If coupons aren’t attracting more customers, then why keep offering them? That’s what the restaurant chain Ruby Tuesday is wondering, as it signals a shift its strategy: more commercials, fewer coupons.
The casual dining chain reported its quarterly earnings this week. While analysts weren’t overly impressed with the numbers, same-store sales did rise slightly, for the first time in nearly two years. The reason? Not so many of those pesky couponers. “We saw an increase in base level traffic for non-coupon users and a decrease in coupon users,” said the restaurant’s CFO. The result is a wash: “traffic was flat, and the increase in sales was primarily a reduction of coupon expense.”
The chain reports it’s reduced the availability of coupons by about 30%. And it’s funneling most of that money into television ads instead. “Cost saving initiatives… in addition to lower coupon expense, are largely funding our television marketing programs,” the CEO said. But with only a modest sales increase, and no improvement in traffic this quarter, it’s hard to make the case that commercials represent a better strategy than coupons – since neither seems to be having a noticeable effect.
At any rate, there’s hardly been an outcry from customers over the lack of Ruby Tuesday coupons, unlike what some other companies have experienced. JCPenney phased out coupons, watched its sales plummet, then relented – at least temporarily – and released a rare coupon yesterday (read: “JCPenney: Reversing Course on Coupons?”). Coach Outlet also eliminated coupons earlier this year, got spooked by a few months of declining sales, then quickly reversed course and starting issuing coupons again (read: “Coach Decides Coupons Aren’t So Bad After All”).
So far, Ruby Tuesday is staying the course with fewer coupons, though it’s much too early to tell whether the move will have a real impact. “We have much work ahead of us. We know that,” the CEO said. “We also feel that our business is very stable, more stable than it’s been in a couple of years and that gives us a certain sigh of relief, really. We believe the Ruby Tuesday brand is headed in the right direction.”
As long as you don’t mind paying full price.
