As painful as it is to hear, none of your customers enjoy paying full price.
That's why restaurant discounts and combos are key to bringing in customers for pizzerias, bars & pubs, fast food restaurants, and casual eateries.
Don't think your customers are looking for discounts at your restaurant? These stats might make you think again.
- 80% of diners are likely to try a restaurant if a deal is available (RetailMeNot).
- 76% of U.S. adults said they’d try a QSR they’ve never been to if it offered a discount (YA).
- 57% of millennials seek out restaurant coupons (Valassis).
- More than 1/3 of restaurant-goers search for deals before choosing where to eat (RetailMeNot).
All that said, not every discount strategy is right for your restaurant. Let's explore six different types of restaurant discounts you should consider offering to your diners.
Disclaimer: Discounts can quickly add up, so be sure to record them in your restaurant marketing plan.
1. Restaurant BOGO (Buy One, Get One)
We all know the classic BOGO, but we rarely think of the possibilities here. BOGO can mean so much for your restaurant than you might think.
Is the extra item free? Half off? Can you increase your profit margin by requiring the "buy one" item to be more expensive than the "get one?" You can test multiple BOGO discount options and see the results directly in your POS system.
If you can't afford to give half your inventory away for free, require a bigger upfront cost from your customers. Papa Gino's, for example, offers a free small pizza with the purchase of two large pizzas. Using the idea of BOGO, this discount pushes out more inventory and leads to a larger average ticket size.
- Pro of this discount: Customers could feasibly save 50% on their entire check, helping to build a solid base of repeat guests.
- Con of this discount: Depending on how much you give away for the "get one" part of this deal, it might not be cost-effective in the long run. It's wise to use this discount sparingly and on menu items you can afford to lose margin on.
2. Combo Deals
Popularized with value meals at fast food restaurants, combos offer benefits to both restaurants and their guests. Guests want a full meal and most restaurants are happy to oblige.
These days, however, restaurants are using combos to upsell even larger-sized meals for parties and events. Wings Over, a popular wing delivery restaurant, offers combos for anywhere from one to 12+ people, with their largest discounts on bigger orders.
For small parties or events that don't quite call for catering but will feed more than a handful of people, combo deals are the way to go.
- Pros of this discount: It's effective at bulk selling and churning through inventory.
- Con of this discount: The bigger the combo, the more profit margin you may be forced to sacrifice.
3. Time-Based Discounts
Happy hour is all too familiar to bar owners. Lowering prices on food and drink is a tried and true way to bring in the after-work crowd.
Happy hour menu for Cuca's Mexican Food.
Not a bar? No worries. A happy hour approach can work for your restaurant even if it doesn't serve alcohol. Plus, according to Technomic, happy hour food prices are actually more important than drink prices to consumers.
You can also use this discounting strategy for off-peak hours – maybe from 2:30 p.m. to 4:30 p.m. – to even out your busier and slower times for a more balanced work day.
- Pros of this discount: Happy hours can bring in foot traffic when your day is slow and can capture the popular after-work crowd.
- Con of this discount: Guests may become accustomed to cheaper food prices and only choose to visit during cheaper times because – in their eyes – you've devalued your own food and prices.
Warning: In many states, happy hour is illegal. For the most part, however, this ban only applies to alcohol – not food – so feel free to change your meal and app prices as you see fit. Check with your local jurisdiction for more details.
4. Percentage-Based Comps
This discount is mainly offered on an ad-hoc basis. Your restaurant may have a standing rule that all public safety officials who come in with their uniform get a 20% discount, or that servers can offer a 10% friends and family discount. Your restaurant may also have a policy of discounting meals for customers that complain, have to wait too long, or are regulars.
If this is part of your restaurant discounting strategy, make sure you have a restaurant point of sale with accessible discounting options and permissions-based discounting so those who enter the discounts are held accountable for them.
- Pro of this discount: It's a simple way to show appreciation for certain professions, groups, and your regulars.
- Con of this discount: The system can easily be abused with the press of a button by a server who is quick to apply the friends & family discount.
5. Calendar-Based Discounts
Let's say you've identified Tuesday as your slowest day. (Want to learn how to do that sort of restaurant analysis? Check out this post.) To help boost sales, you decide to offer a discount available only on Tuesdays.
Westwood Pizza in Massachusetts has mastered this approach. They have individual specials on Monday, Tuesday, and Wednesday, plus a special available all three of those days to help sales outside of the weekend.
Taking it a step further, try applying discounts for specific months or for special events. If you offer calendar-based discounts like a special Super Bowl savings event or a Christmas-themed deal for the month of December, you might boost restaurant sales.
- Pro of this discount: Calendar-based discounts can boost your sales during slower times of the week and the year.
- Con of this discount: Like happy hour, these discounts can create a perceived devaluation of your menu items when you price them lower on certain days.
6. Dollar Off Discounts
Want to reward customers who make big purchases? Keep it simple with a "Buy $X, get $X off" promotion. Common in pizzerias, this strategy is helpful in getting that family of four to spring for the extra side of fries after all.
Here's an example of a coupon for this discount from Express Pizza in Norwood, Massachusetts.
If your restaurant caters or hosts large events, consider offering a discount for these big orders. The promise of $200 off banquet checks of $2,000 or more can fill up your bigger rooms and help you keep the inventory moving.
There's also an opportunity to combine discounts. Maybe you don't want this large-order discount to apply in May or June because you know you'll book up for graduations or in November or December because you'll be busy enough with holiday parties. In that case you'd be using both calendar-based and dollar-off discounts.
- Pro of this discount: It incentivizes guests to place larger orders, meaning you're selling more.
- Con of this discount: Sometimes the math doesn't work out here. Let's say someone was planning on ordering $25 worth of food, but sees a $5 off $30 coupon. To take advantage of this, they order something else for $5 to apply the coupon – but since they just met the requirements of the discount, you basically gave that customer $5 worth of free food. For that reason, making these discounts one-time or limited-time offers might be more effective.
How to Make the Most of Your Restaurant Discount Strategy
Every decision you make in your restaurant should be purposeful and revenue-driving. That's why we suggest you plan through what any discount idea would look like instead of picking one of the above ideas and running with it.
To make your restaurant discounts profitable and efficient, remember these best practices to adhere to within your restaurant POS system.
1. Discount Rationale
Restaurant theft is an issue plaguing the hospitality industry. If your servers, bartenders, and cashiers are too fast and loose with their discounting, it will eat right into your bottom line. Make sure your technology supports a feature that tracks who gives discounts and for what reasons.
For example, if a percentage-based discount is consistently applied at dinner when the guest has a bad experience, make sure you can go one step further and learn what those mistakes were. Are servers dropping food? If so, maybe you should revisit staff training ideas. Is food consistently sent back for being too cold? Check in with your kitchen managers to see if something is wrong with meal prep.
When discounts are applied as you intended, there shouldn't be a problem, but realistically speaking, this won't always happen. Keep a close eye on your staff with mandated discount rationale to keep track of mistakes and areas of improvement. This way, you build a stronger staff and keep the discount protocol from being abused.
2. Auto-Apply Discounts
Your employees are only human. Sometimes, they'll enter in a large cheese pizza and a large pepperoni and completely forget that this combo qualifies for the large cheese, large one topping for $14.99 special.
When the customer pays, they may look at their receipt and notice that it doesn't include the combo discount they thought would apply to the order. Next thing you know, the manager has to come over and void the order, while the customer is now questioning the integrity of your team from an honest mistake.
Make sure you're working with a restaurant POS system that auto-applies any applicable discounts. That way, your servers and cashiers don't need to remember every single promo code or combo special and can focus on the speed and accuracy of ordering.
3. Maintain Creative Control
No POS provider should tell you what kind of discounts you can or can't offer in your restaurant.
If you want to offer BOGO discounts and percentage-based comps, you should be able to do just that. That's why we recommend working with a restaurant POS with an open discounts feature, like Toast POS, so you can build discounts that are best for your business and your customers.
Click here to log your restaurant's discount strategy in your 2018 restaurant marketing plan.