If you want to increase your revenue as a restaurant owner, there are three ways to do it:
- Get new customers
- Increase your prices
- Get existing customers to buy more
Deal sites, such as Groupon, can be great for bringing in new customers.
The trouble is, every time you want to tap into one of these resources, you’ve got to give up margin. And since you’re typically competing with dozens of other offers side-by-side, the nature of the game demands that you offer a STEEP discount to get customers attention.
(Some also say these deal sites tend to bring in low-quality customers… people who just want cheap food but they don’t come back or spend any more. I don’t enough to say for sure, but it’s something to be aware of.)
But the point is, since these deal sites own the platform, you’ve got to play by their rules. And usually their rules mean giving them a generous share of your profits.
They got the eyeballs, they call the shots.
Another option for increasing revenue is to raise your prices.
This is always worth experimenting with. I’m no expert on this, but if you want a good guide on this, check out No B.S. Price Strategy by Dan Kennedy.
That said, I don’t think restaurants have as much wiggle room with their prices as other industries. People tend to have a fairly narrow range for what their willing to pay for a plate of food.
As an extreme example, you have a restaurant like McDonald’s where people will freak out if the price of a menu item goes up by just $0.25.
The closer your customers are to McDonald’s customers, the less flexibility you have with your prices.
But regardless whether raising your prices is feasible, there’s still Option #3: getting existing customers to buy more.
And that’s what we’re going to look at in detail next…