Why Business Owners Are Losing Money By Using Coupons and Offers The Wrong Way?

Coupon deals are extremely common in the hospitality industry. Whilst they can be very effective I sometimes wonder why hospitality business owners seem happy to just keep paying for a service when they could be doing so much more themselves? This would then mean putting the extra profits your pocket, not the coupon companies?

Did you know when most businesses offer a discount using these types of services they don’t always think things through enough and here’s why …

A Groupon type deal generally means a massive discount offer, usually on one of your most popular products. Typically it will be around 50% sometimes more discount off the regular menu price.

Don't Try To Be Too Cheap With Your Offer

Some restaurants try to give less of a discount which might mean profit is slightly higher but usually, this just means the take-up rate on the offer plummets.

Did you know with typical Groupon deal buyers, around 30-60% will actually use the discount they purchased in your restaurant? But and it's a big but, any unused offer will be Groupon's money to keep not yours. The truth is you won't even be aware of a sale being made if they haven't booked with you.

Restricting The Terms Of The Offer Success or Fail Strategy?

Your customer can turn up at any time for a quiet mid-week evening or a busy lunchtime service so unless you have specific restrictions (again reducing the effectiveness of the offer) you are totally unable to control when and how customers are sent to your business.

You will find if you limit the offer or insist customers pre-book (which is not a bad idea but will reduce effectiveness unless done right) you risk putting off customers from dining at your establishment at all.

But if you don't have a system of restriction/control you have a bit of a conundrum.

If you don't know how many customers to expect do you get staff anticipating additional customers or do you keep staffing levels as they are and hope these people come in steadily.

Of course, you could insist all discount customers book but then you have the situation where you need to dedicate staff time to deal with that. Bearing in mind these are sales you'll be lucky to break even on.

How Will Open House Offers To Discount Hunters Affect Your Regular Customers?

Assuming your Groupon offer is attractive and gets a high take-up rate (not all do so it's not a given winner)

You now have potential customers who may not be ideal for your restaurant for a number of reasons. They could be coming at any undetermined time to eat your food cheaply, they might be loud, rowdy or just the wrong demographic. On top of all that sometimes you will not even break even on this initial visit.

Still, at least you'll be busy bound to make a few extra pounds right? But at what cost?

If they turn up en masse you may have to turn away full-price paying customers whilst you stand a chance if they turn up of making money (sort of) if they don't you could potentially have no regulars and no discount customers?

Failing to turn up for a booking is not uncommon after all they may have decided losing the money isn't as big of a deal when it's half price?

Are You Ready To Take Back Control Of Your Customer Aquisition?

Relying on Groupon and other sites you have effectively become dependent on another company to decide when you have customers. Is that how you really want to run your business? You have effectively relinquished control.

The most common scenario is once you go this route you find you gradually reduce every other form of marketing as on the face of it you have a busy restaurant.

But if you turn off the marketing tap you'd find very quickly you have become totally dependent on this channel of marketing.

When we find clients bringing in customers this way we work with them to slowly build their own systems so that over a relatively short space of time they start taking back control.

Once you control your marketing you can build your business instead of paying for the privilege of giving away free hospitality and building someone else's business using your money.

Taking Back Control Of Your Marketing

If you want to know more about how you can still run your discount and Groupon type deals and keep control without having to have dedicated staff. Just get in touch or comment below and we can talk you through a much better way. ??

About the author

Graham is an experienced marketing specialist in the hospitality industry with real life in the trenches experience of the industry who understands the challenges faced by today restauranteurs. Always happy to discuss any issues you are having with customer growth and marketing your business.

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