Numerous studies have been published this year on the daily deal format to determine whether it’s really working out for marketers. The restaurant industry has been very willing to use daily deals to try to improve customer traffic. This sector has been hit hard by the economic slowdown. And the latest research from Cornell’s Center for Hospitality Research suggests that, despite some bad press, daily deals can work for restaurants.
Top level results from the Cornell study show that the biggest advantages from daily deals include new customers and profit and revenue. But there are also pitfalls ranging from cost, cannibalization of existing customers and poor customer matching. However, savvy restaurant operators can roll out a deal program that works for them – as long as they pay attention to the details.
For example, customers that bought a deal to a specific restaurant had the following relationship with the establishment:
- New customers 22%
- Frequent customers 44%
- Been to the restaurant before 34%
Based on these statistics, a restaurant could expect that 56% of consumers who buy deals represent a possible source of ongoing new business.
Daily deal users in the restaurant sector are likely to be married, enjoy higher income levels and reside in cities or suburbs. But when they choose a restaurant to dine out, the deal promotion is only the 3rd most influential factor at 38%. Past experience (52%) and location (40%) are more important. In addition, deal users most often visit casual restaurants (46%) and include family members (52%) in the dining party. These are all details to keep in mind when crafting a daily deal campaign.
Cornell researchers also asked consumers who were new to the restaurant, as a result of the deal, about their future intentions. The majority indicated they would recommend the establishment to friends and would return to eat again at full price.
This study also yielded results showing the fear of cannibalizing – giving discounts to consumers who would have paid full price – were overstated. The bottom line from the Cornell study is that daily deal users enjoy seeking out new experiences and the discount gives them extra motivation to visit new places. Because these consumers often view themselves as market leaders, they can be influential in bringing new clients to a restaurant if they feel they were offered a good meal, great service and an overall enjoyable experience.[Source: Kimes, Sheryl. And Dholakia, Utpal. Restaurant Daily Deals. Center for Hospitality Research. Cornell. November 2011. Web. 21 Nov. 2011]