Everyone likes a good deal, right? Which is why just about every restaurant either considers offering or actually runs special discounts through coupon advertising. Did you notice we said coupon advertising? That’s right. Whether you think of it this way or not, a coupon is actually an ad with an incentive attached. And that can help you meet your ultimate goal: more butts in seats.
As a restaurant owner, you might be hesitant to offer coupons. On one hand, sales can increase from new visitors and repeat customers. But on the other hand, just like with any type of advertising there are associated costs. So how do you know if coupons are a good idea for advertising your restaurant?
Advantages of Offering Coupons for a Restaurant
You’re not going to run an ad just for the fun of it. It has to generate profit, or it isn’t worth it. Right? But there are a few things you can achieve. Check out these three pros for running coupon offers.
1. Coupons help bring in new restaurant customers
Hard to believe someone hasn’t heard of you, isn’t it? But it totally happens, especially if you’re in a strip center where there are a lot of other businesses or if you’re off the beaten path. Your coupon may be their first introduction to your restaurant. For others who may have heard of you, but haven’t visited (trying something new can be scary for some people!), a coupon offer can be just enough incentive to bring them through the door generating new revenue opportunities.
2. Coupons can bring back the oldies but goodies
Sometimes a coupon is enough to bring your restaurant top-of-mind for someone who hasn’t been in for a while. It’s not that they don’t like you, but with a zillion restaurant options, it can be easy to get lost in the shuffle. Not only does a coupon remind them that you’re still in business and where you’re located, but it will give them a reason to visit in the near future. It’s also a good way to bring in traffic for new menu items or seasonal offerings.
3. Eeny meeny miny mo, to which restaurant do I want to go?
People have to eat, whether it’s at your restaurant or your competitor’s. A coupon can be the difference between choosing your restaurant and another one nearby, even if it’s not in the same genre (for example, choosing Mexican over Chinese if there’s a good coupon for the Mexican place).
The Cost of Offering Coupons for Your Restaurant
Here’s something everyone knows: nothing comes for free. And that includes the additional sales you need to keep your doors open. Coupon cost will be included as part of your advertising budget, but you should be sure to calculate not only your cost of distributing the coupon but also what it will cost you in time and/or materials at the restaurant.
The cost of the actual offer
Most restaurants offer coupons assuming the visitor will come in and buy more than just what is on the coupon. But some people are wise to your ways and will only purchase what the coupon offers so they really, actually get a deal. And that’s ok, because it's more important to focus on the amount of the average ticket. By finding the average ticket amount, you've factored in the people who only spend the bare minimum plus the people who spend more than just the coupon offer amount. Coupon offers should never give away more than you can afford. It should at least cover your wholesale cost. While a coupon will reduce your profit margin by a small percentage, at the end of the day coupons will increase your overall profit by increasing all those extra butts in seats.
To measure the success of your coupon ad campaign, here is a simple coupon profit formula:
Average Ticket X Total Coupons Redeemed = Sales Revenue generated from promotions
- Cost of Goods Sold (This is the wholesale cost of goods.)
- Cost of Giveaway (This is the wholesale cost of the discount.)
- Cost of the Ad (Amount paid for coupon distribution.)
= Profit generated from your coupon promotion.
Here is an example of how the formula works for a $5 coupon on a burger:
The cost related to the distribution venues
If you’ve chosen to offer a coupon, or ten, you have to decide where to have them distributed. There are several options we will review below. But they are not all priced equally, and they do not all have the same amount of distribution or results. Consider how many people will see your coupon advertisement AND where they see it. Some formats will make it more likely for someone to take action than other options.
How to Setup Your Restaurant’s Coupon Offer
Step One: Pick Your Platform(s)
You probably have about a hundred people a week asking you to advertise in this or that or whatever they’re trying to push that day. That doesn’t mean they’re all equally good.
Pick the right one or two to help you improve both your profits and your visibility in the community. No matter which ones you choose, be sure you have a way to track the coupons in your POS or another system to know which ones are helping you make bank and which ones you wouldn’t do again.
Social Media: Facebook is a very timely place to offer a coupon, especially when users are in a targeted zone near your restaurant. Offer the coupon and include a way for it to be tracked in the store since they most likely won’t have a way to print it out before coming in. These ads are paid for by the thousands of impressions or by the click.
Grocery Store Receipts: Grocery store receipt advertising lets you use precise local targeting by advertising on the back of the register tape in grocery stores near your restaurant. And, if you’re a pizza shop, you won’t be up against other pizza joints in the area on that receipt. There is usually category- exclusivity offered on the receipt tapes for each grocery store.
Receipt ads can reach lots of customers for a fairly low cost. Participating in a register receipt program is one of the most effective methods for getting coupons in your customers' hands repeatedly.
People are also more likely to hold on to their grocery receipts by putting them in their purse or car. This gives them another look at your restaurant later, which may remind them they’re hungry and you have a good deal. The result: There are more butts in seats.
Direct Mail: While it can be pricey to send out direct mailers, it’s an option that allows a postcard to arrive with your information and coupon offer easily seen. Other direct mail coupons are bundled together and sent in one envelope, such as ValPak, or in a consolidated coupon magazine. The response rate on direct mail is typically lower compared to other types of coupon advertising, but it definitely reaches a wide audience in your area.
Email Coupons: The initial cost is low for sending coupons via email. You’ll just have to take a look at your email list, format a coupon, and send it out. The coupon is right there, in your customer's hand, when they need them. This, however, is a walled garden. It’s only offered to existing customers which is good for repeat business but probably won't increase much new business. Be sure to make it easy to share the coupon so that they can send it to everyone on their email list.
Coupon Websites: Sites like Groupon will make you visible, for sure. They do have one huge drawback: the coupon website will charge an arm and a leg so you can use their service and they require the offer to meet certain requirements that may be above the amount you would like to spend in total for coupons. Some restaurants may struggle to make money from the first sales from these types of coupon websites.
Step Two: Choose Your Coupon Type
There are many types of offers you can make to draw in customers. Also, some types of coupons work better for restaurants than others. Talk to an advertising specialist today, to see what type of coupon is best for you.
- Flat-rate coupons: $5 off an order of $25 or more, etc.
- Percentage-based coupons: 10%, 25%, or 50% off of the bill makes the deal look great!
- Free items: FREE appetizers, desserts, or entrees when customers buy another dish can all be an enticement for your customers.
Step Three: Set Your Conditions
You know that people will try just about anything to get a good deal. So have an idea of what you’re cool with, and what you’re not, so that you can be clear on your coupon.
- Be sure to note if you have a minimum purchase for the offer to be valid.
- If you have multiple locations, or you are part of a franchise, indicate which stores will accept this offer.
- Set an expiration date to create a sense of urgency.
- Allow them to be shared. Photocopies of a coupon are not typically cool, but sharing can be good. It’s up to you to decide whether you need to just have a code to get the offer, a funny catchphrase, the physical coupon, an email forwarded from a friend, etc.
So, are you ready? Do you want to start filling those seats with… you guessed it… more butts? Coupon advertising is a proven restaurant advertising program that increases profit for many types of restaurants including Mexican, Asian, Pizza, Fast Food, Quick Serve, Ice Cream and FroYo, Italian, BBQ and others. Contact us and we can help you decide which offer will be most profitable for your restaurant.
Finding the best ways to advertise in your local area is key to driving new customers through the door every single day. Learn more about some of the top restaurant marketing tactics and how to apply them to your restaurant.