It has not been much time that e-commerce gave way to a unique way of marketing for various F&B players to reach out to their target audience. With a plethora of players like snapdeal.com, khojguru.com and dealsandyou.com now into the business, thousands of coupon junkies are now glued to their computers waiting for the next daily deal to show up on websites or mail boxes.
The trend is now a rage among customers and those who have indulged once in this practice are now loyal customers of the players in context. Groupon, which gave way to the concept two years back, is now arguably the fastest growing company ever promising to reach the $1 billion in sales mark. Groupon is a famous UK-based deal-of-the-day website that offers discounted gift certificates usable at local or national companies.
Let’s seek an answer to the question as to how it makes sense for a potential F&B player to participate in the ‘daily deals’ campaigns and how does it work? Restaurant A offers a number of gift certificates redeemable at the restaurant at a significant discount. The offer is valid only if the target number of certificates sold has been reached. The resultant money that the campaign generates is then split between the brand (restaurant) and the vendor (like snapdeal.com etc).
Such deals, undoubtedly, help in bringing a lot of first-time guests for a restaurant, putting the business on the map. These guests otherwise wouldn’t have even heard of the restaurant otherwise. “We used to use various mediums to place our advertisements and offerings for our customers but sites like snapdeal.com and dealsandyou.com have changed a lot of things for us. In a way, the customer also does not get lost wherein he seeks some other benefits from a deal as against the actual implications,” comments Anil Dhingra, Owner, Gossips Bar and Kitchen. He further comments that it’s a no profit-no loss game and the primary focus remains to be generating footfalls.
How does it work?
It is understood that word of mouth plays an important role and interestingly players (F&B) keep a track of each other’s activities via checking their websites often in order to understand as to what is new on the agenda. Dhingra shares that there are no particular seasons for taking out the offers or schemes as such. “It depends on the customer (his taste and preferences) which sets the kinds of schemes or offers at times.
It is a zero investment process as the initiative (a great deal of it) falls on the part of the website which gets a portion of the money as commission. “It is a competitive business world that we are living in. For instance, we are competing with 57 restaurants in this space (including other restaurants in hotels). We indulge in conducting surveys, studying price points to be fixed, quality concerns, footfalls, menu pricing, guest tastes, promotions, discounts, etc.,” opines G.D. Panda, F&B Manager, Hotel Connaught.
Making a difference
Panda shares that the walk-ins which were initially around 30 per day have now gone up to 45 per day. “We have experienced a 30% rise in the kind of footfalls we now receive,” says Panda. When discussed about how the profit margin works out to be, Panda explains that for instance, if we are offering ‘buy two, get two free’ scheme, then that is accompanied by snacks and other food items too. Thus, in a way it makes up for the cost invested in the scheme and helps in attaining a balance as the customers end up buying beyond what the coupon offers.
Summing up, it is also learnt that once a customer walks in with a deal in hand, becomes habitual to getting similar deals in the future too. New sites which carry the advertisements of various F&B players are not very promising, though, experienced players are doing very well in the game. Dhingra shares that the newer sites have a conversion of 20 coupons on an average if 450 coupons have been offered in total.
It is simple to understand in a way that more the selling (of the coupons), more is the money flowing for these sites. It is to be noted that this type of heavy couponing is going to bring in price-conscious customers and also, this bunch tends to not tip a lot or not tip at all, even though you offer the same food and level of service as you do to non-coupon guests. This comes with an assurance that these guests will end up visiting your restaurant again!
Although it is nice to have a lot of new guests to come in and discover your restaurant for the first time, certain things need to be taken care of like training your staff to attend to coupon holders, adding first time guests to your newsletter, customer loyalty programme, enabling your POS system to automatically include the tip in the check itself, etc.
A word of caution remains to be that each coupon customer walk-in puts you further in the red until you do make an effort to generate more add-on and repeat sales!