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Why offering discounts is not always a good thing?

A big mistake that most restaurants make is offering too many discounts. Offering discounts will not always increase the sales and profit of your restaurant. Therefore, as a restaurant owner; it is crucial that you do not offer discounts on a regular basis. Here are a few negative effects that offering regular discounts may cause your restaurant.

Why offering discounts is not always a good thing?

Lack of Confidence

It is essential that as restaurant owner, you do not continuously place discounts on a specific product. This is because it will show the customer that you are not confident in your product and may lead to the customer thinking that the product is of low quality. This will lead to the customer not purchasing the product due to them thinking that it is discounted for a reason. This will lead to your restaurant’s sales struggling which could lead to your profit margin falling.

Customers will expect the same thing next time

When you offer a discount on a meal, it may be successful in luring the customer in and may lead to them buying the product. However, when they visit the store again, they may expect to pay the same price. This will lead to them not wanting to buy the meal again as they will not believe that the meal is worth the original price. This means that customers will expect the discounted prices every time they visit your restaurant which will lead to them not wanting to buy the products at the original price. This will lead to your restaurant’s sales struggling which will have a negative impact on your profit. This shows that discounts will damage the value of your products and will lead to the customers valuing them at a lower price.

Lose the Customer’s trust

If you keep adding discounts to your meals, it may lead to the customers becoming suspicious and believing that your restaurant is hiding something. The discounts may make the customers believe that the meals are made poorly or with poor quality ingredients. This will lead to the customers not wanting to eat your meals and may lead to them losing their loyalty and eating at your competitors. This will decrease your competitiveness as customers will choose other local restaurants over yours. Consequently, your sales will struggle which will prevent your profit margin from rising.

Cuts your Restaurant’s profits

Remember when you offer a discount, you are losing out on money because you are not selling the product for the correct price. This means every time you sell a product for a discounted price, you are losing potential profit. This shows that you should not offer a lot of discounts because you will be throwing away potential profit. Even if your sales increase due to a discount, your profit will continue to struggle.

How to increase sales without discounting?

To increase sales without changing your price, you should focus on the quality of the meal as this will increase the value of the meal. If customers know that they are going to get a high-quality meal that they enjoy, they will not care about spending an extra £2 or £3. This proves that if your meals are high quality, your sales will increase as customers will know that they will enjoy your meals leading to them coming to your restaurant. This will also increase your profit as the high quality of your meals will enable you to charge customers a premium price for the food. This proves that offering quality food is more effective than offering discounted food.

As a restaurant, it is essential to remember, quality is key.

 

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