotions for desired outcomes that strategically maximize profits:
- Percentage discount on individual menu items or items in specific menu sections
- Flat dollar discounts on individual menu items or items in specific menu sections
- Bundle offers featuring menu items grouped together like “buy this, get that”
- Loyalty rewards
- Seasonal discounts on holidays and special occasions
- Free delivery
- Stickers / Mailers with QR codes driving direct orders and unique offer codes
One or more of the above-mentioned methods can be used at any given time; but if your goal is to increase sales at your restaurant, flat percentage or dollar, seasonal, or bundled offers work well. Attracting new customers can be accomplished through seasonal or “buy this, get that” strategies. Driving business from existing customers or loyal patrons can be accomplished by offering free delivery or loyalty rewards. And, to sell through your excess inventory, try bundled discounts and offers with a minimum order amount to increase the volume of orders.
Discount to drive behaviors
Offers perform best for restaurants when they’re tied to driving a guest behavior—whether that’s bringing in new customers, engaging inactive customers or even driving upsell opportunities and increasing average check size.
Refrain from offering discounts that diminish the perceived value of staple menu items. Instead, highlight something different, preferably high profit-margin items, to get people excited about trying something new.
- Identifying the slowest day(s) of the week to drive more online orders
- Highlighting holidays that are historically lower ordering days
- Bundling discounted items with full-priced items to increase revenue per transaction
- Setting up automatic loyalty rewards to encourage regular orders or visits
Keep your guests informed
There are several ways to notify guests of your active discounts; to keep costs low and engagement high, consider the following channels to promote your offers and keep engagement with your audience consistent and clear:
- Automated Emails - Emails that are automatically triggered by a guest's behavior. Think loyalty emails that are automatically sent after a guest places a certain number of orders.
- Email Blasts - Customized emails that can be sent to different segments of guests. An example might be a marketing reminder that reminds guests about your restaurant’s happy hour or brunch menu—attach an offer to these to entice guests to follow that email straight to your door.
- Text Message - Text messages have an extremely high open rate in the restaurant industry. In fact, 95% of text messages are opened within 3 minutes of being received. Texting your guests an offer increases their potential to see and redeem it!
- Social Media - Guests eat with their eyes; social media lets you put a visual aid alongside an offer—sometimes all it takes is one delicious photo to create a craving.
Know your audience
Not all offers are of equal value. Segment your audiences and send specific offers to specific groups to maximize impact. For example, send a “Free Delivery” offer to guests who have previously placed a direct online order with you; it’s an effective way to drive a behavior because they’ve ordered online from your restaurant(s) before and are therefore more likely to redeem a delivery discount.
Other guests who have not previously ordered online from your restaurant may respond better to a more on-premise offer like “Buy this, get that” (e.g., getting free chips and salsa when ordering a taco platter!)
Sharing success stories: Restaurant offer strategies that stick
Online offers, when strategically executed, can account for a large and consistent revenue stream. Just ask Libby’s Neighborhood Brasserie, part of the Tableseide Restaurant Group, a neighborhood staple known for its delicious menu and locally inspired cuisine with two locations in Sarasota and Lakewood Ranch, Florida.
In the wake of the pandemic, Libby’s incorporated offers into its ordering strategy to keep revenue flowing.
“We were trying to get people in our doors during COVID and takeout was the safest option so we launched 35% off online ordering all day on Monday - Wednesday, which at the time were our slowest ordering days,” said Alex Simpson, Marketing Director at Tableseide Group.
It took a while for the deal to stick and required consistent marketing to remind guests about the offer. Alex dropped the offer into email blasts twice per month prompting guests to click on a button in the email and the offer would automatically be applied upon checkout. Alex and the team also shared the offer code through SMS to keep Libby’s ordering top-of-mind.
Over time, the success of the offer became clear: guests redeemed the offer 724 times generating $42,166 in ordering revenue and extending $14,757 in offer value.
Libby’s offers continue to influence their larger operations and marketing strategy: Monday, Tuesday, and Wednesday remain the highest ordering days and that COVID-era offer has evolved to a standard 35% off at Libby’s on Mondays.
Just as the type of discount can vary, so will budgets and returns—the key to a strong offer strategy is rooted in your restaurant’s needs. With Popmenu’s included marketing and offer features, executing an offer strategy is simple. Ready to see it in action? Schedule a demo below!