Friday, January 10, 2014

Creating Value Without Discounting Your Brand

Creating value can mean value for your guests and value for your bottom line.  Value equals time and money well spent.  You can add value by designing signature dishes at low cost to you, but at a nominal premium. Coupons create perceived value even when customers have to spend a little more in order to get that coupon. Coupons also work well to generate bounce back traffic creating a win/win for you and your customer. Shameless self promotion using sampling techniques to encourage larger orders per guest can also work well to create value while raising the profile of your brand as opposed to discounting it.

From the owner’s perspective, begin with menu engineering.  Focus on margin calculations of items that can be bundled and set at a fixed price.  Which items on your menu have the lowest food costs but have the highest perceived proportions?  An example may be a natural, hand cut French fry that is unique to your restaurant but has a very low food cost.  Another easy example is a signature dip or dressing.  Signature cravable items have an important impact on traffic.   So your approach would be to pair, for example, a ½ sandwich with your special French fries and choice of our “signature” dips all for $7. If your average per person check at lunch is $5.42, you are creating value and you are potentially bumping up your average lunch check by $1.58. 

You can also create perceived value using these same low food cost menu items as your give-aways on coupons.  It is important to have your restaurant accounting department confirm these costs. This helps you be competitive with high couponing brands without discounting too deeply at your restaurant.  Use these coupons when you are generating trial.  For example give away a free small order of your signature French Fries and a dipping sauce with any two entrees purchased.  You can also offer a free child’s meal with two adult entrees purchased.  Or the same works for free drink with two entrees.  The idea is to promote value with a low discount. 

Typically $5 off $20 or Buy One Get One (BOGO) offers generate traffic, but results show that you do not have to give that much away.  If you have a captive audience for distribution and close proximity (convenience) the redemption percentages can be upwards of 15%.  (3% is an average redemption percentage on couponing.)Then, to continue to create a circle of visitation, the guests that visit with these “acquisition” coupons should be identified as new guests.  Before they leave, present them with another bounce back offer. 

Another approach to value is sampling.  If you have a fast casual restaurant design, you can take advantage of your line to sample products.  If it is an item that your food service partner is willing to promote they are likely to provide sampling cups for you at no fee.  If you have a casual dining design, use your extra hostess to walk around with menu samples during slower seating times.
Remember the key to value is giving the guest a reason to select your restaurant and then leave them wanting more of your menu, and ready to visit again. 

CFO Business Growth Solutions, LLC provides Nationwide Restaurant Accounting, Restaurant Bookkeeping Services, Menu Engineering, POS Business Intelligence and Restaurant Consulting Services.  For more information go to
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