Wow, Whattadeal!: How QSR’s are boosting trials and brand reach with deal sites

In this second installment of our exclusive series, we look into the popularity of Deal of the Day sites like Groupon by asking QSR’s: “Have you used them, would you use them and what has your experience with them been like?".

Most of the QSRs are open to running Deal-of-the-Day promotions, but mostly as a quick and easy way to expand brand awareness. But some remain cautious due to the small gains or even negative revenue impact of joining deal sites, and the prospect of losing a premium-offer positioning when offering such huge discounts.

“We have trialed this as a brand awareness tactic that we would only execute during the introduction and/or growth phase of the business lifecycle,” said Nicola Mills, MD of Pacific Retail Management, the franchise group behind several brands like Kick! Juice Bars and Go Sushi. “We are very careful to not be perceived as a discount brand, so we try to value-add to the offer, opposed to a cheap offer.”

“For a new business, it is an effective way of reaching the local community. People who view the deal (via email, Facebook, website or TV) don’t necessarily buy it, but become aware of the brand and store too. It also encourages consumers to come in and trial the product, and then also encourage repeat business,” said Mills who ran both Living Social and Cudo offers for two its new stores.

Aggressively expanding brands like Lord of the Fries seem to also favor Deal of the Day sites to get people coming into newly opened branches.

“We are about to team up with Deals.com.au and test this market out,” said Sam Koronczyk, one of the owners and co-founder, Lord of the Fries. “We just opened a retro diner style store on Brunswick Street, Fitzroy and we’ll also be opening up two new stores in Melbourne at Southern Cross and on Swanston Street in addition to planning to expand into Sydney. Exploring online retail trends such as group buying is another way of allowing as many people as possible to experience our brand.”

Brett Carman, GM of Salsa’s Fresh Mex Grill, added that deal sites are best viewed as a brand promotion expense rather than a huge profit generator, based on his recent trial experience.

“Last year, we trialed a Deal of the Day site to drive additional traffic to one of our restaurants. Compared with other mediums, daily deals are relatively easy to set up and execute. The challenge is with margins; obviously when you are offering greater than 50% discounts on a food product, plus paying a fee to the advertiser, there’s not much left to cover costs. As such, they must be seen as a brand building exercise that encourages trial,” Carman said.

This trial-boosting tactic seems to be working for Baskin-Robbins Australia. “Some of our franchise partners have had great success with these sites in their regional areas, so we’re open to exploring opportunities for a national program. Our key objective will be to encourage product trial with new users,” said Julian Casa, Marketing Manager, Baskin-Robbins Australia.

But even as some QSR’s double down on deal offers, some QSR’s are testing the waters first with small trial runs as what Sunshine Kebabs is doing with Scoopon. Others like Oliver’s Real Food and Pizza Inn, which declined an approach from Living Social, are sitting out on the online trend for now. Why so?

The reasons vary per brand, but specifically for Muffin Break and Jamaica Blue, it has to do with the logistics of coordinating a national deal among its many franchisees.

“Like Muffin Break, Jamaica Blue has not used any group-buying sites namely because the group-buying concept does not easily lend itself to a franchise business operation,” said Serge Infanti, Foodco Group Managing Director.

“Jamaica Blue has been approached by numerous ‘Deal of the Day’ sites during the past year but has not committed to any ‘deals’ to-date, namely because a national deal would require the consensus from all Jamaica Blue franchisees. Furthermore, committing to a ‘daily deal’ presents a number of franchising challenges such as nationwide product availability and the need for uniformed pricing across all states,” Infanti said. “Nonetheless, Jamaica Blue is always on the hunt for new avenues to promote the brand and therefore, has not ruled-out the possibility of partnering with a group-buying site in-future.”