You’ve heard the horror stories: Small business owner runs a daily deal, can’t handle the volume, goes out of business. In truth, these epic fails are a rare occurrence in the restaurant industry. The majority of restaurants that have run a deal with a daily deals provider have found it to boost business during downtimes, encourage spending well over the deal amount and keep people coming back for more. They know the secrets of how to make the daily deals business work for them.
Four ways to avoid daily deal disaster: a checklist
Reading the fine print and timing are two important factors to ensure success.
While there is no one preferred cookie-cutter approach, here are some tried and true things to consider when putting together a deal:
1. Payment
Every restaurant—whether it’s a national chain, a family business or a single franchisee—needs a consistent cash flow. It’s a part of the business. Ask the daily deals provider when you will receive the first payment. The big names typically take 20 days to deliver the first payment, an eternity in the restaurant world. If cash flow is important to you, look to smaller, more market-focused daily deals sites.
2. Timing
If only it could be summer at the Jersey Shore all year long, or autumn in Phoenix. Unfortunately, it’s not. After the peak of summer, beach towns need to find foot traffic from groups other than tourists. Targeting locals with an introductory offer through a daily deals site is a good way to do it.
3. Additional promotion
You may not have time for an in-depth social media strategy when you are busy ordering supplies and hiring servers and cooks. The good news is that daily deals sites can do the legwork for you by virally spreading the word to social-savvy consumers. A recent study by Edison and Arbitron found that daily deal users are more likely to use social networks. Additionally, the study found that the average daily deal user had about 255 friends on Facebook. If each purchaser spread the word to their 255 fans, that’d be a lot of new referrals! Occasionally, you’ll even find a partner that is willing to provide deal-specific advertising in the local media. DealChicken uses the Gannett family to run ads in the local newspaper or on a local TV station. This helps reach people who may not be online as frequently.
4. Pricing
Setting the right price makes all the difference. Take a look at your average check price. If possible, try to set the deal total for less than that amount. So, if the average check is $40, run a $15 offer for $30 worth of food and drink. This is a good value to the customer, but also means that you are likely to generate revenue that you will not be shared with the daily deal provider. Further, the customer holding a $30 voucher is not likely to be dining alone. The other option is to do a special package for two—perhaps two apps, two set entrees, dessert and a bottle of wine for $49. Can you make up the cost in the wine? Can the servers upsell the set entrée to the special of the night? The possibilities are endless.
In summary, who you partner with makes a world of difference. Is the deal facilitator trying to get you hundreds of customers? Or is your partner trying to get you a smaller set of high-quality customers—ones who will spend well over the deal amount and then keep coming back? Studies have shown that daily deal users have higher incomes, own more tech gadgets and don’t mind spending money on things they find to be of value. This suggests that daily deal users are not price conscious, but they are value-seekers.
Finally, keep in mind that a daily deal site can only do so much. Once those vouchers are sold, it’s the staff’s job to deliver the impressive service, appetizing menu and high quality standards that keep people coming back.
Nicole Taylor (nptaylor@gannett.com) is the content manager on Gannett's social commerce team, specializing in social media and merchant relations. Gannett’s daily deal site is called DealChicken.
