Will the New Marketing Strategy For Higher–end Table Service Restaurants Work?

More and more table service restaurant companies are turning to couponing, deep discounting and reduced services to drive guest counts and survive in these tough times.

Everyone is fighting for the smaller portion of consumer spending, and studies show that many consumers are trading down to the next pricing tier. For instance, those who used to go to Morton’s for dinner are now going to TGI Friday’s and those who were going to Chili’s for lunch may now be going to Chipotle. The trouble for the higher-end restaurants is that there are no diners trading down to them, and we are seeing something that many of us have never seen before – deep discounting and, may I dare say, even coupons from those high-end eateries.

In a market that does not traditionally use deep discounting and coupons to drive sales, outside of some limited time offers, we are starting to find deals like these:

• Morton’s is offering two steaks, two choices of seafood, two salads, potato and vegetable as well as two delicious desserts for $99

• PF Chang’s four-course meal including soup, starter, entree and mini dessert as part of their ‘Chang’s for 2′ promotion, which is just $39

• The Palm’s is offering a family style dinner that serves two to three guests for $69 –or – their Palm Summer Lobster Event – a 4 pound lobster (split for two), 2 salads and a signature side dish for $89

• Logan’s Roadhouse’s $13.99 special menu features 12 options including steak and seafood, all of which come with two sides, rolls and the bottomless peanut bucket

• Outback’s $9.95 special includes a 6 ounce sirloin offering with salad, baked potato and bread

• Ruth’s Chris Summer Classic featuring a starter, entrée, personal side and dessert all for $39.95

These are just a few of the seemingly limitless options you can find in the restaurant world today, not to mention the $5 lunch or $10 dinner menu many casual chains offer.

I think the question of “Will it work?” remains to be seen. The bigger question for me is, “If it does work, what will be the lasting effects?” and “At what cost?” The only way that these types of deals can continue to work is if the portions get smaller and smaller or the quality of the product lessens. Either way, the industry is setting a standard that may haunt them well into the future.

We do not have to look far to see examples of how this has affected other industries in the past. The hotel sector is still trying to recover from price wars and deep discounting that occurred in the early 2000’s. They have struggled to get their pricing back up to earlier levels or in some cases even “profitable” levels. Like the restaurant industry, even the high-end hotels were not immune. Before this last economic slowdown, high-end hotels’ rates were considerably less than the late 1990’s and early 2000’s.

It makes me wonder if we will ever look at these restaurants the way we did just one year ago When the economy returns, will the consumers still be looking for the “deals?” One would argue that these questions are not important if you do not survive to see what the outcome will be. But one thing is for sure, it will change the way we look at dining out forever.