Restaurant Marketing: Why ‘Deep Discounting’ Doesn’t Always Work

Saturday, October 31, 2009

Restaurant Marketing: Why ‘Deep Discounting’ Doesn’t Always Work

Restaurant Marketing: Read this important restaurant marketing article from BrandWeek:

Nowadays the deepest threat to the restaurant industry isn’t food companies advertising the value of their brands, but competitors who promote “deep discounting,” said Drew Madsen, president and chief operating officer of Darden Restaurants, which owns such dining concepts as Red Lobster, Olive Garden and LongHorn Steakhouse. The company saw first-quarter sales dip 2.3 percent to $1.73 billion, but Madsen remains optimistic that the economy will turn around and that consumers will go back to dining out more. He said the “deep discounting” tactic erodes the value of a brand over time, which is exactly why Darden Restaurants, for the most part, has stayed away from heavy promotions. Instead, the company chose to focus on “value” for family-friendly brands like Olive Garden, and “broadening the appeal” of less value-oriented restaurants like Red Lobster and The Capital Grille. Madsen chatted with Brandweek about these and other changes, as well as the company’s hopeful outlook, even despite heavy consumer cutback.

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