Sunday, October 26, 2008

Ruth’s Chris Steakhouse is lowering prices due to the economy, according to a story in the News & Observer.

I felt the article was one sided and exhalted the restaurants and owners/mgrs mentioned as making smart decisions. I felt that it advocates the fact that discounting for high end restaurants is a good business decision, when in fact it’s not.

The fact is that besides eating into the profits, which was rightfully mentioned, the discounting tactic is the lazy way out for trying to beat the recession.  What will the guests’ reactions be when the prices are raised? They’ll lose them.

It is a proven fact that lowering your prices in a recession tight economy is not the way to go. It devalues your product and devalues your restaurant.

Discounting is the penalty you pay for being unremarkable, not providing enough value and not having a written plan of action. And the restaurants mentioned are now paying that penalty.

If people don’t want to pay for your product, it’s because you’re not delivering enough value for the money you’re charging.

Rather than decreasing prices the fact is that they should be increasing their value to their guests in other ways, whether it be a tie-in with for example Brooks Brothers, or a much better dining experience.

Sounds to me like neither one of these restaurants mentioned has a sales-building marketing plan based on increasing their value and what steps to take in a tight economy.

If they did, they wouldn’t take the lazy way out and discount.

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Restaurant Marketing

Posted by jcohen in • Restaurant Marketing
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