Young and Hungry

Does Restaurant Week Actually Benefit Restaurants?

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At the end of our discussion on Vidalia's Restaurant Week menu, owner Jeffrey Buben told Y&H about an experiment he conducted during last summer's promotion, which offers some evidence that the bi-annual RW event isn't as beneficial to restaurants as Open Table would like us to believe.

Open Table conducted a survey in 2007, which revealed that 92 percent of diners said they would return to the restaurant they just tried for the first time during RW. Now that stat, all by itself, doesn't tell you much because it's based only on an oral commitment. But Lynne Breaux, president of the Restaurant Association Metropolitan Washington, tells Y&H that 61 percent of diners actually return to the restaurant they try for the first time during RW. That's according to the same 2007 survey, Breaux says, which presumably is based only on Open Table users.

Still, that's some impressive return on a restaurant's RW investment. Except maybe the return isn't that great. Buben told me an anecdote about last summer's Restaurant Week, in which Vidalia staffers handed out 2,000 gift certificates that entitled diners to take 50 percent off a bottle of wine when they returned to the downtown institution.

"There were no strings attached," Buben says. The diners could have simply come into the bar at Vidalia, ordered a bottle at half price, and happily downed it without being forced to purchase anything else.

So how many coupons came back to Vidalia?

Forty, Buben says.

When I related this anecdote to Breaux, she had a reasonable response. "Part of that could be D.C.'s ADD," she says. "They could be losing [the gift certificates]. You know how people can be."

Comments

  1. #1

    Or it could be that restaurants like Vidalia ruin the restaurant week experience by serving inferior meals with terrible service during this period. Instead of 'wowing' new people, they turn them totally off!

  2. #2

    Or it could be that people don't like to use coupons at a nice restaurant like Vidalia. Would you use that "gift certificate" on a date or business lunch/dinner? I wouldn't...

  3. #3

    Last week was my first visit to Vidalia, and unfortunately I was disappointed. Although the service was perfect, the food did not impress. The appetizer was on a small side and the main dish (lamb) only came with a few slices of eggplant and a fig. The redeeming course was dessert: lemon chess pie. Not sure I'll be paying Vidalia another visit.

  4. #4

    My experience with Restaurant Week is that generally we see an immediate bump and then a slow growth of business. We can pull up someone's reservation history and often see a pattern of someone trying us out during Restaurant Week, sometimes even more than once, before becoming a regular.

    I would also say, however, that like with all trial, the majority of folk who come to a restaurant for the first time, restaurant week or not, do not return. So if Restaurant Week generates a lot of new trial (or generates second visits from folk who have yet to become regulars) and even only 5% or so of that translates into regular future business, it is a huge source of new business. My first time diners (as indicated by the open table check box) go from maybe 1/3 to 1/2 of a given nights business to 2/3 during restaurant week.

    It is well known in the marketing world that giving people a coupon for an item, even one that they already buy regularly, generates a small fractional response from folk who are positively inclined to consume that product or service regularly. So without knowing how many of the coupons were given out, it would be hard to judge the response. In the retail world, gift certificates act as a profit center as they are simply not redeemed at a very high rate in general. In fact, current financial regulation reform includes a lot of proposals for gift card reform because of the huge balances carries on unusued gift cards.

  5. #5

    Good stuff, Dean. Thanks for chiming in.

    -Tim

  6. #6

    A 2% redemption rate for coupons is pretty darn good and Vidalia should be proud.

    The usual rate for things like newspaper coupons is less than 1% (http://www.nytimes.com/2009/08/29/technology/29coupon.html?scp=1&sq=iphone%20coupon&st=cse).

    Yes, I know we are not comparing apples to apples here, but the psychological concept behind it remains and people just aren't that crazy about using paper coupons.

  7. #7

    Found your site through google search. I have enjoyed reading your posts. Looking forward to more. Thanks!

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