Yesterday, I was doing my thing, uncovering customer insights for a national food franchise. And I was visiting with a regular guest. And when I say regular, I mean super regular. He dines 5 times a week, 2 times a day at this franchise location. With a ticket average of $8.10 he spends approximately $80 a week, or $324 a month, at this fast-casual concept. Needless to say, he is a gem!
I noticed that he had a frequency card in his hand. I asked about it and he said that he received the card from the employees. It was actually a frequency card for students designed to encourage students from the local university to dine at various restaurants. So the staff decided to hand them out to regulars vs. handing them out to students. And it was a killer offer...50% off. Back to the regular customer. So for the next 6 months, this guy will spend a total of $972 with the restaurant vs. $1,944. And the kicker...he said he would still go two times a day whether he had a coupon or not.
I am all for rewarding frequent guests. For a guy that comes in that often, the owner should buy his lunch every once in a while. But is the relationship with the customer worth it? With food, paper and labor at 50%, and a 50% reduction in price, there is not profit, and no loss on this deal.
What do you think...cannibalization or smart marketing?
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