Examples of How Not to Give Comps in Your Restaurant
There are many examples of how not to give comps in a restaurant. In a recent article about setting a budget for comps in a restaurant, I outlined how to use comps correctly in a restaurant, including setting a budget for comps. That might seem like “Restaurant 101,” but there are plenty of independent restaurants who give too much for free.
If you think you might be among that group, read through these examples of how not to give comps along with my recommended solutions. Here are a few comping practices that can kill your cash flow and ultimately your business if you don’t set a budget and train your managers:
- Free meals. When a guest does not like his or her food, instead of immediately jumping to buy the meal, consider whether a replacement item and a comped dessert might do the job. Failing to assess the situation and ask the guest leading questions can often lead to giving away the shop. This is where it becomes important to discuss with your management team each comp so that you can give them guidance on how you want that similar situation handled in the future if they didn’t handle it the way you would have wanted them to.
- Discount promotions. Running Groupon promotions and other marketing centered on discounting. Keep in mind, I am not against discount promotions. I am against the misuse of them. For example, if you run a Groupon at a 50 percent value, you are actually selling that certificate at a 78 percent discount. And if you’re operating at a 65 percent or higher prime cost, this could spell disaster. Make sure if you are using discounting for marketing, that you are driving NEW customers in and are requiring they sign up for your loyalty or VIP programs. This means you will make a little money on a new guest and can now market to them to bring them back. You are basically buying the lead. It’s important not to use discounting in a fashion that cheapens your brand or makes it so that your customers wait for the coupon before they come through your door.
- Buying drinks! If you have a bar, you already know that you get hit up for free drinks from your regular customers. You know that you probably have to give your bartenders the ability to give away a couple drinks each shift or they will take them and more without your permission. Both of these can rob you of your cash. When it comes to regulars, you might decide that you as the owner don’t drink for free in your bar. You can then let the customer know you don’t even drink for free. Then if you buy the customer a drink, pull cash out of your pocket to pay. When it comes to bartenders, giving them freedom within some rules — say two comped drinks per shift — allows them to build business without breaking the bank. And then if they have given away their two and someone has a bad experience, all they have to do is ask the manager on duty if they can buy them a drink over their quota.
Do you recognize yourself in these activities? It’s OK. You can fix it. Read the article on setting a budget for comps.
To read more about the importance of budgets read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here.