Offering the right type of discount will help operators win more loyal customers
The food and grocery delivery space is booming – and it shows no signs of slowing down. Even as the pandemic shifts into endemic territory and people don’t fear being in public as much, there are certain conveniences we have all learned to love, including having food delivered. And of course, everyone also wants a deal. Data collected from receipts and other publicly available sources in a January report shows a clear takeaway for quick service restaurants (QSRs): percentage-based discounts are winning the food delivery space.
The January report included a chart illustrating month-over-month growth featuring offers from burger brands, (McDonald’s, Burger King and Wendy’s) broken out by promotion type. A takeaway: Merchants provided more “perentage-off” deals, rather than dollar off discounts. “Percent-off” deals consistently rose from September through December, while dollar-off discounts declined over the same period.
As noted in a recent Modern Restaurant Management (MRM) Research Roundup, QSR shares of single-party ordering are on the decline, meaning there is an increase in multiple people ordering together. With larger orders, “percent-off” offers can have a greater benefit for the customer. From 2019 to 2021, the number of items in a single order went up 14.3 percent.
Dollar-off discounts were the next frequently used approach; delivery-based discounts were consistently the lowest percent share of offers, hovering around 20 percent during the months spanning from May through December.
Of popular burger brands, McDonald’s provided the most overall discounts to customers. As McDonald’s “percentage-off” discounts continued to increase, this could provide a proof point to other businesses that this type of promotion is successful.
Finding the “right” kind of discounts to offer is important for small businesses and operators interested in making the most of the delivery partnerships while ensuring their own bottom line doesn’t get squeezed.
Creative, Time-Sensitive Offers
It is clear that popular burger brands are doing a lot of experimenting with their offer strategies.
During the 2021 Summer Olympics, McDonald’s offered a timely discount: the “GO4GOLD” offer, which provided customers with a free 6-piece chicken nugget on orders over $15. Similarly, throughout the NCAA March Madness tournament, on Grubhub, Wendy’s offered $1 Dave's Singles when customers spend over $15.
It’s always smart to consider current events and local happenings when deciding on discounts for delivery services.
Most QSRs have a loyalty rewards program, so promotions for those programs is key to a program’s success. As noted in the MRM research roundup mentioned earlier, 39 percent of respondents report they download an app for a loyalty program because of a deal or a promotion. Operators who create promotions within loyalty rewards apps specifically for food delivery services are likely to see success.
Merchants need to pay attention to every detail, however, as consumers are likely to delete an app if food arrives cold or missing an item. Timeliness, quality, and accuracy of orders are key to retaining customers, even those who shop with discounts
As many consumers believe ordering through apps is more convenient than ordering in person, it is important for merchants to capitalize on these platforms.
In an ever digitizing market, with the need for immediacy and accuracy of orders, merchants face stiff competition. Creating offers is an important way to gain customers. Doing this through “% off” offers, timely offers, and loyalty programs have seen success for food delivery.