Give Away Free Food, Increase Revenue 300% — And Also Build A Stronger Community

from the nope,-free-doesn't-work-at-all dept

This year, it seems, there’s been a big trend for restaurants to experiment with free food promotions. While I’ve been a bit skeptical about some of them, they do seem to be working wonders. David sends in yet another story of free food doing quite well for a restaurant. In this case, it’s a pair of restaurants in Texas that are offering free entrees on Mondays. It’s not all entrees, but apparently it’s a pretty decent selection. Diners are still required to pay for any other food (appetizers, desserts, drinks, etc.) and (of course) tip. Apparently the promotion is doing amazingly well — increasing the revenue on Mondays by 300%. While the profit margin is obviously down a bit due to the food giveaway, it’s not that bad. The giveaway stuff was the lower margin items — the paid food is higher margin. Plus, the restaurant is actually saving a lot of money because it killed its marketing budget, recognizing that this acts as a better promotion.

But, perhaps the most interesting phenomenon of all is that the restaurant has really used this “free Mondays” to better “connect with fans.” Apparently, there’s now a group of regulars, and it makes the overall restaurant feel more like a family gathering — as patrons keep coming back, saying that “It makes it feel like it’s a neighborhood restaurant.” Those same people are coming during other days as well, now that they feel so comfortable at the restaurant, so it appears that it helps boost revenue on other days. Once again, when used properly, free absolutely makes sense as a part of a larger business model.

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Comments on “Give Away Free Food, Increase Revenue 300% — And Also Build A Stronger Community”

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Scott says:

Food Costs

Mark up on food at restaurants can be between $100% to 300% depending. Wine and liquor tends to be more toward the 300% range particularly on the wind side. So, giving away select entrees is brilliant. Especially if they’re pasta based.

Pasta has the largest cost to price charged ratio due to the ease of prep and relative low cost of ingredients which is why you generally get a huge plate of it.

Cheese McBeese says:

Re: Food Costs

“Pasta has the largest cost to price charged ratio due to the ease of prep and relative low cost of ingredients which is why you generally get a huge plate of it.

…which contributes to why so much of the American population is so fat.

Portion control in this country is out of control. Too many people extend their Costco value mentality to restaurants.

Anonymous Coward says:

Basic restaurant business:

Food costs should be no more than 35%, and the lower end entrees shouldn’t be more than about 50-60% of the total bill.

So really, giving away the entree on average will still make about a break even check, plus you wait staff get tips, the place is business on a monday when it might otherwise be empty, etc.

It’s a nice idea, something that has been used many, many times before in various ways, such as two for one, second meal free, etc.

Very little “new” here, even if the term “FREE!” is in there.

Anonyous Coward says:

already tried in Melbourne

This is not a new model. There is a place in Melbourne called Lentils as Anything that has been operating on the “pay what you want” model for about 4 years now. Apparently, it is widely successful and the owner has made a lot of money from it.. more than he would have with a normal restuarant model.

At Lentils as anything, the staff don’t have a fixed salary either.

Anonymous Coward says:

Monday is a slow day anyway

Monday is generally a slow day for restaurants. They are packed full of people at the end of the week and the weekend but relatively poorly attended at the start. Creating a free promotion on a Monday gets people in through the door who will end up paying something for drinks, starters etc. It would be interesting to see whether they honoured the offer for people who only wanted to eat the free meals and didn’t pay for anything else.

If we assume that the restaurant is a dine-in affair (rather than a takeaway) then the exposure of the owner to punishing costs is limited because there is a maximum number of diners who can claim at any one sitting and the cost of the food has been restricted by the offer (they aren’t giving away the lobster thermador). The deal is probably limited to one free meal per sitting.

I dare say that it would be a different story if they were giving away as much beer as you can drink with a meal. There would be a lot of full plates and empty beer bottles in what was left of the restaurant!

Anonymous Coward says:

I have had cheap taco Tuesday for years… The local taco chain is not up to 5 Tacos for $5 on Tuesday (when I started the tradition it was 2 tacos for $1). Over the course of 20 years I must have eaten there on Tuesdays about 500 times and about 200+ other times of the week. I have even gone out of my way in different cities I knew they have the Chain I knew with it cheap taco Tuesday deal. 1 hour drive to get cheap tacos…. mmmmmmmm.

Gene Cavanaugh (profile) says:

Free at restuarants

In support of what Mike is say, “Mike’s Cafe” (different Mike) gave free side dishes with a low cost prime rib last night, here in the Bay Area of California. It was excellent prime rib, reasonable portion, with great potatoes and veggies. I don’t know how they did, but the reactions I got from the patrons indicate it was a huge success.
BTW, the prime rib was $5.00, no other charges for the full meal.

mm says:

free food

I am glad you are all excited about free food in the restaurant industry. you are all right, the mark up of 300% TO 500%, they should be giving away free food! That is why so many restaurants go out of business, right!!Becauase they are raking in the cash!!!!! Well I beg to differ with all your views of free food. the sad reality is it is done to bring in more business in desperate times. And most likely the restaurant is on the verge of going out of business. The saddest fact is that a restaurant does not have a 300%-500% mark up. Most restaurants hope to have between a (realistic) 35% and 50% food cost. And that doesn’t include operating cost(electricity,heating,liability insurance,repairs), and lets not forget about payroll. I think it is sad that most people think restaurants are printing money, when reality is it is the most difficult industry to be in. So lets celebrate free food from the restaurant industry, they deserve the desperation. Everyone should go to their favorite store and let them know, if i don’t get things for free, i won”t be back. MORAL OF THE STORY “WHY WOULD YOU WORK HARD AND SELL A PRODUCT FOR A PROFIT TO BUILD YOUR BUSINESS, WHEN YOU CAN GIVE IT AWAY, GO OUT OF BUSINESS, AND COLLECT UNEMPLOYMENT!! Just a thought!!!!!!

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