Over the last thirty plus years that I’ve been involved in restaurant research - I’ve occasionally been associated with fast food brands that REALLY believed in `couponing’. So much so that the `regulars’ - those that used the chain once or even twice a week - could pretty much count on not paying full price if they were flexible in eating - before the next `coupon drop’ - would once again give them the lowest price on a product. For them, this coupon price became the REAL price - they avoided going when couponless - why should they?
In addition to giving the regulars a lower price point - eroding the real profit center of any restaurant (frequent users) - eventually, and BECAUSE OF BEING UBIQUITOUS - the coupons also didn’t have appeal to the non-users (after-all they had thrown them out dozens and dozens of times already) - the very NEW users the coupon was trying to attract.
Oh sure, the coupons did `move up’ the visit of the irregular users - a few of them - after all, most of them simply `aren’t that into’ your chain - or they would be regulars - so, they often would be using just because of ads and not real coupons. After all, you `supported’ those coupons, any marketing efforts, with other media, usually expensive TV or billboard on occasion.
So, along comes the new normal - set in motion by the near financial collapse of the very structure of the credit system itself in 2008. Followed by the `re-adjustments’ by a huge portion of America’s population - which also included `eating out’ - which suddenly became VERY `discretionary income’ oriented for many individuals and households. (Remember, all income levels saw their perception of their personal and household wealth fall or drop.)
`Nice restaurants’ - the ones with a waitperson for your table and a hostess to show you where to sit - were the first to feel the pressure; hence the rise of the Fast Casual Segment without tipping. A tradedown without giving up too much quality - and with an element of `speed’ that was lacking in the `tipping locations’.
Obviously, the old Fern bars - now family dining places such as TGIF, Applebee’s, O’Charley’s and others had to respond - and they did largely by advertising WAY more than those `fast casuals’ could afford to - by YELLING the `value’ prices they were now having in their restaurants. IF one were to believe the ads, one could eat at these places for 7 or 8 bucks, even less sometimes.
But, customers, especially today’s new normal customers, know that is not the case - with drink and with tip - even with getting the specials - you were over the 10 bucks a head - and that was a low end number. Avoid the special and you were rapidly approaching 15.00 - not a desirable price in the new normal.
Indeed, SO MUCH SO it was a forbidden price that suddenly — REAL RESTAURANTS - with similar price points - such as BBQ places and `Full Service’ restaurants (that used to take reservations, or do still when needed) felt the need to attract customers - knowing the days of 12.00 plus for frequent eating out was simply not a real business plan in most areas of the country and most trade areas.
Along, came Groupon. And, yes, I had been seeing them and not using any. Then my daughter asked if we wanted to buy Groupon’s on two separate days recently (in January) - which we had her do. One was an 8.00 off coupon at a BBQ place in Woodstock, Ga. called Bub-Ba Q, the other a 15.00 off (25.00 coupon bought for 10) for The Right Wing Cafe, once again in Woodstock (downtown this time).
What was `nice’ about both Groupon’s was they didn’t `require’ purchases - the old - you MUST by drinks etc. It gave the users, us, the feeling of more control and ultimate savings possible.
Now, as a user with a frequency of perhaps - once every 12 weeks or so to Bub-Ba-Q’s — IF they run that special more often than that - I will never pay full price again most likely. INDEED, I MIGHT EVEN WAIT FOR IT - and reduce my frequency by doing so!
And, really - was it really the fact that paying 23 dollars for three of us including tip - instead of 31 that brought us in? Yes, but, now, I don’t want to pay 31 anytime in less than the next three months for sure. More importantly, did the enticement of spending 23 bring in NEW users who were TOTALLY avoiding BBQ due to it’s pricyness at 31 dollars for three?
Do you actually think they will return at full price?
The effect of Groupon’s ultimately on the sit-down, alcohol available, how about an appetizer or dessert places - such as Right Wing Cafe (yes with a political theme) could be even worse IMO. There, in a location we only use perhaps once a year, - I am SURE that I wouldn’t return without getting the same 15.00 savings (bill was 38 - minus 15 for 23 bucks) (not including tip).
It’s just my opinion, but, it seems unlikely that folks that have stopped goingto hostess seated, appetizer-dessert-alcohol pushed by waitpersons restaurants - but who are indeed enticed by 15.00 savings - will be returning at FULL price. Right?
Oh, and here’s an article that basically confirms my above experiences - http://www.cnbc.com/id/41666618 - CEO Blog: Daily Deal Sites Don’t Want Loyal Customers (for Businesses) - (here is a story tease):
“The collective buying model can successfully drive thousands of one-time customers to a location, yet little research or analysis has been done to determine if daily deal sites are driving the right type of customer – one that comes back at full price.
Businesses almost always lose money on the deal itself and justify the expense with the hope they’ll connect with loyal customers. Unfortunately, a recent Rice University study showed that only around 20% of Groupon customers actually return to local businesses. Most local businesses only break even when 60% or more of their customers come back.”
Thanks for your visit today.
Also: related - http://restauranttradearearesearch.com/2010/10/25/no-tipping-fast-casual-segment-the-staycation-of-the-new-normal/
