SubscribeEveryone loves a great deal. Some people are hard-wired to seek those deals automatically and without fail each time he makes a purchase. In the restaurant and retail business, “couponers” are the people we speak of. And let me say this: we love their loyalty and business just as much as the next customer’s.
This post is not about couponers. It’s more about the greater coupon culture. The dependence on the deal. And the subsequent pegging of one’s brand. If a restaurant’s coupons are so ubiquitous they pop in view like pennies on the pavement — what does that say about the establishment’s brand?
I started thinking about this after reading a restaurant blog about new restaurant startups I follow and an article about weaning customers off the deep discounts in the Nation’s Restaurant News.
Recently, we've even started offering more lucrative discounts to our most loyal fans via email. The jury is still out on the effectiveness of these deals.
I sometimes fear R.M.C.C. has a coupon-dolling dependency. And I’d hate for us to have a reputation as a discount dining option — or just plain cheap. For years, we issued 15% coupons to everyone who ordered takeout, rewarding them for some return business. A majority of regular customers has become so used to the perk, a few of them get miffed if their coupon isn’t in the bag. At times more disconcerting, some expect a flat 15% off each time they visit — coupon in hand or not.
Feelings on this phenomena are truly mixed. By one account, we’ve scored a major win: each of those customers is not only a loyal follower of Red Moon, but also a frequent visitor. Our doors are still open because of their collective impact on our cash flow. That’s not lost on us.
Conversely, so many customers are in this pool of discount-only buyers that their effect on our bottom-line is surely not negligible. Let’s come to Jesus for a second: anyone who didn’t know this already, let me break the news — restaurant profit margins are either absent entirely or quite slim, certainly less than 10 percent and many closer to the three to five percent range. Need proof? Just check out this roster of publicly traded big boys — if they can’t muster much more than that, how is this little guy doing much better?
Without much more than a gut-feeling and a little rudimentary number-crunching, I have decided to re-think how we approach coupons.
If anyone has any ideas of what works for them or better — as a consumer what you plainly feel about coupons and what that means to your loyalty for certain establishments, I’d love to know.
I hope to follow-up with a meatier blog about what our strategy going forward will be — how we will keep building on our tremendous group of loyal customers, luring in new customers and providing value on top of high quality, sought-after delicious food.
I’m not a coupon seeker myself but I do find the whole practice of issuing coupons very interesting. I agree that an overload of coupons can send a strong message to customers and change their behavior. For instance, when is the last time you bought something at Express without a coupon? They constantly mail out 30% off coupons and so their customers have been trained to wait for one to buy (it won’t be long). Express positions itself as a somewhat high-end clothing store (among non-designer brands), but I think these coupons definitely erode the high-end perception. Whether this is good or bad for profits is another issue. Other companies who don’t have a 100-person marketing department or a profit margin that allows for deep discounts might copy this strategy and lose money while simultaneously eroding their brand.
One restaurant that handles coupons exceptionally well is Punch. Once in a while (maybe every 6-8 weeks) they will have a pretty crazy deal that runs for a few days like a free pizza or a buy one get one free offer. I said I’m not a coupon seeker, but I’ve stood in lines that literally spill out their door and down the street for a free pizza. Of course they lose money on these days, but I imagine the goodwill and customer loyalty it creates is enormous. I don’t see deals like this weakening the brand either. Maybe even the opposite. It feels like a generous offer from a restaurant that is so healthy that it can just give out free pizzas for a night. Compare that to how a customer feels when they have a 15% off coupon. Maybe they are happy to save a few bucks, but I doubt it garners even 15% of the goodwill.
Thanks for the astute observations, Eric. I agree that Punch Pizza has done something magical when it comes to the goodwill it has earned with the community. It’s funny you mentioned them because FOX 9 did a story about discounts being offered online last spring and our restaurant and Punch were the two examples they used. My dad did a great job offering soundbites — considering he doesn’t even know how to use a computer!