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Three Reasons Coupons May Hurt Your Restaurant's Revenue

There are tons of daily deal sites out there. Groupon and LivingSocial are the largest, but there are many local deal sites popping up. In Vermont, we’ve got at least three - started by radio stations, TV stations, and local entrepreneurs. They’re pretty awesome - spend $10 to get $20? Yes, please. And most of the time it’s for restaurants. So free food makes it even better. Unfortunately, for many restaurants, coupons don’t make them a lot of money. Here are three reasons you might want to reconsider putting a coupon in the paper or on a daily-deal site.

1. Coupons Cheapen Your Restaurant’s Image

There’s a huge steakhouse in every city. It’d be pretty telling if they had a Buy One Get One Free filet mignon promotion. They’d lose money like mad, but they would also damage their restaurant’s image from top-of-the-line to bottom-of-the-barrell. Which do you want to be?

2. You Get Habitual Coupon Users

When you run a promotion, only allow one coupon per person. Why? If you allow four or five, you’ll get customers who only go to your restaurant because they have a coupon. I’m guilty of many times over with several local restaurants, but I shouldn’t be. Run smart promotions - make sure you’re going to make money on the coupon no matter what.

3. It Creates a Bottleneck

A coupon, for the most part is a manual process - especially the daily deals. You have to call the code in, get it verified, and then keep them all in a safe place. It takes a ton of time. Time is money. Skip the coupon route and save yourself some labor costs. Coupons aren’t the worst promotion for your restaurant. There are plenty of places who have had wild success with them. Just be careful - make sure you’re making money with your coupons!