Restaurants Can Leverage Pick Up to Avoid Discount Trap

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Small business restaurants have had it rough lately as inflation has driven consumers toward groceries over eating out, leading to thin margins. To cover rising expenses, restaurants have had to raise menu prices, which has lead to patrons feeling less satisfied and has impacted their tipping habits. It has also steered customers toward more affordable options when choosing where to eat out.

Small business restaurants seeking cost-cutting options that won’t impact service or quality are in an especially tight bind. Many merchants have responded by offering customers discounts in hopes of keeping loyal patrons returning and convincing new ones to give them a try. But how do these SMB’s stay profitable and avoid the discount trap?

There may be a few options for restaurants to increase traffic without necessarily sacrificing revenue. 

Rising Costs Push Consumers Toward Pick Up Options

That takeout choice incentives are dominated by discounts is no surprise, as noted in a PYMNTS report. The report found consumers are opting to pick up 80% of their off-premises meals. For 58% of takeout customers, saving on fees is top of mind — and likely contributing to diners choosing pickup four times more than delivery. With no immediate end in sight for inflation’s impact on consumers’ wallets, this signals a behavioral shift restaurateurs may choose to lean into instead of fight.  

The report revealed customer preferences that a small business restaurant may want to explore as part of its loyalty strategy. Here are some of the reports findings that can help merchants not eat into their margins or sacrifice reputation:

  • Consumers are willing to consider other non-monetary incentives in their restaurant choice.
  • Using time savings as an enticement, 49% of surveyed consumers said they would be persuaded to choose pickup over delivery if there was a dedicated pickup line.
  • 55% of consumers would choose delivery if there was a promise of it coming within a set window.
  • Incentives would be guaranteed by a discount if the delivery or pickup fell outside the allotted timeframe.
  • These kinds of incentives could cost restaurants nothing more than dedicated personnel time in implementing, preserving margins and reputation in the process.

Loyalty strategies such as pickup lines and time-sensitive delivery windows don’t entirely do away with the possibility of discounts. However, they may be limited with the right support staff system in place. And as most owner-operators know, all it takes is one large meal order to make or break an otherwise slow night.

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