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Restaurants should resist the temptation to discount heavily

11 December 2008 by

Restaurant operators have questioned a report that urged them to offer special deals to customers during quiet periods in the run-up to Christmas.

Peter Backman, managing director of food service consultancy Horizons, last week warned that the spate of high-profile retail sales meant consumers would become reluctant to pay full price for other things, including meals out.

"Almost every non-food retailer on the high street has slashed prices to encourage consumers to spend," he said. "Restaurants, pubs and fast-food outlets have to do the same to raise throughput of customers at quiet times. Clever operators are now offering discounts that encourage people through the door but enable them to benefit from higher margins on drink, for example."

Backman suggested offers such as "a free meal on your birthday", "two for the price of one", "50% off the food bill", and "set-price menus and a free glass of Champagne".

But James Horler, chairman of restaurant chain Ego and previously chief exccutive of La Tasca, questioned whether discounts were the way forward. "It's all about adding value and just offering discounts doesn't seem like a very sensible way of responding to the current climate," he said. "So many operators are offering ‘two for the price of one' deals and I just wonder how much profit they are driving with them."

Paul Parnell, proprietor of restaurant group the Jack in the Green, agreed. "If you're discounting too much you're buying turnover but not profit," he said. "Restaurateurs have a responsibility to their suppliers and if they're discounting too far, they won't be able to sustain their business."

Carluccio's holds nerve ahead of critical Christmas trading period >>

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UK hoteliers must look for creative ways to cut costs >>
Restaurant news round-up >>

By Kerstin Kühn

E-mail your comments to Kerstin Kühn here.

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