Maurice Abboudi and Paul Herbert explain how to avoid the twin perils of locking the business into perpetual discounting and falling foul of the strict rules surrounding promotions
Once the domain of the pizza delivery sector, promotional activity has become widespread in the casual dining sector in response to difficult market conditions.
While sales promotions may seem a sensible strategy to lure customers away from competitors and eating at home, it can be very difficult to wean customers off discount offers. Discounting destroys margins and can create a vicious circle, with customers prepared to visit a restaurant only if there is an offer on. If discounts are not managed properly, there is a danger the business will become unsustainable. It’s also worth noting that many brands that have thrived over the years never offer discounts – Wagamama and Nando’s, for example.
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