Foodservice discounting could weaken restaurant brands, warns Horizons

7th December 2010, 11:40am

Discount deals in pubs and restaurants have played an important role in keeping consumers eating out over the past 18 months, but their on-going use could weaken brands and profit margins.

This was one of the key messages raised at a breakfast briefing held in London yesterday by market analyst Horizons.

Research found that of the 16% who use vouchers, most prefer
'2 for 1' deals. Pizza Express, McDonald's, Tesco, Domino's and Pizza Hut are the most common places to redeem them.

Meanwhile many vouchers are downloaded by diners through money-off websites, while more targeted offers are sent by some chains directly to the consumer via mobile phone, email or Facebook.

This enables one-off deals to be communicated quickly to consumers such as Pizza Express offering '50% off your food bill' in its London restaurants on the day of the recent tube strike.

Horizons' managing director Peter Backman said: "Consumers have developed a voucher-scheme mentality when it comes to eating out. It's a treadmill that many operators will find impossible to get off without redefining their target audience in line with lower prices."

Glyn Heald, a partner at business coaching firm Shirlaws, added: "If they stop discounting restaurants will have to work extremely hard to ensure customers get something extra for the higher price they are being asked to pay. 

"Customers very quickly get used to paying a lower price for a particular level of service, so if operators effectively raise the price by stopping the discounts, customers could end up feeling cheated."

Related Articles:

• 25 Mar 2011 - Pizza Hut named Best Family Restaurant at baby friendly awards
• 07 Sep 2010 - Are restaurants wasting their time with discount vouchers?
• 18 Aug 2009 - Restaurant operators urged to control costs
• 10 Jun 2009 - Eating out is falling after hitting new high

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