Consumers seek bargains through restaurant coupons

Couponing can drive traffic

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Many operators already are finding that strategic couponing can drive traffic and increase trial without impacting margins or devaluing the brand.

Lenny’s Sub Shop, a 150-unit chain based in Memphis, Tenn., has been focused on direct-mail coupons sent to local businesses for the last year. The deals range from buy-one-get-one-free subs to free chips and a drink with the purchase of a regular sub.

So far the business-to-business coupons have performed extremely well for Lenny’s, officials said, earning a response rate above 50 percent.

Lenny’s also has found success with promotions like Social Wednesday, for which it sends Facebook friends a coupon each Wednesday. Lenny’s president Brent Alvord linked consumers’ increased use of coupons to the freshness of the deals and a desire to use them before they expire.

“Combos and value meals are expected,” he said. “A coupon raises the need to take action, versus a value menu or a combo meal, which will be there the next time [customers] go. If [consumers] have something in their hands, they feel obligated to use it. That phenomenon is responsible for the trend.”

While the Philly Pretzel Factory offers lunchtime combo meals, it has focused heavily on coupons because officials said its consumers perceive them as a better deal.

“[Combos are] not traditionally deals in terms of savings; they’re bundles,” said Marty Ferrill, president of Philadelphia-based Philly Pretzel. “People don’t see it as that great of a deal. Truthfully, it’s not. … [They] may only save 25 cents.”
 
Currently, the 120-unit pretzel chain is having success with its newest coupon program, Funday Monday. Every Monday the chain posts a different coupon on Facebook and Twitter that its friends and followers can redeem on that day only.

Philly Pretzel’s online coupons offer customers a significant savings compared to its combo meals. For example, a recent Funday coupon offered buy-three-get-three pretzels. Traditionally, three pretzels cost $2.

“The offers are much more aggressive, so we see a much higher return. We can still make margins on them,” Ferrill said.

Coeur d’Alene, Idaho-based Pita Pit also has reaped the benefits of couponing, but the chain said the key to its success is tiedto the timing of the offers. For example, the 191-unit chain e-mails coupons to its loyalty-club members just once a month and sends direct-mail coupons to local businesses just once a quarter.

In the 2 1/2 years since Pita Pit has been offering direct-mail coupons, it has seen redemption rates as high as 67 percent. Among the deals that have performed best are buy-one-getone pitas and $2 off a pita.

“Consumers are still very, very interested in value. … They get and understand $2 off,” said Tracy Carbonneau, director of marketing. "I think couponing, discounting, value is going to be a dominant thing in the industry.”

Nation’s Restaurant News has an exclusive agreement to obtain the NPD Group data and research findings that appear on the Consumer Trends page.