Discounts Make You More Profit

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So you are thinking about providing a discount, but you just aren't sure. I mean you will be losing money, right? What if I told you that providing a discount doesn't guarantee that you will be losing money, but you might in fact make more money than you are "losing"? Sounds crazy, but the math checks out.

Let's imagine it's Monday at an Italian restaurant and they are expecting about five of their regular customers and two new customers.

  • Each of the regulars will spend around $25.
  • While the new customers are more budget conscious and will spend only $15.

All in all, the restaurant makes $155 gross sales. If their profit margin for each dish is at 40%, they made $62. But with the amount of food they prepared, the wages they have to pay for staff to wait for customers, and all of their other bills, that isn't enough.

Now let's do that again. Only now the restaurant offers a discount: 25% off one item.

This Monday:

  • Five of their regular customers come in and order their usual $25 plus a $5 drink.
  • Five more infrequent customers order their usual $25 plus a $5 drink.
  • They also get four new customers who order their $15 entree and a $6 appetizer.

Now the Italian restaurant made $374 gross sales and $171 in profit. Those appetizers and drinks at with 75% profit are easier to upsell when the customer is getting a discount. The restaurant also had little to no food waste, their staff was busy during the day and happy because they had more opportunities for tips.

By only offering the discount on slow days, and narrowing the discount to a certain demographic like students, teachers, seniors or police officers, our imaginary Italian restaurant can make the discounts work even better for them.

If you are interested in offering discounts to over 10,000 foodies, click here to check out our Super Yummy Deal Day program.