April 22, 2009
April 22, 2009
By Traci Scott, BIZ Reporter
According to a recent Nielsen consumer survey, 66 percent of fine dining patrons admit they are going out less often compared to a year ago. This trend was echoed by 65 percent of nightclub patrons, 55 percent of bar patrons, 59 percent of casino and resort patrons and 52 percent of casual dining visitors. A report from Fitch Ratings suggests things aren’t likely to improve anytime soon. Although gas prices are declining and the government stimulus package is in effect, these conditions are being canceled out by rising unemployment and downward pressure on the housing and stock markets.
To counter lagging business, U.S. restaurants and bars are turning to innovative and desperate measures to lure in diners and retain their customers, including the following:
• Free meals. Denny’s offered a free “Grand Slam” breakfast to anyone who visited a Denny’s restaurant back on February 3. The offer attracted two million people in its restaurants the day of the promotion, compared with around 200,000 customers on a typical weekday.
• Two-for-one offers. Denny’s tried another approach earlier in April with its “bring a friend” promotion in which customers received a free “Slamwich” when they bought another one.
• Special promotions. Cici’s Pizza chain has scattered one million pennies covered with stickers offering discounts and free pizzas in public areas around its 650 restaurants in order to attract diners.
• Value-based deals. Dominos Pizza and Starbucks are both offering special packaged deals, such as 3 pizzas for $5/each and a coffee/breakfast sandwich combination.
• Honesty-payment options. Several restaurants are offering “pay what you want” pricing options in order to build customer loyalty, with the assumption customers will return and pay full-price when the economy improves. Even though many of these restaurants are not even breaking even utilizing this method, they figure just getting customers in the door will help keep their business running by minimizing losses as much as possible during the downturn.
• Partnerships and value add-ons. In Las Vegas, where the hotel business has seen better days, restaurant and nightclub value add-ons to hotel bookings are making incredibly low room prices seem like an even bigger bargain. Guests receive free vouchers and discounts to the hotel’s on-premise eateries and restaurants.
• On-site enhancements. To get more patrons in the door, bars and nightclubs are trying alternative amenities such as hosting “18 & Up” nights in traditional $21 & Up” establishments, switching from a live music to a dance club format, offering special food and drink combinations, providing more outdoor and patio environment, and marketing through text messaging and social networking in order to attract the younger crowd.
It is too early to tell whether these novel and daring tactics will succeed, but it is evident that the ongoing recession is forcing many restaurants to think far outside the box.
Due to this heavy wooing, discounting and dealing by restaurants and bars, many experts wonder whether customers will ever again be willing to pay full prices or accept traditional eatery offerings, clearly making these strategies a risky venture.