After a very tough 2009 and a tepid 2010 our sales have been up 20-40% for the last 10 months. Looking over the numbers it is pretty clear that we have been trading food cost (driven higher by both actual costs and by discounts) for sales as well as running significantly higher marketing costs.
The good news is that it worked and cash is flowing through the till, bills are paid, we have been able to invest in upgrades and replacements etc etc.
The question is: how many new customers have we captured and can we keep them while weening them off the deals and dialing back the marketing outlay to make the business more profitable?
We have been gradually weaning ours off the high discount deals every new menu release. We just trim a couple of % off the discounts each time so they still think their getting a great deal without realising that are getting closer and closer to paying full price.
A major selling point for you is that you have a great product (evident by your sales increases) and that you have a lot of regular clients that get you through the soft times after the paek ski season has gone.
My thoughts to you, and every other TT’r is that if your product is good enough customers will stay even if the price goes up.
I don’t care if I lose the bottom feeders who are after the deals or want to try and screw us down. Constant supportive customers who are willing to pay for a good product will keep you going. Make them feel special and welcome each and every time they come in the store and they will think more of it than a discount on the bill.
Just keep doing what you well - making a great pizza backed up by great friendly service.
We have just started pushing deals down quite dramatically, so actual cost to the customer is about 15% - 20% more. We have found we are getting new customers and losing the bottom feeders, although after two or three weeks now, some are biting the bullet and coming back(although not ordering as many pizzas).
People will always gripe at first but as long as your pizzas and service are good, they have no real choice.
I guess we’re about to find out the answer to that question at our place. We’re bringing out our first major menu overhaul next Monday, and with it’s introduction…price increases. We’re doing everything “right” according to which ever self-appointed experts we read or listen to, but still “just making it”. We’ve absorbed all the pricing increases for the last 20 months and simply can’t do it anymore.
So…if folks are truly loving the food and not the deals, we’ll be fine and should finally be profitable…if not, well…
Here is a suggestion regarding your concern about “staying in front of customers, but weening them off of discounts”…
Instead of mailing out menus and coupons, every time, try different types of high-visibility promotions.
Here’s a great action plan:
Step 1: Mail menus WITH coupons to every household surrounding your restaurant.
Step 2: Once every household has your full menu, start using other types of promotional mailings. Try a monthly mailing with a “Pizza of the Month”. Create exciting new pizzas or sandwiches, and promote them at a great price point WITHOUT sending coupons. Train your customers to “expect” a featured deal every month and make sure it has high profit margins.
Step 3: Every new customer that walks in your door, or orders delivery, should leave with a reason to come back again. Maybe this is a magnet, box topper, or birthday special - whatever you are comfortable with.
Note: Once every quarter, mail an updated version of the menu and coupons so that you can update prices and add/remove items. Always keep your local area engaged and integrate all of your direct mail campaigns with your social media and web presence.
This strategy works very well if done consistently. Hope this helps.