The article suggests that restaurants are not turning to discounting as a primary means to show value to customers for a few reasons:
Changing Consumer Values: The traditional notion of value, which was heavily tied to discounts, is evolving. While price is still a factor, consumers now consider other aspects such as convenience, experience, and quality when assessing value. Restaurants are adapting to this shift by focusing on enhancing these aspects rather than relying solely on price cuts.
Complex Value Equation: The value equation has become more complex due to factors like delivery fees, shrinkflation, and dynamic pricing. Restaurants find it challenging to navigate this complexity while maintaining profitability through discounts.
Price Consciousness Not Increased: Contrary to expectations, consumer price consciousness has not significantly increased compared to pre-pandemic levels. This suggests that discounting may not be as effective in attracting customers as it once was.
Alternative Value Propositions: Restaurants are exploring alternative ways to demonstrate value, such as loyalty programs, bundled offerings, and unique dining experiences. These strategies aim to appeal to a wider range of customer preferences and offer value beyond simple price reductions.
Profitability Concerns: Discounts can negatively impact a restaurant's profitability, especially in the current economic climate where costs are rising. Restaurants are prioritizing sustainable business models and are cautious about sacrificing profit margins for short-term gains through discounting.
Overall, the article highlights a shift in the restaurant industry's approach to value creation. While discounting still plays a role, it is no longer the dominant strategy. Restaurants are focusing on providing a holistic value proposition that encompasses various factors beyond price to cater to evolving consumer preferences and maintain financial viability.
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