How Can Restaurants Respond to Inflation With Smart Promotions?

TLDR

With the rising costs of ingredients and operations weighing heavily on profit margins, restaurants need smart ways to attract diners without resorting to across-the-board price hikes. According to a recent survey, 86% of consumers say that promotions are a major incentive when deciding where to dine out. Additionally, 81% are drawn to coupons and discounts. With inflation making restaurant meals feel like more of a splurge, strategic promotions can help operators maximize value for budget-conscious guests. This may involve offering carefully targeted deals through loyalty programs, happy hours, or custom branded apps. The key is enticing people in the door and making them feel they are getting a good deal, while still protecting margins on your most popular menu items. Promotions must be perceived as a win-win in order to drive traffic and build loyalty.

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The Impact of Inflation on Restaurants and Diners

Restaurants Face Challenging Times Ahead

With food and dining inflation increasing, restaurants are being squeezed by higher costs at every turn. According to a recent survey, 78% of Americans say higher menu prices have made dining out more challenging. As a result, restaurants must find ways to provide value to customers without sacrificing quality or profits.

Promotions and Discounts Drive Diner Visits

Promotions, coupons and discounts are major incentives for 86% of diners, closely followed by loyalty programs for 65% of respondents. Nearly half of Americans (47%) are attracted to happy hour deals and other time-bound specials. By offering strategic promotions, especially through digital channels like branded mobile apps, restaurants can drive customer visits and spending even during inflationary periods.

Value-Added Extras Boost Customer Loyalty

Beyond price-based promotions, value-added extras are an effective way for restaurants to build goodwill and loyalty with customers. For example, a rewards program that offers surprise treats, early access to new menu items or VIP events creates perceived value for diners at little cost to the restaurant. Leveraging technology like AI-based recommendation engines (used by 52% of respondents) to suggest highly-personalized rewards and experiences for each customer can further strengthen the relationship.

The Path Forward: Creativity, Flexibility and Tech

For restaurants, the road ahead may not be easy. However, by exercising creativity, flexibility and smart adoption of technology, there are ways to weather the challenges of higher costs and continue serving loyal customers. Promotions, value-added programs and digital tools are more important now than ever before in driving guest visits, spending and long-term loyalty. With the right combination of offerings and channels, restaurants can thrive even in inflationary times.

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Smart Promotions to Offset Rising Prices and Attract Customers

Restaurants should implement smart promotions to counteract the challenges of inflation and attract new customers. Offering coupons, discounts, and loyalty programs are proven ways to drive business and boost revenue.

Coupons and Discounts

According to a recent survey, 86% of Americans cite promotions like coupons and discounts as major incentives to dine out. Nearly half are attracted to Happy Hour deals and flash sales. Offering special promotions through channels like social media, email newsletters, and branded mobile apps are easy, cost-effective ways to reach customers. Coupons and deals shared on social media also increase brand visibility and awareness.

Loyalty Programs

Loyalty programs are an excellent way to encourage repeat business. Over 65% of respondents find value in loyalty programs that offer rewards, points, and special offers. Creating a loyalty program builds customer relationships and garners data to personalize communications. Loyal customers tend to spend more and promote businesses through word-of-mouth.

Menu Innovation

In addition to traditional discounts, restaurants can introduce value menus, meal deals, and prix fixe options. Bundling popular items, offering smaller portion sizes, and highlighting more affordable fare are creative solutions to provide options at multiple price points. Continually optimizing menus to balance costs and customer demand will position restaurants to weather economic fluctuations.

The impacts of inflation and rising costs are challenging for restaurants and consumers alike. However, smart promotions and a customer-centric approach can counteract these difficulties. Restaurants that focus on value, loyalty, and innovation will thrive despite economic pressures. The key is understanding customer needs and crafting solutions to keep them coming back.

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Technology Solutions to Streamline Promotions and Loyalty Programs

Configurable Loyalty Technology

Restaurants can leverage configurable loyalty technology to streamline marketing efforts and boost profitability. Solutions like Talon.One allow businesses to create customized loyalty programs and targeted promotion campaigns based on customer data. With a loyalty program and promotions in place, restaurants have an effective means to provide value to customers, increase frequency of visits, grow average spend, and improve customer lifetime value.

Mobile Apps and Coupons

Offering coupons and deals through a custom branded mobile app provides convenience for customers and an easy way for restaurants to drive traffic and sales. Apps like Per Diem enable restaurants to offer in-app coupons and discounts to promote menu items. A mobile app also allows restaurants to highlight value menus and enable customers to build their own meal boxes at a discounted price. With 78% of Americans saying higher menu prices have made dining out more challenging, mobile apps give restaurants an avenue to provide affordable options and value.

Personalized Promotions

Advanced technology solutions leverage customer data from loyalty programs and point-of-sale systems to create personalized promotions. By analyzing purchase history and customer attributes, restaurants can tailor promotions to match individual interests and preferences. Personalized promotions have been shown to generate redemption rates up to 10 times higher than generic campaigns. With 41% of Americans dining out less frequently due to higher prices, personalized and targeted promotions are an effective way for restaurants to re-engage customers and drive increased visit frequency.

Restaurants have many options available to strengthen guest engagement and loyalty in response to rising costs and economic pressures. Loyalty programs, mobile apps, personalized promotions, and other technology solutions allow restaurants to provide value, convenience and relevant offers to customers. By leveraging these tools, restaurants can mitigate the impacts of inflation, keep guests coming back, and protect their customer base during challenging times.

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Final Thoughts

You Can Fight Inflation With Smart Promotions - What's Your Restaurant's Plan?

As you've seen, offering coupons, discounts, loyalty programs, and happy hours can be highly effective strategies for restaurants to attract and retain customers during inflationary periods when rising menu prices make dining out more challenging. With 86% of Americans citing promotions as a major reason to dine out, the opportunity is clear. Now is the time for your restaurant to get strategic with promotions. Evaluate your current programs - are they optimized to deliver maximum value in areas your guests care about most? Don't lose diners to competitors who are being more proactive. Take steps today to implement impactful promotions that will keep guests coming through your doors while also protecting your bottom line. The future success of your business could depend on it.

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