Gary Toyn is a client marketing consultant for Access who frequently shares his experiences, research and insight into the world of member benefits - everything from turn-key discount programs to member engagement. In this article, he speaks to the value dining discounts contribute to member rewards.
Why are restaurant discounts so critical to the success of your member benefits program?
Because people eat out...A LOT. In fact, I’m amazed by how frequently people go out to eat.
I conducted an informal poll of my office colleagues and asked them one question. How many times per week do you buy prepared food? Whether it’s a cup of coffee, a pastry, a treat like ice cream, or a full-on meal like breakfast, lunch, dinner. Among my coworkers the answers ranged from once per week to fourteen times per week.
So ask yourself: how often do you purchase any type of prepared food in a given week?
The average American eats out 4.2 times week, or a little over 18 times per month. According to the Bureau of Labor Statistics, the average American spends $232 per month, or $2,784 per year to eat commercially prepared food outside the home. High-income individuals (in the top 20% of income bracket) will spend a whopping $6,510 per year on commercially prepared food.
Let’s face it. For most of us, eating out is just part of our weekly routine. Whether it’s our preferred choice for meal preparation or a reward for surviving the daily grind, we all get varying levels of pleasure from having someone else cook for us.
So just imagine how much joy you would deliver to your members if you gave them a way to spend less on their frequent purchases at local restaurants, coffee shops and bistros?
Offering compelling, local restaurant discounts will help membership organizations accomplish a few goals like:
- Making your organization more relevant in the day-to-day lives of your members
- Generating goodwill with members
- Staying top of mind
- Having a reason for members to look forward to your emails
Dining Discounts Must Be Compelling
Whether you’re building your own network of local discounts, or using a turn-key discount platform, if you want to truly engage your constituents, you can never have enough dining deals.
But not just any dining deal will do. You’ll need deep and compelling discounts in order to motivate your members to use them. Unfortunately, these killer dining deals are rare indeed.
Why are compelling restaurant discounts so hard to find? Because restaurant owners reserve their deepest discounts for special marketing reasons.
They use discounts as a tool to attract new customers, but they also want to avoid giving discounts to existing customers who are willing to pay full price. Consequently, the best dining discounts are only available in a closed network. That’s because restauranteurs can limit exposure of their discounts, but offer them to a targeted audience that fit their preferred demographic. Consumers that are likely to spend more and visit more than the average consumer.
That’s how restaurants keep their existing customers happy, and also grow their business. Unless you are part of a closed, private discount network, you’ll never see these deep discounted offers.
The Popularity of Local Restaurant Discounts
The most popular restaurants that generate the greatest buzz, are often the small, mom-and-pop restaurants in neighborhoods throughout America. But getting a discount at these popular restaurants is hard. That’s because the gal/guy who’s stirring the sauce is likely the same person who’s making the marketing decisions.
Getting them to answer the phone is a challenge. Getting them to return a call is next to impossible. It takes time and commitment to get decision makers on the phone long enough to negotiate a discount offer and sign a contract.
That’s why most discount programs don’t bother with signing up local restaurants. It’s too hard. Most discount programs just give up and instead, opt to sign national restaurant chains with thousands of locations. But these restaurants are often more challenging for your members than they’re worth.
Why Most National Chain Restaurants Don't Play Nice with Members
Chili’s or TGI Fridays for example, are national chain restaurants with instant name recognition and consumer appeal. But they are typically quite restrictive about giving real, honest-to-goodness discount offers that are redeemed at the point of sale. Most use pre-paid gift-cards that offer a modest discount in the range of 5% to 10% off.
Why do national restaurant chains insist on using pre-paid gift cards?
It’s a dirty little secret in the restaurant business called “breakage.”
It works like this: Say, for example, you buy a $25 gift card and spend only $23, most consumers will discard or lose the card before they ever spend the remaining two dollars. That unredeemed portion is called “breakage.” If you get millions of people leaving $1, $2 or even $5 unredeemed, you can see how that adds up.
This study shows that more than $1 billion dollars in gift cards goes unspent every year. Restaurants also love pre-paid gift cards because it spurs higher spending. This study shows that consumers who use gift cards spend 72% more than the value of the card. When it comes to gift cards, the restaurants are the clear winner. Not your members.
From the perspective of the consumer, many restaurant gift cards and “dining certificates” are just too much hassle. Third party providers like Restaurant.com have faced a backlash from consumers because the user experience is so frustrating. Although you may buy a certificate with high expectations, you don’t realize you must wade through a mountain of terms and conditions. A frequent condition of pre-paid certificates is their limitations on dining at popular days like Friday or Saturday, when your members are most likely to go out to eat.
This is another example of how your members lose with gift cards and dining certificates. These dining offers end up being a forgettable, (if not a frustrating) experience. When a discount offer requires your members to jump through too many hoops, members will give up because it’s simply not worth the effort.
Where Can You Find The Best Dining Deals?
The best discounts are the instantly redeemed deals. Those where you show your phone at a register or to the server, and they reduce your total bill on the spot. Members love these deals, but only a few discount networks are substantial enough in size to offer local, mom-and-pop restaurant deals in retail neighborhoods from coast to coast. But such networks do exist.
These discount networks are willing to do the heavy lifting of building out their restaurant network with local mom-and-pops, regional and national chain restaurants, as long as the redemption is quick and easy.
In the end, these programs are the only ones that can truly attract and engage your members with their discounts. When your members know they can find a good discounts at their favorite local restaurant, they’ll have a reason to stay connected with your organization, be more loyal, and engage at far higher rates.