NPD Group data shows that 28% of visits to Britain’s Out-of-Home (OOH) market involves some form of deal or promotion, this amounts to 3 billion visits a year and is associated with spend of around £14.5 billion (data to end of December 2017).
Visits involving a deal or promotion grew more slowly than non-deal visits throughout 2016 and most of 2017. This was because consumers not only found good value for money without using more meal deals and promotions but also because consumers were not inspired by what was on offer. The majority of foodservice outlets were offering a basic meal deal, a price reduction or a voucher with the result that nothing really stood out from the crowd. Consumers began to suffer from discount fatigue.
Despite this recent fatigue, deals and promotions remain a key part of the foodservice industry and will increase in importance as economic factors continue to put pressure on consumers’ wallets. In fact, the most recent NPD Group data shows that deals are already recovering. In the year to December 2017, deal and promotion visits grew by +2.8% while non-deal visits declined by -0.4%.
Operators need to make sure they do not return to old habits. They should focus on making their deals and promotions more targeted and this in turn will make deals more effective. Meal deals for example are ideal for lunch, allowing consumers to pick up a selection of items for a set price, saving them time and money. At dinner, the best promotions are price reductions or vouchers with money off, as this is the most expensive daypart, but consumers still want more choice.
Cyril Lavenant, NPD Group’s Head of Foodservice UK, said: “Consumers love saving money and a deal or promotion is perfect for this. To really stand out from the crowd, deals and promotions need to be really impactful. Offering a free product (with nothing expected in return from the customer) will be a welcome surprise. Equally, offering a substantial and worthwhile reduced price for a limited time only is a great way to drive footfall. It’s also a great tactic for creating a buzz with a good chance that news of the promotion will spread via word of mouth.”