Everybody loves a discount.
If you’ve identified some slower times at your restaurant — could be a particular season, month, or day of the week — restaurant discounts can come in handy in a big way.
Providing the right discounts can attract tons of new customers to almost any restaurant, whether you run a bar or pub, a pizzeria, a fast-casual restaurant, a fast-food franchise, or a full-service restaurant. Even fine dining restaurants sometimes offer discounts disguised as special prix fixe menus.
Why offer a discount? In short, they’re popular. Here are some stats:
92% of consumers have used a coupon in 2019. (Statista)
38% of consumers are willing to drive over 10 miles to a restaurant offering a deal (RetailMeNot)
81% of consumers seek out dining deals regularly (Valassis).
More than 1/3 of restaurant-goers search for deals before choosing where to eat (RetailMeNot).
77% of consumers say they use restaurant coupons (Valassis).
While discounts are popular and can give you a big boost, it’s important to choose the right discounting strategy for your restaurant. And most importantly, being too lax with discounting can quickly impact your bottom line, so make a plan, stick to it, and track the results through your restaurant point of sale.
Let's explore six different types of restaurant discounts you should consider offering to your diners, and then we'll also share three strategies you can use to make sure you make the most of your discounts.
Types of Restaurant Discounts
1. Restaurant BOGO (Buy One, Get One)
BOGO (or buy one, get one) is a classic discount for a reason. It’s easy to implement, really easy to calculate, and it’s perceived as massively valuable by customers. You can structure these types of deals a number of different ways and see the results directly in your POS system.
Buy one, get one free: “Buy one bowl of ramen and get a second bowl for free.”
Buy one, get one half off: “Buy one grilled cheese and get the second for half price.”
Buy one, get [specific, cheaper item] free: “Buy a steak, get a side of mac and cheese free.”
Buy [certain amount of product], get [specific, cheaper item]: As an example, Papa Gino's offers a free large pizza with the purchase of two extra-large pizzas. This discount pushes out more inventory and leads to a larger average ticket size.
That last option, where you require a bigger upfront purchase to get a cheaper freebie, is a great way to test into offering BOGO-type promotions and see if they’re effective enough to justify the cost of giving away free inventory.
If that promotion drives tons of new customers, you can justify trying out a more costly BOGO promotion to bring in even more new guests.
BOGO Pro: Customers can save up to 50% on their entire check, helping to build a solid base of repeat guests.
BOGO Con: 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 profit on.
BOGO Solution: Do the math on how profitable your items are and pick low-cost items to give away. Offer the promotion for a limited time frame. As always, track the results so you know the baseline for next time.
2. Combo Deals
Popularized by value meals at fast-food restaurants, combo deals offer benefits to both restaurants and their guests. Guests want a full meal and most restaurants are happy to oblige with a combination of foods and a drink that are priced in a way that saves the customer a little bit of money, but encourages a larger ticket size. It’s basically a built-in upsell.
Any restaurant can offer a combo. Whether you brand it as a combo, a lunch or dinner special, a prix fixe menu, or something else, you can adjust the wording, offering, and presentation to suit your style.
You can even use combos to upsell larger-sized meals for parties and events. Momofuku Ssam Bar in Brooklyn has a separate large format dinner menu that serves 6-10 people for $250, including a cured and slow-cooked pork shoulder with tons of sides and condiments.
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.
Combo Pro: It's effective at bulk selling and churning through inventory, and leads to larger ticket sizes.
Combo Con: The bigger the combo, the greater the profit margin you may be forced to sacrifice.
Combo Solution: Be very strategic about what you include in your combos, and adjust the combo or the price if you notice your profits dipping.
3. Time-Based Discounts
Bar owners are deeply familiar with happy hour discounts: Lowering prices on food and drink is a tried and true way to bring in the after-work crowd. 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 and Statista, happy hour food prices are actually more important than drink prices to consumers.
In Philadelphia, Giuseppe & Sons has a whole happy hour menu — and they’re famous for it. With $5 cocktails and wine, $4 beer, and $3 snacks, it’s easy to see how the place draws crowds every day from 5-7pm.
You can also use this discounting strategy for off-peak hours — maybe from 2:30 p.m. to 4:30 p.m. on weekends — to even out your busier and slower times for a more balanced business day.
Time-Based Discount Pro: Happy hours can bring in foot traffic when your day is slow and can capture the popular after-work crowd.
Time-Based Discount Con: Guests may become accustomed to cheaper food prices and only choose to visit during cheaper times — why pay more for what they can get more cheaply at other times?
Time-Based Discount Solution: Offer a different, more elevated experience during non-happy hour times, and market these full-price times as ideal for dates and celebrations.
Heads up: In many states, happy hour is illegal. In some cases, however, this ban only applies to alcohol — not food — so you can change your meal and app prices as you see fit. Check with your local jurisdiction for more details.
4. Percentage-Based Comps
You can give percentage-based comps whenever and however you like, but make sure that you keep track of all comps in your POS.
Your restaurant may have a standing rule that all firefighters who come to the restaurant get a 20% discount, or that servers can offer a 10% friends and family discount. You might have a policy around discounts for regulars, and your restaurant should have a policy around discounting meals for customers that complain, send food back, or have to wait too long.
Ryan Egozi, of SuViche Hospitality Group in Florida, tells his managers that if a customer is unhappy, they should comp their whole meal, not just a dessert or a drink. “I'd rather comp $100 than $20, knowing that $100 is going to get me back my guest," he said to us in an interview for The Garnish podcast.
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 you can always track who comped what, and why.
Comp Pro: It's a simple way to show appreciation for certain groups and your regulars, and it can get unhappy customers to give your restaurant a second chance.
Comp Con: If comps are given out too leniently, your bottom line will be negatively affected.
Comp Solution: Train your staff in your discounting policies, and follow up with a server about all comps and discounts after every shift.
5. Calendar-Based Discounts or Specials
If you’ve identified Tuesday as your slowest day, you can offer a discount or a profitably priced special on Tuesdays to try and bring in crowds and increase sales. (Want to learn how to do that sort of restaurant analysis? Check out this post.)
Lloyd’s Restaurant & Lounge in Atlanta is great at this. They boost sales for Monday, Tuesday, and Wednesday with different deals: Monday night is snow crab night, prime rib is on Tuesday, and fried chicken on Wednesday. As you can see, they also do a happy hour every weekday.
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 can draw in hungry people looking to celebrate. These events also tend to lead to large ticket sizes, as people tend to treat themselves on these occasions.
Calendar-Based Discount Pro: Calendar-based discounts can boost your sales during slower times of the week and the year.
Calendar-Based Discount Con: Like happy hour, these discounts can lead to guests not wanting to pay full-price for the same items on normal days.
Calendar-Based Discount Solution: Make sure your guests know that specific-time offers aren’t for all the time, but that your restaurant will welcome them back happily any time. Consider offering a small discount — say, 10% off — for their next visit, which you can send via email. This is also where outstanding service and food come in: If the guest experience is amazing, they won’t mind paying a little more next time.
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.
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 inventory moving.
Dollar Off Discount Pro : It incentivizes guests to place larger orders, meaning you're selling more.
Dollar Off Discount Con : Sometimes the math doesn't work out. 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.
Dollar Off Discount Solution: Make these discounts one-time or limited-time offers, or have a high price threshold before the dollars can be deducted.
How to Make the Most of Your Restaurant Discount Strategy
Every financial decision you make in your restaurant should drive more revenue, and be easily supported by data. That's why we suggest you plan through what any discount idea would look like before you start promoting it — instead of just 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. Track All Discounts — and Watch Out for Trends
If your servers, bartenders, and cashiers are too quick to discount, it’ll eat into your bottom line. Make sure your restaurant tech supports a feature that tracks who gives discounts and why.
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 mistakes caused the customer’s displeasure. Are servers dropping food? If so, maybe you should revisit your staff training. Is food consistently sent back for being too cold? Check in with your kitchen managers to see if something is going wrong during the prep process.
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 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 forced to wait longer (and feel a little cheap, maybe).
Make sure your restaurant POS system 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 2019 restaurant marketing plan.