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Coupon Sites: Holy Grail or Poisoned Chalice?

Many restaurants are turning to popular coupon sites, such as Groupon and Vouchercloud, to offer deep discounts on the promise of increased sales. While this strategy can bring results in terms of increased volume and brand exposure, they must be careful not to “oversell” or else risk alienating customers. Coupon sites have a large base of consumers looking specifically for high discount deals. It is an unfortunate reality for hospitality venues that to remain attractive to consumers, they are often compelled to jump on the bandwagon. Having a packed-out restaurant of punters with a 2-for-1 coupon may be better for business than operating at only 20-30% capacity during the week. Indeed, with so many consumers now making their restaurant choices based on coupon-site listings, it would be a foolish High Street restaurateur that does not at least consider getting involved.

So what are the risks involved?

Offering a deep discount can bring in far more customers than normal, stretching you to capacity or even over capacity. This can often lead to slower service, sub-par dishes from the kitchen and overall a poorer experience for the consumer. Having table-staff rushed off their feet and receiving smaller tips than normal (by percentage of the total bill) can also lead to lower staff morale, which again reduces service levels. "All too many restaurants seek to maximise short term sales, at the expense of the consumer experience and their own brand value" Some hospitality venues rethink the whole value proposition when dealing with coupon sites, by limiting offers to a small subset of dishes that they can prepare in advance and serve quickly to maximize efficiency. This may be effective, but can still erode long term opportunities by forcing the business to change its original menu and give a % of sales to an intermediary. Customer retention can also become a big problem as consumers become loyal to the coupon site, rather than to the restaurant.

Is there an alternative?

Smart restaurants remove themselves from the coupon-site cycle completely by building their own customer loyalty programmes and using intelligent online marketing to attract new consumers directly. With a little effort, this can prove to be a far more profitable strategy that encourages long term growth, without sacrificing their core brand values. As with all digital marketing, a trusted guide can help you find the best strategy for your business. Don’t hesitate to get in touch with us for an informal chat.

Insights by Kishen Hawkins

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