Should You Offer Discounts in Your Bar or Restaurant Operation?

The subject of whether to offer discounts in the bar and restaurant industry can be a hot topic. Many owners and operators stand firm in their belief that discounting harms their brand.

But is that true?

Our very own Dave Nitzel is a former Fortune 500 executive, who brings invaluable expertise he gained while in leadership for mega companies like Office Depot, Velocity Express, and Advance Auto Parts.

Dave joins us again today to share his outlook on whether or not discounting is a good idea in this industry—or in any other industry that relies on trading products or services for cash.

The Answer to Every Business Question You’ll Ever Have

We lay it all out for you in the video, but the short answer to any question you’ll ever have in business is:

It depends.

Businesses are in a constant state of flux, so what you’re doing today might not be right tomorrow.

The answer will always depend on what you’re trying to accomplish.

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Four Scenarios for Discounting Products or Services

• Companies that don’t need to discount – and don’t
• Companies that don’t need to discount – but do
• Companies that should discount – but don’t
• Companies that should discount – and do

The Holy Grail for Anyone In Business

Companies that don’t need to offer discounts—and don’t are sitting pretty.

They’re in a spot where supply outpaces demand.

Think Apple, who, at the time of this post, has just released a new product.

The thing retails for SIX GRAND!—And you guessed it, they’re not offering a discount.

That’s where we all want to be! People want what you have and are willing to pay top dollar for it!

Luxury hotels, resorts, even car companies are examples of businesses who don’t need to offer discounts—but do.

People often equate a discount with a business that’s in trouble – but that’s not necessarily the case.

Even high-end products and services offer discounts for a variety of reasons: seasonality, free or reduced prices as a part of a rewards program, even goodwill efforts or passion projects.

Building Customer Confidence as You Build Your Brand

Sometimes when a business has more supply than demand—or when it’s in launch mode, it may fall into the category of companies that should discount and do. 

An example might be companies in growth mode—take for example, in the US auto industry, KIA and Hyundai. They hit the market as entry-level vehicles, but as they not only kept their promises— but over-delivered for their customers—their brand value was elevated—big time.

Now they make cars that compete with Mercedes and BMW.

The Uh-Oh Moment – Folks Who Should Definitely Discount – But Don’t

In the video above, Dave tells a great story about a retailer he encountered who fit into this category. (Spoiler alert: They missed a sale)`

Empty retail stores and empty bars and restaurants are bad news.

• The rent still has to be paid
• The lights are still on
• Employees are still being paid
• Marketing dollars are at work

There are times when you need to offer discounts to drive revenue into the business.

But here’s the challenge for you: Be careful of what you believe.

Discounting alone RARELY diminishes your brand. What ACTUALLY damages a brand are bad outcomes.

When you fail to deliver on your promises and/or when you compromise your value proposition—that’s when your brand diminishes.

Remember, we all want to reach the holy grail of more demand than supply, so we don’t have to discount.

Bonus: What happens when demand is outpacing supply, but we still discount?

This is a good one, but you’ll have to watch the video— Dave gets super excited about this stuff!