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New and amazing items for a limited time. More Sale at olivegarden. The influence of online marketing on restaurant demand continues to grow, says Bonnie Riggs, NPD restaurant industry analyst. The restaurant association's recent research into social media found that a majority of operators and consumers believe daily deals were effective in driving traffic. These are two distinct parts of the marketing mix. Once guests are drawn in through an offer, I can have a conversation.
Getting diners to step into a restaurant is key because that's when the operator can make them regular customers. A restaurant operator needs to "step back and realize the discount is a cost of marketing," he continues. Consumers who use deals and are generally satisfied with the experience will come back again.
Deals carry numerous pros and cons. They can bring in more customers and result in new regulars, but they can also be costly and may be purchased by bargain seekers who will never be regulars. Various studies say anywhere from 35 to 80 percent of Web-coupon purchasers are new customers. One restaurant report by professors Sheryl E. Kimes of Cornell University and Utpal Dholakia of Rice University found most deal users would return and pay full price. They typically spend more than the deal and tip well on the real price of the meal.
In the past few years, daily deal companies have been focusing on how to help their customers offer more productive deals. Groupon, which has 36 million members worldwide, developed an online merchant center that helps businesses track how deal campaigns perform. This can be used to assist the structure of future offers. Groupon reported it earned money in the second quarter. That way, a restaurant that is looking for more business between and 5 p. Groupon's mobile application, now responsible for nearly a third of the company's North American deals, makes it possible for a business to better focus its deal.
Groupon and some other daily deal sites also have rewards programs available, allowing a business to offer benefits to customers who spend more. So much of it was people looking for a cheap meal. It hurt us. Living Social also launched a local live-events venue at F St.
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NW in Washington, where its merchants can offer pop-up restaurants, classes and other experiences. It includes a state-of-the-art culinary kitchen as well as a demonstration kitchen. The restaurant company "has never, and will never, participate in a standard 'deal' in which a consumer gets a dramatically discounted offer," according to Jennifer Motruk Loy, marketing and public relations director. It "isn't part of any good operating model. But the LivingSocial street space is different because it can be part of a positive strategic marketing and brand awareness effort.
The space essentially became a satellite restaurant during Founding Fathers' spring menu preview there in April. Not only did the sold-out event over three weekends preserve the Founding Farmers brand by allowing the restaurant company to control the space, but it "was an enticing event for many new guests that had never dined" at the restaurants, Loy says.
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The daily deal industry continues to grow, according to a separate study by Rice's Dholakia. More than half of the deals are profitable for merchants, and the likelihood of making money on deals grows with operators' experience with them. The bar to enter the business was fairly low, but companies found the cost of operating is high. And their profit margins are tightening as merchants learn to negotiate better terms. The industry went through "a sudden rush and infatuation in daily deal sites, with companies jumping in without much thought," says IBISWorld's Samadi.
A study by Sheryl E. Kimes and Utpal Dholakia found a series of advantages and disadvantages in restaurant daily deals.
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Kimes and Utpal Dholakia. Skip to main content. Economic downturn provided the impetus for consumers to seek bargains. Positives Incremental customers — Daily deal companies say they will bring in additional customers who will return. Various surveys found a wide range of how many new customers are drawn by deals — from 35 to 80 percent.
Increased revenue and profit — With an increase in traffic, restaurants may see higher income, as many diners spend more than the deal's value. Between Exposure — As a marketing tool, daily deals can help restaurants improve customer awareness of their businesses, often lasting well after the promotion ends. Negatives Cost — This is a big concern of many operators. In addition to the food cost, increased traffic could result in higher personnel costs, plus there are also administrative costs involved in the promotion.