Restaurant Coupons

[thelaridarsarm]

While I am a huge fan of using these types of coupons I just don't understand the entire marketing ploy of having them and would like to with my company!

You see, I see all of these online websites with free restaurant coupons and people just go there and get them. But if they are searching online for the restaurant coupons, don't they want to eat there all ready! It is definitely a win for the buyer but how about the seller? What are the implications? It must increase income somehow?

 

[kyheirloomer]

There are all sorts of possibilities and no simple answer. And, no, people who search for coupons have usually not already decided to eat there. The coupon is often the deciding factor.

Keep in mind, too, that on-line is just one of several ways that coupons are distributed. In each case, the goal is to increase---and, hopefully, retain---traffic.

For instance, let's say you offer a 10% off coupon on any adult meal. Most of the time, it won't be a single that occupies the table. Rather, m'lady and I are going out, you see, and the coupon is a tie breaker for the restaurant we choose. And you've sold 1 discounted meal and 1 full meal as a result. Presumably, we were so pleased with the meal and service that we return again and again.

However, if you're looking to increase traffic long term, and very little cost to yourself, gift cards actually are a better approach. If you look into them, you'll quickly see how beneficial they are on many levels.

I'm not suggesting it's an either/or situation. Marketing should take place on many levels. But if you're only looking at one technique, gift cards make more sense.

 

[thelaridarsarm]

That makes alot of sense,

Never thought of it that way, gift cards are something I haven't even considered as part of the equation!

Might even be worth creating a discount with the use of a gift card!

thanks!!!

 

[kyheirloomer]

Never thought of it that way,..........

Which isn't particularly surprising. Restauranteurs tend to think that the services they provide are different than other businesses, and that what works for retailers doesn't work for them. Those who insist on thinking that way are the ones who fall by the wayside. Using gift cards is just one example.

Actually, considering the 1. unused money that is never redeemed with gift cards, and, 2. the interest value of having your money up front, a discounted gift card could be a great approach; particularly as the holidays approach.

The thing is, you can cut awfully deep without incurring any pain. A RestaurantOwner.com survey revealed that, on average, 21% of all gift cards sold go unredeemed. So think of the possibilities. For instance: A customer appreciation gesture: Buy a gift card in any amount after enjoying a meal and recieve a 15% discount on the card.

Let's say a couple has a meal at your place and really enjoys it. So they buy a $100 gift card, for which you charge them $85. On one hand, you are risking $15, long-term. But, on the other hand, is the sure and certain knowledge that all or part of that card will not be redeemed. Meanwhile, at even only 3%, you are earning $2.55 on that card until such time as it is redeemed.

A definate win-win situation for you.

But, interestingly, most gift cards are not discounted because people do not buy them for themselves but for other people. The opeative word on these cards is "gift," and you want to keep that in mind if you go this route. You might, for instance, find yourself marketing them to local businesses which use them as gifts to employees or customers. Or, possibly, they appeal to older clients who give them to the newlyweds so they can enjoy a nice night out. And so on. A lot depends on the kind of restaurant you are, your geography, and your markets...as well as how much time & resources you're willing to commit to marketing and PR.

 

[abefroman]

One some of the sites that sell them, they probably take more like 50% (for doing the marketing).

Its good for the restaurant because, they have to spend at least $100, so people are going to go over.

Plus it builds a clientele, if they like the food, they will likely come back without a coupon.

You're better off hoping they coming in an use the coupon, rather than hoping people buy the coupon and don't use the.  I'd be surprised if 21% of the $100+ coupons went unredeemed anyway, also you are required by law to turn unclaimed funds (including that in the form of a giftcard) over to the state, so if they buy a gift card and don't use it, you don't get to keep that money anyway.

 

[kyheirloomer]

I'd be surprised if 21% of the $100+ coupons went unredeemed anyway,

I think maybe you're confusing coupons and gift cards. I have no idea what the redemtion rate is on coupons. But with restaurant giftcards, 21% is the correct figure.

also you are required by law to turn unclaimed funds (including that in the form of a giftcard) over to the state, so if they buy a gift card and don't use it, you don't get to keep that money anyway.

Don't know where you got that piece of information from, Abe, but it's incorrect.

 

[abefroman]

also you are required by law to turn unclaimed funds (including that in the form of a giftcard) over to the state, so if they buy a gift card and don't use it, you don't get to keep that money anyway.
Don't know where you got that piece of information from, Abe, but it's incorrect.

Incorrect?  Its the law.

Did you get a gift card for Christmas? Since it was given to you, you probably think the money should be spent by you. However, if you wait too long to spend that gift card, it could end up in the state's unclaimed-property account.

Why? Well, even though you might not think you've abandoned your gift card, if you don't use it after a certain amount of years it might be subject to laws that allow the money left on that card to revert, or escheat, to your state's piggy bank.

Every state has an act regarding unclaimed property that covers things such as the way in which dormant bank accounts, unclaimed safety-deposit boxes and uncashed checks go into the hands of the state. These laws are called escheat laws.

 

[petemccracken]

Not in California! Gift cards with no expiration date  do NOT escheat to the State of California, as least according ot the information I can find.

Perhaps BDL will have a thought or two???

Incorrect?  Its the law....

 

[kyheirloomer]

Gift cards with no expiration date  do NOT escheat to the State of California

Nor in any other jurisdiction I know of.

Unlike bank accounts, with gift cards there is a product involved. In the case of a restaurant card what you've done is prepay for the meal, which you can then consume, at your leisure, at any time.

If the escheat laws applied, what would accrue to the state is a plate of food.

 

[abefroman]

Gift cards with no expiration date  do NOT escheat to the State of California

Nor in any other jurisdiction I know of.

Unlike bank accounts, with gift cards there is a product involved. In the case of a restaurant card what you've done is prepay for the meal, which you can then consume, at your leisure, at any time.

If the escheat laws applied, what would accrue to the state is a plate of food.

They escheat in most states.  Exceptions are California, Washington, or Massachusettes. In indiana and Iowa they partially escheat, 60% goes to the state.  In Connecticutt they escheat after 3 years whether they have an expiration date or not.

Here is a listing of each state:

http://www.usegiftcertificates.org/associations/3747/files/ESCHEAT LAW SURVEY 091503.pdf

 

[boar_d_laze]

Well that settles that.

BDL

 

[petemccracken]

FYI,

http://www.nrn.com/article/new-rule...10&utm_campaign=August 27, 2010 - Weekly Wrap

 

[chefedb]

Abe,   In Florida the state does not get anything In fact some of the issuers of the cards started to put expiration dates on their cards. The state past a law that they can no longer do this. I take it from what I read  that all states have adopted their own laws. Also Abe the laws that are quoted were as of 2003.

 

[madeline]

Coupons work in a lot of businesses, the restaurant business included. It depends on who's looking for them. Some people think, "I'd love to have dinner in Restaurant X on Thursday. I wonder if they have a coupon?" In this case, they would dine there anyway, but the coupon would work as a further incentive. And some people think, "I'd love to have Italian on Thursday. I wonder which restaurant has the best deal?" In the latter situation, the restaurant with a good coupon would get a customer it wouldn't have gotten otherwise.

 

[babytiger]

I am seeing more restaurants using coupons to lure customers. I've gotten coupons to places I do go to anyway but have also tried new places with them. With websites like Restaurant.com, people are browsing and looking for deals more so to just look for coupons for the restaurants they already go to. Also, there have been a lot of "coupon/deal of the day" type websites popping up recently like Townhog and Groupon. Our local newspaper has partnered with another such site to provide the deals. Even Yelp started to offered deals recently.

Are the coupons bringing in business? I guess so. I remember reading about a local cafe getting really overwhelmed as it did not anticipate the high number of coupons being sold.