RestaurantIQ: The Power of the Spin Pt. II

The Power of the Spin (Part II) – maintaining a strong brand

The Spin. It’s 15 seconds of excitement for Spotluckers, yet a valuable feature that protects the brand of Spotluck merchants. In Power of the Spin Part I, we explained how our spin makes bigger discounts exclusive, thereby bringing in fresh faces and helping profits remain within our restaurants. Today, we explain how our spin helps merchants maintain a strong brand while still offering a universal loyalty program.

Have you ever seen that offer for a $25 voucher for only $10? A 60% discount! A simple demand curve should show demand skyrocketing when price is slashed. But not here. Instead, consumers “discount the discount.” They wonder what’s wrong with the fish tacos. Or perhaps they assume regular prices are way too high. Or the service stinks and the discount is meant to silence the angry diners. In any case, the real victim of such a steep discount is the restaurant’s brand.   

 
50% off everyday?! What's up with that sushi?
 

The underlying flaw with standing offers (e.g. a directory-style "deal" site) is that discounts float around for ANYONE to grab at ANY time. And the higher the discount, the more questions arise about the quality of the restaurant.

So how does a restaurant offer a discount without compromising its brand? MAKE IT EXCLUSIVE AND RANDOM! By limiting offers to a select audience, questions about the restaurant’s quality/brand disappear. There's no underlying flaw that requires an incentive to bring in EVERY diner – the restaurant's prefers offering it to a select few. Rather than questioning the cleanliness of the kitchen, the diner is instead encouraged to act NOW. They’ve won an exclusive incentive that expires soon. The trick is devising a mechanism to offer such an exclusive incentive…

Enter the spin. The Spotluck spin, whereby Spotluckers gain a bonus discount to one randomly-selected restaurant each day, limits larger discounts to a handful of lucky diners who have “won” that day. The only discounts floating for ANYONE to grab at ANY time are baseline loyalty incentives (~10% off), while the bigger discounts vary for each spinner. Merchants are able to offer a nominal standing incentive to any loyal supporter of the local restaurant alliance, but also have the power to make enticing offers without looking desperate.  As a result, everyone’s brand remains strong and attractive.

 

Spotluck is a merchant-centric mobile platform that provides an easy way for restaurants to show off their wares and drive traffic when they need it most. We’re blazing a new trail by applying time-tested economic theories to the local restaurant space. Our Restaurant IQ series takes a deeper dive…