How Restaurants Can Use Coupons Effectively (Part 1)

Discounting through coupons and certificates is a tried and true marketing tactic for restaurants, and in today’s challenging economy restaurateurs who would not have considered it are now taking the plunge. Properly executed, it can drive traffic and build repeat customers. Done improperly, it can sabotage your efforts to acquire good customers. The first step is to think it through.

In Part 1 of this Blog, we look at a few of the issues you may want to consider including knowing your audience, aligning your program with you image, what offer to make and measuring your results.

Know your target audience
Make sure you know who you want to reach and understand how to reach them. Then make sure your message speaks to them in a manner that causes them to act. You can craft a very compelling offer, but if it is targeted to the wrong audience, you will not get the results you desire.

Align your program with your restaurant’s image
Consider your eatery’s brand and image when designing your discount program. For example, a simple, two-color offer on plain paper may be appropriate for a family diner or quick-service restaurant. A more upscale venue, on the other hand, deserves a sleek or elegant-looking offer that aligns with the ambience of the establishment. TIP: An upscale restaurant may want to offer “gift certificates” as opposed to coupons.

Make sure your offer is significant
We have all seen restaurant offers ranging from half price entrees to kids eat free to free appetizers or deserts with purchase. Make sure your offer is compelling. Many restaurant consultants recommend that the offer be worth at least the price of an entrée on the menu, which include “buy one, get one free” or discounts of 50 percent off up to a certain dollar amount. Don’t insult your prospective customers with an inconsequential offer.

Measure and calculate your results
Unlike many other advertising and promotional tactics, coupons offer the crucial advantage of allowing you to track the return on your investment. For instance, if a couple comes in and spends $45, and redeems a coupon for $15, you put $30 into your cash register. That $15 discount – with the national food cost average of 35 percent – cost you about $5. That $5 investment in “free” food brought in a return of $20 (after food costs). Not counting the cost of printing and distributing the coupon that is a 4:1 return. Not bad, but the only way to see that is to track it systematically.

In Part 2 of this Blog, we will look at how to spread the word about your program and how often, whether you should use the internet, and training your staff.

If you are a restaurateur thinking about increasing marketing, making capital expenditures, or otherwise investing in your business and looking for a restaurant loan, try Advance Restaurant Finance, LLC (ARF). ARF has been making short term business loans to restaurants for almost a decade. Despite the economy, ARF never stopped making business loans to restaurants, and ARF makes restaurant loans up to $1,000,000 per location and starting as low as 11.5%. If you are looking for a restaurant loan, ARF is one of the first calls you should make.