We’ve all been there — that £2 sandwich, how can they do it? Many hospitality chains offer aggressive discounts, loyalty schemes, introductory coupons, and other incentives to lure new customers.

The facts show that this type of offer-based acquisition marketing is very effective at attracting new customers to restaurants, but very often those customers are laser-focused on only the offer instead of developing a relationship with the brand, food and service.

The UK restaurant industry can agree on what a huge success Eat Out to Help Out (EOHO) was. It has been described to Orderly by some of our clients as “like Christmas trading but busier” and “a great morale booster to let people know they can eat out and be safe”.

But what is next? How can you keep these new customers coming through the door?

As described in the Harvard Business Review — bullish, discount-driven acquisition marketing may attract new customers, but often those customers are myopically focused on the offer instead of interested in cultivating a long-term relationship with the company. It has been shown that such a high-pressure approach may turn off the loyal, self-determined customers whom companies want to keep. In a field experiment by the author of the article in the HBR, it was found that these “self-determined customers who were sent reminder coupons to encourage repeat purchases came back less often, spent less on each visit, and were more likely to defect during the next three years than customers who were not given any incentives to return.” That definitely goes against conventional wisdom.

So what is the solution? Many sources show one solution to be within adaptive pricing, which “capitalises on the fact that different customers have different needs and therefore place different values on a given product or service.”

We’re now at the start of another recession, and as we wait for the economy to pick up, we have a lot to learn about how companies bounced back from the last global recession. One of the tactics was adaptive-pricing strategies. As we wait for the economy to return to full speed, managers have a good opportunity to learn from companies that weathered the last recession by employing adaptive-pricing strategies — and to develop plans that could help their own businesses regain lost ground in the recovery.

One example was from Burger King — in the summer of 2010 Burger King began selling premium fire-grilled ribs for $7.19 per portion. Customers quickly bought the entire supply — 10 million ribs, way above projections. Another example(non-food related) was Hyundai offering to take back their cars in the US should buyers lose their jobs. Fiat has just implemented something similar in the UK.

So, as of the time of writing, we are one week out from the end of EOHO. With 45% of restaurants saying they are worried about lasting the year, many restaurants are deciding to keep the EOHO offers on for another month, at their own cost — including Bills, Harvester and Toby Carvery. But is this the right option for long term success?

Are these brands using it as an opportunity to build a lasting relationship with their customer base, or will these people go elsewhere for another deal, or “eat at home and stay at home”?

Only time will tell.

Although the pandemic is making many wonder if the restaurant sector will ever return to full force. For companies that view pricing as just an “increase or decrease” it is just a matter of how long to keep on the EOHO incentives. These companies will be missing a trick though. Research shows that by being creative with your pricing strategy, you can more effectively reach new customers — and transfer more of this into profit.

Orderly provides order, inventory and forecast management tools to increase sustainability and profitability in restaurant chains.