A recent report issued by the NPD Group suggests what an increasing number of restaurants are sensing – consumers are becoming slightly less focused on price points or deals at restaurants. The number of respondents who said they are looking for good restaurant deals is trending downward, from 29% a year ago to 22% in March. Restaurants have begun to ease away from deep discounts and are becoming more selective about price-based promotions, but distancing themselves from deals will likely be gradual and slow. In fact, how quickly and completely consumers will release their grasp on price is unknown. Consider that Restaurants & Institution’s 2010 New American Diner Study found consumers still put price before all other elements in making dining decisions – nearly 60% agree that, “In choosing a restaurant, price is usually my first consideration.” Diners across the board named lower prices as the top incentive at breakfast, lunch, and dinner that would encourage them to eat at restaurants more often.
So, how can restaurants appeal to price-conscious consumers but not define themselves by price? New delivery channels are taking coupons and discounts to the next level – and to new audiences. For example, offers made to restaurants’ social media followers are working well. In fact, 63% of respondents to the R&I study said coupons and deals are what they most want when they connect to restaurants’ Facebook or Twitter accounts. Restaurants are becoming increasingly adept with offers – such as asking followers to mention a specific tweet to get a special deal. They are also making announcements of last-minute specials and invitations for happy hour specials. In addition to driving traffic quickly, offers aimed at restaurants’ social media audience are viral and build those communities further.
With over four million subscribers and more than four million coupons sold to date, Groupon is a force in the electronic coupon category. Subscribers receive a daily email with a special offer in their cities to see, do, and buy, including discounts on restaurant meals, such as paying $25 for a coupon (or “groupon”) for $50 worth of food. The offer becomes the exclusive subject of a daily email (including photos, information about the business, and links to its Web site). There’s no upfront cost to businesses to participate; Groupon processes the transaction and retains a portion of each “groupon” sold. Because businesses specify a minimum number to be sold for the deal to be valid, subscribers often use email and social media to spread the word. Restaurants say that participating has helped them reach new audiences – notably the young and Web-savvy – without spending time and money on marketing. Groupon reports that its customers spend an average of 60% above the value of the coupon. (Visit grouponworks.com for more information and to schedule a deal.) Also, look for Seattle-based collective buying service Tippr – now in eight major U.S. markets with plans to launch in more than two dozen in 2010. Tippr negotiates with popular places to eat, drink, shop, etc., for large discounts. The deals are guaranteed to subscribers; the more people who buy, the better it gets, so Tippr encourages passing deals along via social media. (Visit blog.tippr.com/merchants to learn how it works.)
Part friend-finder, part city guide, and part game, Foursquare is a location-based social networking app that is becoming a boon to savvy businesses. Foursquare members (currently over 1M), use the GPS-based app to “check-in” from wherever they are (a museum, a bar, a restaurant, etc.) via iPhone/Blackberry/Android/Palm Pre, text message, or Foursquare mobile. Foursquare tells their network of friends, recommends things to do nearby, and awards points and badges for activities – like trying a new restaurant, visiting one more than anyone else (which earns the title of “Mayor” there), or adding a new place to Foursquare’s listings. The friendly competition keeps it fun and provides members an incentive to frequent businesses – especially those that reward them with deals (e.g., free drinks, free apps, 20% off) for being the Mayor, for their 10th check-in there, etc., when they show proof (on their iPhone or other mobile device). Some businesses reward every member who checks in. If a member is at your bar/restaurant, Foursquare tells the member what he or she has to do to receive the offer. If the the member is nearby, they will let the member know if your restaurant caters to Foursquare users. Restaurants promote Foursquare deals in house and via social media, where the deals get passed along. (Visit foursquare.com/businesses to learn more and to sign up your restaurant for Foursquare specials.)