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Pizza Prices Are Surging, so Are Searches for Deals
Pizza sales last year topped $40 billion, between deliveries and carry-out. Even when split between the top 5 delivery chains, that’s a lot of pepperoni and cheese. With numbers like that, it’s no wonder that pizza chains are always looking for new and innovative ways to attract customers.
Most of us agree that pizza is delicious. No one wants to pay full price for a pizza. And pizza prices have surged over the last few years. That might explain why millions of Americans search for pizza delivery coupons each month.
But it does not explain why pizza companies offer so many coupons instead of just reducing their menu pieces.
Customers Are Searching for Savings
Millions of searches occur monthly for pizza delivery coupons. Coupons for the top five pizza companies make up nearly a million monthly searches.
- Papa John’s (441,000 average monthly searches)
- Pizza Hut (263,000)
- Chuck E. Cheese (99,000)
- Little Caesars (68,000)
- Domino’s (66,000)
This list doesn’t even include local favorites like Imo’s Pizza in St. Louis or Giordano’s in Chicago.
We wanted to know why pizza companies offer coupons instead of just reducing the price on their menus. So we asked experts to explain.
Coupons Are a Form of Marketing
Due to the market saturation of pizza restaurants, pizzerias must perpetually promote. They are constantly looking for content for their publicity. Coupons are easy fodder for advertisement. Pizza chains can attract new customers by offering coupons.
Coupons Feel Special
There is a psychological reason for offering coupons too. A coupon in hand feels special. The shopper hunts for a deal, and when they find one, it feels good. That experience feels more valuable than if menu prices were reduced.
Chuck E. Cheese is an excellent example of creating loyalty and value in the hunt for the deal. Unless you know where to look, Chuck E. Cheese discounts are difficult to find. That may explain why there are so many searches for Chuck E. Cheese.
Shannon Chirone, Senior Vice President of Marketing at HungerRush, says, “In working with more than 500 pizza chains, we know coupons are more motivating to diners when choosing a restaurant. A coupon in hand feels extremely valuable to today’s price-focused consumer who doesn’t want to miss out on a deal.”
Discounts Drive Sales as Desired
Coupons create a sense of urgency for the guests that a blanket reduction of prices wouldn’t do. Without a drastic reduction in prices, people wouldn’t even notice a menu price change. The coupon is an immediate, time-sensitive discount, and it creates a pressing need for the customer to redeem it. It can also quickly drive business to the restaurant as needed.
Sean Ferraro, the chef-owner of award-winning Madison Avenue Pizza explains, “We can run a mail campaign and saturate neighborhoods with coupons during our slow times. Customers will immediately show up within a day or two of receiving the coupon. Sometimes this can be so effective that we will only send out a limited number of mailed coupons at a time because it will overwhelm the restaurant. A menu price reduction wouldn’t do that at all.”
Using coupons instead of lowering prices enables restaurants to practice a form of discriminatory pricing in the sense that only a fraction of your transactions will receive a discount instead of every customer.
Michael Sick, a former Pizza Hut marketing manager, explains, “If a 20% coupon is used by 10% of your transactions, you are only losing 2% of potential revenue. In areas with a lot of transient traffic like shopping malls and tourist areas, this is also a way to offer lower prices to the locals while getting a full price from everyone else.”
Sean from Madison Avenue Pizza adds, “Coupons can help drive business during off-peak days and hours that will help us balance our business load across the week. We will create coupons to drive weekday business rather than weekend business when we don’t need to sacrifice profit to gain customers. A menu price reduction wouldn’t drive business to the days that we need it.”
Coupons Are Sticky
By offering coupons, pizza chains can increase the amount of loyalty they have from their customers. Clara Sutton, Human Resources Manager of Healthier Trajectory, explains, “When customers use a coupon, they’re usually happy with the discount they received. This means they’re more likely to return to the pizza place in the future and order more pizzas.”
Shannon from HungerRush echoes that sentiment. “Restaurants that follow up with a strong loyalty rewards program can use coupons as the initial offer, and then drive brand loyalty with strong reward programs that drive their diners to make repeat purchases. Mere price reductions miss the value mark and potential for loyalty and rewards.”
Pizza Coupons Deliver Results
Coupons are more effective than discounting the menu because they are more dynamic. They allow the pizza chains to promote how and when they want. They also attract new customers and retain existing customers. Given how many people are searching for pizza delivery discounts, customers appreciate them too.
This post was produced by ChaChingQueen and syndicated by Wealth of Geeks.
Greg is a Chartered Financial Analyst (CFA) with 22+ years of experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66) and is an investment product and financial planning expert. Greg has 22+ years of experience as a real estate investor and degrees in Psychology and Philosophy. Greg and his wife Erin own ChaChingQueen and ClothDiaperBasics.