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Online Restaurant Daily Deals: Good For The Business?

Research has shown that online daily deals are effective tools to market a restaurant, as it brings in new and irregular customers to the participating establishments.  Technomic reported such findings, and also learned that a high percentage of consumers claim that after they used the daily deal promo, they returned to the restaurant even without it, and recommended the establishment to their family and friends. It’s also interesting to note that many of these customers help promote the restaurant by writing about their experience on social media network sites such as Facebook or Yelp.

There are a lot more significant findings that were reported in Technomic’s  Online Daily Deals Report, focusing on restaurant consumers’ behavior and use of couponing sites.  Some of the findings are:

  • 48% of coupon buyers used the coupon at restaurants that they have never tried yet, and 25% use it at a dining place that they have visited only once before;
  • 67% returned to the place even without a daily deal coupon;
  • 83% recommended the establishment to their friends and family; and
  • 34% wrote a review of the dining place on review sites Yelp or Zagat, and 25% posted a status on their Facebook page.

“It turns out that consumers of all income ranks love the idea of daily restaurant deals, participate in it and are quite satisfied with their purchase,” notes Bob Goldin, Executive Vice President of Technomic.  “Customers are now subscribing to various services and are buying multiple deals.  There is a strong indication that online daily deals are great methods of promoting restaurants, based on the fact that 85% of consumers are prepared to purchase more restaurant deals on the internet, and 79% are eager to receive them in the future.”

The daily deal business model emerged on the internet as early as 2004, but it wasn’t until late 2006 that the concept exploded, with more than 100 deal-a-day sites in existence.  Groupon came into the market in November 2008 and immediately became one of the fastest online companies to hit a billion dollar valuation.

Now, the concept have had several variations, including longer time frames, such as a week, rather than giving the buyers only a day to decide on the deal.  The prices are also progressively decreasing, with most sites giving out free shipments.

The consumers, of course, have one great motivation in mind:  discounts.  Fifty percent off the sticker price is a deal they just can’t say no to.  But other than saving money, it’s been found that daily deals provide consumers a layer of emotional and social satisfaction.

For one, daily deals bring about a feeling of sophistication to the consumers.  It makes them feel like they are “in the know” of an exclusive secret, primarily because the daily deal sites require membership.  And availing of such steep price markdowns make them feel like savvy shoppers.  Daily deals also empower consumers to do what they love to do more often, since the deals allow them to integrate more luxuries into their lifestyle on a more regular basis.   It also allows them to experiment on new services and products, which gives them a firmer control of their life.

Daily deals have had some profitability issues with their merchants, but many merchants have already accepted the fact that any business that has been earned on a discount is already starting out disadvantageously for them.  But then, many do realize, too, that daily deals drive a lot of new traffic and revenue for the restaurant without paying advertising fees.

Despite the issues that merchants have on this business model, the fact remains that consumers love them, and marketing experts advise that restaurants and chefs in their chef clothing ought to include daily deals in their discussions of their marketing initiatives. Since these deals are permitting customers to be spontaneously indulgent, restaurants should capitalize on it as a way to surprise and delight – but should be very careful not to overdo it.  Restaurants must correctly understand where, when, how and how much they can give.

Daily deals, as predicted, is here to stay, and as it turns out, restaurateurs, as well as chefs in their chef clothing who make peace with the fact and master this promotional scheme will eventually profit from the move and come out ahead in the game.