Do You Make This Mistake Of Offering Very Low-Price Meals In Your Casual Dining Restaurant?
Last year restaurant owners had it tough when the term “economic recession” entered the household vocabulary. Customers tightened their belts, and only a few restaurant brands—McDonald’s, Burger King, etc.—continued to earn good money. Casual dining establishments were hit the hardest.
This year we’re seeing some good signs of recovery, but not enough to put casual dining restaurant owners back into their comfort zone. My one advice is to be careful with your promotions.
Take the “low prices” concept of fast-food dining chains. In an attempt to attract more customers, some fast-food chains decided they would sell $5 meals, very cheap. $5 burgers, $5 fries and milkshakes. But the thing is some casual dining restaurant owners saw the idea and liked it and thought to implement it in their own restaurant brand.
If anything, it is a recipe for disaster.
Here are five reasons why you shouldn’t even think about offering $5 meals in your casual dining restaurant.
1. Truth is these “low prices” promotions rarely hit it big enough to create a new level of business for your restaurant
2. Cheap prices invite one-time customers and seldom loyal patrons
3. Offer a very cheap value meal long enough and your customers will reject everything that goes out that price range
4. It’s harder to go back to your original pricing than it is for customers to get used to your “new prices”
5. Your restaurant will carry the burden and financial loss coming from the promotion for a very long time
TGI Friday’s had to learn it the hard way when their management decided to jump on the wagon and offer an entree at $5 per order. Friday’s management said they wanted more exposure for their new salads, but no one in the industry was dense enough to believe it. Friday’s wanted to compete with Subway’s QuickServe campaign. Period.
The plan backfired. Long-term sales dropped, thanks to their $5 new salads. It also caused them extensive brand damage, something the management at Friday’s is struggling to put back together to before the promotion. Simply put, the QuickServe promotion has no place in the casual dining market.
As a casual dining restaurant owner, you’d do well to remember that. Cheaper offers are okay. But learn to draw the line somewhere. Don’t be too cheap as to look cheap.
Let me know your opinion on “low prices” promotions and casual dining restaurants by leaving a comment below.