Are daily deals here to stay?

When daily deals emerged during the recession, the new couponing approach—based on group buy-ins to unlock deep discounts—seemed like a boon to struggling restaurateurs and bargain-hungry customers alike. As the economy recovers, daily deals have not ebbed; rather, they have become a fixture in the restaurant industry, according to a new eMarketer report, “Do Daily Deals Still Matter for Dining?: What's Working Now and What's Coming Next.”

Deal-centric consumers will always be a consideration for restaurant marketers. According to a survey from AYTM Market Research, 38.2% of US internet users subscribed to at least one daily deal in March 2013, down from 45.3% in September 2011. But sign-ups don’t equal conversions, of course; the majority of respondents rarely purchased the deals arriving in their email inbox. But roughly one-third cited making regular purchases.

In a November 2012 survey, market researcher Mintel found that 71% of customers were motivated to select restaurants based on coupons or special pricing.

One of the criticisms of daily deals is that they only appeal to indiscriminate spendthrifts who will go wherever they get the best price. Sherri Kimes, professor of operations management at Cornell University School of Hotel Administration, has found that statement to be mostly untrue. “About 20 to 25% of the daily deal users really were cheap. They weren’t spending anything more than the deal amount, they weren’t tipping; they were horrible. But the rest of them—that’s 75 to 80%—were spending more than the value of the deal, they were tipping on the gross amount rather than the after-discount amount. Those are the ones you want.”

Deals and loyalty are inextricably tangled up; in its October 2012 report, the National Restaurant Association found that 66% of consumers would be more likely to visit restaurants offering loyalty and rewards programs.

A desire to draw in convenience-loving customers has sparked an explosion of mobile loyalty providers. Companies such as Belly, Punchh (unrelated to Punchd) and Front Flip are just a few that are trying to crack the loyalty code, bring more repeat customers and improve tracking.

Mobile can make deal delivery more sophisticated. Diners with smartphones can now have payment, loyalty and ordering options linked to one device, and mobile POS systems and third-party analytics are opening new possibilities for operators to collect and harness customer data beyond basic credit card transactions. Creating seamless, more precise offers is possible with mobile marketing.

The full report, “Do Daily Deals Still Matter for Dining?: What's Working Now and What's Coming Next” also answers these key questions:

§ What is the current state of daily deals?

§ Are deals and loyalty mutually exclusive?

§ How is mobile changing the way in which operators discount?

§ How can yield management fill tables?