Q: I have a small restaurant business in a Dublin suburb. While business is generally healthy, there have been slack periods, and I’ve been researching ways to drive traffic during this time. In the course of this, I’ve had discussions with one of those ‘daily deals’ operators. What they’re proposing sounds great – a special offer that entices repeat customers – but I’ve never been involved in this kind of third-party promotion before. Is there any reason I should be wary.
A: You’re being smart – not just by looking for ways to drive traffic, but also in doing your homework when something sounds too good to be true. In this case, while ‘daily deals’ sites have their usefulness, there are a few pitfalls for companies that use them in the wrong way.
In the case of restaurants, some establishments have been convinced into offering phenomenal loss-leaders. The get a nice cheque after the deal is sold to a lot of customers, but they’re left paying for it when – over the course of several months – the deal buyers turn up to use their vouchers, sometimes taking up reservations that premium customers might have filled. More than one restaurant has gotten into financial difficulty with this situation.
For this reason, smart restaurant owners will take certain measures to ensure that a deal doesn’t run them out of business. Assigning a ‘quota’ – in other words, limiting the number of people that can avail of the deal in any one night – might seem like a good idea at first. However, people using a daily deal won’t want to be treated like second-class customers – that certainly won’t encourage repeat business! It’s far smarter to limit the offer to nights that you know are quiet.
As for the offer itself, don’t be tempted to make a loss on your meal just to drive people through the door. Do, however, try to present something unique to your establishment: many of these customers will almost exclusively use restaurants doing special offers, so you’ll have to offer something special to get them coming back. Also, try to encourage a bit of upselling – maybe don’t include wine, coffee, or a desert that will particularly tempt customers to spend more.
Using these sites isn’t rocket science, but they can cause problems for the naive. Just be practical, and don’t get talked into offering an unsustainable deal.