October 28, 2016

Discounting Doesn't Work Anymore

Discounts aren't bringing in customers - NRN

2 comments:

Anonymous said...

my p+ls prove that every month

Anonymous said...

Discounting is a drug for those companies that live off of the top line of franchisee stores. Even a small top line sales increase sends many more dollars to "home office". Only a small per centage of those discounted dollars hit the franchisee bottom line, if any. Many products being sold today are approaching a 50% food cost. Discounting those products coupled with programs that lower drink prices makes no business sense for a franchisee or an independant restaurant owner. Those promoting these programs don't understand or care about the legal requirements for the use of profit. They argue that "you still make a profit" but that isn't the point. The point is do you make enough profit. Out of profit the owner has to pay the principle on the financing, all reinvestment, income taxes, other expenses before taking his own draw. Thus, there are times when making a small profit is meaningless. Discounting is far less effective than it was fifteen years ago. Customers today want prices to be fair but they are not looking for "cheap" like they once were. Today, the supply of products greatly exceed demand. This causes customer to shop for a certain taste rather than a bargin. In addition, healthy is a new dynamic, fresh is a new dynamic and customers will pay full price to get it. There are a lot of those customers and discounting will not pull them away from taste and healthy. Discounting today would be like going to war using a 30 cal. mechine gun against modern weapons.