The Discount Dilemma: Filling Seats or Losing Profits?
The Story: A Busy Night, A Costly Lesson
It’s Friday night, and a neighbourhood bistro decides to run a “Buy One, Get One Free” pasta deal to clear stock. By 7 PM, every table is buzzing. Guests are thrilled, staff are overwhelmed, and the kitchen is running at full tilt.
But at closing, the numbers don’t add up. Margins evaporated, regulars got their usual meal for less, and tomorrow’s footfall is uncertain. The owner realises: not all full houses are profitable houses.
The Double-Edged Sword of Discounts
Discounts are powerful, but they can also quietly erode value and train customers to pay less. Let’s break it down:
When Discounts Hurt
- Cannibalising your loyal base: Most discounts don’t bring new customers; they give your existing ones a cheaper bill.
- Brand devaluation: Too many discounts make your restaurant look “cheap” instead of “worth it.” You’ll never see a Michelin-starred spot with a “Buy 1 Get 1 Free” deal.
- Attracting the wrong crowd: Deep discounts pull in deal chasers who vanish once the offer ends.
- Margin erosion: A full dining room doesn’t mean profit if each cover generates less revenue.
When Discounts Work Wonders
- Targeted come-backs: Incentivise lapsed customers to return with a tailored offer.
- Frequency drivers: Reward loyalty with exclusive perks instead of slashed prices.
- Upsell triggers: Pair discounts with high-margin add-ons (e.g., “50% off dessert with any entrée”).
- Off-peak fillers: Happy hours or weekday specials can smooth valley periods — if managed carefully.
- Event-based excitement: Prix fixe menus on Valentine’s Day or themed promotions can boost ticket sizes and brand engagement.
The Discount Playbook: 10 Strategies You Can Use
Drawing from industry best practices, here are common discount structures and what to watch for:
- BOGO Deals – Great for volume but risky for margins unless carefully structured.
- Combo Meals – Encourage upsells and higher checks (fast casual & events).
- Time-Based Discounts – Happy hours or off-peak menus fill seats but risk training customers to only come cheaply.
- Percentage-Based Comps – Useful for service recovery or VIPs, but must be tracked closely.
- Calendar Specials – Tie promotions to slower weekdays or holidays.
- Dollar-Off Discounts – Simple and effective, but thresholds must be set high to protect profits.
- First-Party Ordering Discounts – Direct guests to your owned channels instead of third-party apps.
- Gift Card Bonuses – Boost cash flow upfront with added value to cards.
- Birthday Discounts – Engage customers and tie into loyalty programs.
- Senior/AARP Discounts – Attract off-peak groups and long-term loyalty.
Data: The Missing Ingredient
Discounts without data are blind bets. Restaurants that succeed:
- Track every discount in their POS to see who is using them and why.
- Measure incremental revenue — not just sales volume. Did the discount create new business or reduce the bill for existing guests?
- Refine constantly — drop what doesn’t work, double down on what drives repeat visits and profitability.
As Christopher Muller of Boston University’s Hospitality School notes: “Data-driven decision-making is not a trend; it’s the cornerstone of sustainable restaurant success.”
The PerfectCheck Perspective
At PerfectCheck, we believe promotions should be a scalpel, not a hammer.
- Use analytics to pinpoint slow demand and target just those valley periods.
- Engineer menus so discounts highlight high-margin items.
- Bundle offers to create experiences, not just “cheap deals.”
- Track server performance & upsell impact to ensure promotions grow revenue, not shrink it.
Closing Thought
Discounts are irresistible to diners — 90% of consumers used a coupon in 2024. But for restaurants, the difference between profit and loss lies in how you structure them.
Used strategically, promotions build loyalty, fill seats, and boost profits. Used carelessly, they train customers to wait for discounts and drain margins.
👉 Next time you plan a promotion, ask: Am I adding value — or just leaving money on the table?
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