Coupon offers are becoming increasingly popular with food truck owners and consumers alike. But does providing such steep discounts (often 30% or more) pay off? The idea of offering food truck coupons or not depends on many factors, including your food truck’s business model and what you’re trying to accomplish. It’s not a quick fix, but the simple truth is that coupons can work as advertising.
Before you make up you mind if you plan to offer food truck coupons, you should know the pros and cons.
The Pros and Cons of Offering Food Truck Coupons
Pros of Offering Food Truck Coupons:
- Could result in a quick infusion of cash.
- May be a quick way to unload inventory.
- Makes it easier for people to try your menu before they pay full price.
- Getting people to your service window for the initial offer may lead to add-on sales for items that weren’t discounted.
- May attract first-time buyers, which could increase your customer base for the long-term.
- Some coupons are never redeemed, so you get some of the awareness-building effect for free.
Cons of Offering Food Truck Coupons:
- Can be costly; be sure you understand what you can afford to give away.
- May not be sustainable as a promotional strategy (customers may only buy the discounted item).
- Cannibalization of existing revenue. In other words, you’re giving a discount to those people who would buy from you at regular price anyway.
- Could alienate the people who aren’t offered the discount.
- May lessen the perceived value or quality of the item being offered.
- Customers may get used to waiting for deals, rather than paying full price.
Who Use Coupons?
Finally, before you decide to offer food truck coupons, you should know who they are most successful with:
- The price sensitive. Discount coupons allow you to offer price breaks to customers who value your food truck products less than other customers do. Once they have a chance to sample from your menu, their valuation may increase and they may return and pay full price.
- The unfamiliar. Coupons can create buzz by announcing your food truck’s existence to thousands of consumers en masse.
RELATED: 10 Ways To Promote Your Food Truck
The Bottom Line
If you do decide to offer food truck coupons, you must understand your profit margin on an item before you decide on the discount amount. Be sure to include overhead in your calculation. It shouldn’t just be the cost of ingredients, but of producing the item as well. If you run at pretty thin profit margins, offering coupons could mean you’re offering items at a loss.
Also consider your offer from the consumer’s point of view. Will they find it valuable or will they buy more than the discounted item? Will they come back again after the initial purchase without the discount incentive, or will they think less of your business because of it?