A restaurant owner must understand the customer’s mindset regarding deals. Some restaurant deals heighten price awareness while others do not, while still motivating customers. Discounts on an entire meal, for example, invite customers to pause and consider a restaurant’s pricing. Unless the restaurant’s brand is about low pricing, this is not productive thinking for the business. On the other hand, freebies shortcircuit a customer’s awareness of price. Customers will rarely connect the regular price of a menu item to a free deal.
Offering free items is often a better long-term strategy for restaurants than giving percentage discounts or certain amounts off the price. Discounts take away from the perceived value of your food and services while free gifts offer incentives for customers to try new foods, refer the restaurant to others and dine more often.
Why Free Is Better than Discounts for Restaurants
Discounts convey the impression that your regular prices are too high for the food, neighborhood or restaurant concept. It’s sort of like passing the business that always has a “Going Out of Business” sign in the window. Your customers will either want a discount on every visit or decide that you’re not trustworthy. Americans, in particular, associate percentage discounting with low end retail and that can taint a restaurant’s brand.
The exceptions are highly competitive fast food chains, which tend to bombard consumers with offers, discounts and BOGO offers. Direct mail campaigns frequently target consumers in the neighborhood with pages of discount coupons, especially for burger and pizza restaurants. Coupon books include offers that apply at different times so that consumers keep the coupons handy to save money on food.
Unlike the full-service restaurant experience, fast food places get value from increased customer volume and convincing people to order out instead of cooking at home. Cost savings become important tools for convincing budget-conscious families to eat in fast food restaurants for convenience.
However, even the fast food places gravitate toward free offers when possible. Buy one sandwich and get one free is a common offer, and free beverages or fries are often among the coupons that these restaurants offer.
Free is better than discounts because freebies encourage people to try new foods, and free food provides a strong value for customers that discounts can’t match. Freebie also has a strategic element where a restaurant owner can advance the overall brand.
Best Times for Free Incentives at Restaurants
Free incentives have power to bring large parties to your restaurant, and birthday freebies are great examples of this principle. Most people celebrate their birthdays with friends, family members and co-workers. If you offer a valuable free birthday incentive, the recipients might bring enough guests to fill a large table or the entire restaurant. Your free birthday meal could easily generate hundreds of dollars in business.
The same strategy applies to anniversaries, graduation dates, proms and other personal milestones. The trick is getting information about your customers and using it in a timely way. Most important events are planned several weeks or months in advance. You need to reach customers with your free offer before they commit to a different restaurant or plan a party at another venue.
Promoting the Restaurant’s Best Interests
You can promote your restaurant’s best interests by giving away free merchandise and personalizing in-house signage or hanging banners to recognize a customer’s accomplishments. Free food is a great way to introduce new menu items or services. For example, if you offer a free catered meal to a decision-maker who’s responsible for booking caterers for major events, you can build customer loyalty while promoting your catering service. Other ideas for promoting the restaurant’s interests with freebies include:
- Giving preferred customers merchandise that features the restaurant’s logo or advertising
- Providing an unannounced gift to delight a regular customer, especially when they’re bringing a lot of business to the restaurant
- Offering customers sneak previews of upcoming additions to the menu or new services or merchandise
- Delivering an appetizer or dessert on-the-house
- Giving customers a condiment or prepackaged food item at the end of the meal
- Furnishing meeting space for business customers that they can use for routine employment screenings, client meetings and other social occasions
- Enlisting customers to test new products or foods free of charge in return for their opinions
- Taking your best customers to a local game, event or charitable auction
- Showcasing customer art, music, poetry or published works at the restaurant
Gifts of Value
Most restaurants receive about 80 percent of their incomes from 20 percent of their customers. This active customer base is loyal, in-tune with your brand and concept and willing to refer friends and associates to your restaurant and services. You can cultivate these customers with free gifts as an honest appreciation of their efforts.
Not all gifts need to have monetary value to be effective. Recognition for years as a loyal customer, VIP incentives like event tickets, preferential status during visits or special services provide custom opportunities for you to deliver something your guests may value more than money. Ideas for preferential gifts for customers include:
- Reward upscale customers with wine and cheese, personalized desserts, free side dishes and special levels of service, such as preparing food in custom ways.
- Offer a bottle of wine for a large table if local alcohol regulations allow it.
- Invite customers to help you choose wines for your next seasonal change in your wine list.
- Encourage customers to post reviews of new foods and specials by providing samples.
- Partner with a noncompetitive merchant to offer reciprocal incentives to your favorite customers.
Establishing a Value Connection for Incentives
It is all about perception: in the simplest terms, offering $1.50 off the price of a burger makes customers think that your burger costs $1.50 more than it should. Giving customers free orders of fries with a value of $1.50 is like giving them a valuable prize that they would probably have ordered anyway, so they’re happy.
Giving customers a $1.50 order of jalapeño toothpicks introduces them to a delicious new side that they might never order if left to their own preferences. You get the promotional incentive of getting the customer in the door and the possible long-term benefits of convincing that customer to come to your restaurant to get get jalapeño toothpicks that most places don’t offer.
The best incentives for your customers depend on their perceptions and not on your preconceived ideas. It’s important to research your customers and find out what appeals to them. Regardless of what you offer and when you offer it, you’ll set a better tone by offering a free incentive instead of a percentage discount or cutting the price.