Discounts or rewards: which habit are you building?

A restaurant runs twenty per cent off on Tuesdays to fill a quiet night. It works: Tuesdays get busier. Six months later, the owner notices that Wednesdays and Thursdays have become quieter, and that regulars who used to come on Fridays now come on Tuesdays instead. The discount did not create new trade so much as move existing guests to the cheapest night.

Discounts or rewards: both give guests something for coming back, but they build very different habits. A discount teaches guests that the real price is lower than the menu says, and that the smart time to come is when the offer is on. A reward teaches guests that coming back is recognised, and that the venue values them, not just their visit on a particular night.

This guide compares discounts and rewards: the habit each one builds, what each costs, when a discount still makes sense and how to move from discounting towards rewards without losing guests. Every venue and figure in it is an example.

A discount builds the habit of waiting. A guest who has learned that the restaurant offers twenty per cent off on Tuesdays, or a voucher every few weeks, starts to plan around it. Why pay full price on Friday when Tuesday is cheaper? Why book without a voucher when one will arrive soon?

Over time, the discount becomes the price in the guest's mind. Full price starts to feel expensive, even if it has not changed. That idea, that people judge a price against what they expect to pay, is known as a reference price, and discounts lower it.

A reward builds a different habit: coming back. A guest who knows that their tenth coffee is free, that the venue will mark their birthday or that regulars are invited to tastings has a reason to keep visiting, without any reason to wait for a particular night or offer.

Rewards also say something different. A discount says "we are cheaper today"; a reward says "we are glad you keep coming". The second builds loyalty; the first builds bargain hunting.

Discounts and rewards also cost differently. A discount applies to the whole bill, at menu price, every time it is used, and often to the whole table. Twenty per cent off a table of four is twenty per cent of four meals and their drinks.

A reward is usually a single item, such as a dessert or a coffee, costing its food cost if it is extra. Our guide to loyalty cost: what a reward really takes out covers how to cost rewards properly. For most venues, a reward of the same perceived value costs far less than a discount.

Many discounts do not add guests so much as move them. A Tuesday discount fills Tuesdays partly with guests who would otherwise have come on another night at full price. The covers on the discounted night rise, but the total across the week rises far less, and the revenue may even fall.

Measure the whole week, not just the discounted night. If Tuesday's covers rise by twenty and the rest of the week falls by fifteen, the discount has bought five extra covers at the cost of discounting all twenty.

Discounts are not always wrong. A short, targeted discount can make sense: to launch a new venue, to fill a quiet period that genuinely has no other demand, to clear stock that would otherwise be wasted or to win back a lapsed guest with a one-off offer.

What makes the difference is that the discount is temporary, targeted and measured. A permanent standing discount, available to everyone, is the one that builds the habit of waiting.

Promotions can be built to avoid the discount habit. Instead of a percentage off, offer something added: a set menu at a fixed price, a free glass of wine with a main course, a tasting menu on a quiet night, an event with a special menu. These give guests a reason to come without lowering the reference price of the normal menu.

A fixed-price set menu, for example, is a different product rather than a cheaper version of the same one. Our guide to promotions that fill the right seats covers how to choose.

Discounts affect menu pricing too. A venue that discounts often may find it harder to raise prices, because guests compare new prices with the discounted ones they are used to. Some venues end up raising menu prices to make room for the discounts, which makes full price feel even more expensive.

Keep menu prices honest and stable, and use rewards and occasional promotions rather than standing discounts. Our guide to menu pricing psychology that is not a trick covers pricing that guests trust.

Discounts are not only planned offers. Many are given at the till: a few pounds off for a friend, ten per cent for a regular, a discount to settle a complaint. Each builds a habit too, with the guests who receive them and with the staff who give them.

Rules on who can give which discount, and why, keep these under control. Our guide to discounts at the till: who, what and how much covers setting the rules.

Before any discount or promotion, do the sum: how much will it cost in lost margin on the guests who would have come anyway, and how much will it earn from guests who would not? If the extra guests do not cover the lost margin on the existing ones, the offer loses money.

Our guide to offer margin: the sum to do before you publish works through it with example figures.

A restaurant loyalty programme built on rewards rather than discounts recognises guests for coming back: a reward after a number of visits, a treat on a birthday, an invitation to an event, a regular's favourite table. Each reward is small, and each says the venue values the guest.

Our guide to a restaurant loyalty programme worth joining covers what makes a scheme work.

Choose rewards that build the habit you want. If you want guests to visit more often, reward frequency: every fifth visit, a treat. If you want them to try new dishes, reward exploration: a taste of the new menu for regulars. If you want them to bring friends, reward groups: a cake for birthday tables of six.

Avoid rewards that build the wrong habit, such as a reward only on the busiest nights, which encourages guests to come when you are already full.

A venue that has relied on discounts cannot stop them overnight without losing guests who have come to expect them. Move gradually. Replace a percentage discount with an added extra, such as a free dessert. Make the discount available only to members of a scheme. Shorten its availability. Then replace it with a reward.

Tell guests what is changing and why, and give them something good in return. Guests who feel the venue is taking something away will leave; guests who feel it is offering something different may stay.

Measure what each discount or reward does to behaviour over months, not just on the night. Do guests who receive rewards visit more often? Do guests who use discounts come only when there is a discount? Does the average spend at full price change?

The answers show which habit you are building. A good loyalty approach shows guests visiting more often, at full price, with rewards that cost little.

Discounts attract a particular kind of guest: the one looking for a deal. Some become regulars, but many move on to the next venue with a better offer. A venue built on discounts can find its room full of guests who are loyal to the price, not the place.

Rewards attract guests who already like the venue and give them a reason to come back. They build a room of people who choose the venue for what it is.

Discount websites and apps can fill tables quickly, but they often take a commission on top of the discount, and the guests they bring may never return without another deal. The real cost can be far higher than the headline discount.

Use them carefully, if at all: for a launch, a genuinely empty period or a specific event. Measure how many guests from them return at full price.

Happy hours are a common discount in bars and restaurants. They can work, bringing guests in early and keeping them for dinner, but they can also train guests to come only during the happy hour and leave when it ends.

Measure what happens after the happy hour: do guests stay for dinner and full-price drinks? If not, the happy hour may be costing more than it brings.

The best rewards feel generous to the guest but cost the venue little: a dessert, a glass of wine, a cocktail, an early invitation. They are noticed and appreciated, and they rarely replace something the guest would have paid for.

Choose rewards that guests talk about. A reward that becomes part of the venue's story, such as the cake for every birthday table, does marketing as well as loyalty.

Rewards do not always have to be earned. A surprise dessert for a regular, a glass of something on the house after a long wait or a taste of a new dish builds loyalty without building expectation.

Because they are unexpected, surprise rewards feel more generous than earned ones, and they do not train guests to wait for them. Use them sparingly, so they stay special.

Design rewards around the behaviour you want. If you want guests to visit more often, reward frequency. If you want them to come midweek, make rewards redeemable midweek. If you want them to bring friends, reward groups.

A reward that encourages the right behaviour pays for itself. One that rewards behaviour the guest would have shown anyway is a cost.

When moving from discounts to rewards, talk to guests openly. Explain that you want to reward the guests who keep coming back, not just those who come on the discount night. Most guests understand and appreciate the honesty.

Give them something in return: a reward for regulars, an invitation to an event, a better experience on full-price nights. Guests who feel valued accept the change.

Guests who stop needing discounts are guests who feel they get good value at full price. Value is not just price: it is the food, the service, the atmosphere and the feeling of being looked after.

Improving value at full price, through better service, a warmer welcome or a better dish, reduces the need for discounts more than any reward scheme.

In a group, discounts at one venue can affect the others. A discount at one site may draw guests from a sister venue, or set expectations that the whole group discounts.

Coordinate offers across the group, so they support rather than undercut each other, and measure the effect across all venues, not just the one running the offer.

The habit worth building is guests coming back because they want to, at full price, and bringing friends. Rewards, recognition and value build that habit. Standing discounts erode it.

Every offer you make teaches guests something. Make sure it teaches them to come back for the venue, not for the deal.

Not all discounts are planned. A server knocks a little off for a friend, a manager rounds the bill down for a regular, the bar gives staff's friends their drinks at cost. Each one feels small and generous, but together they can cost more than any promotion, and they teach the guests who receive them to expect it every time.

Set a clear policy for what staff may give away and why: a gesture to put right a problem, a treat for a regular's occasion, a dessert after a long wait. Record every one, so you know what it costs and where it goes.

Generosity is part of hospitality. The aim is not to stop it, but to make sure it is a choice the venue makes deliberately, rather than a habit that grows on its own.

Guests rarely remember the exact price they paid, or the percentage off. They remember how the evening felt: the welcome, a dish that surprised them, a server who made them laugh, how quickly the bill came. Psychologists call this the peak-end rule: people judge an experience largely by its most intense moment and by its end.

That is why a discount is so easily forgotten, and a gesture so often remembered. Ten per cent off fades the moment the bill is paid; a dessert brought out for a birthday, or an apology made well, becomes part of the story the guest tells.

Spend on the moments guests will remember, and you will need fewer reasons to bring them back with price.

Guests who understand why a dish costs what it does need fewer discounts to feel they got good value. The menu is where that understanding starts: where the meat comes from, how long the stock is cooked, which dishes are made by hand each morning.

Write descriptions that are short, specific and true. "Slow-cooked for eight hours" or "from a farm twenty miles away" tells the guest something real; "delicious" and "finest" tell them nothing. Staff who can add a sentence of their own about a dish, because they have tasted it and know how it is made, do even more.

A menu that shows its value makes the full price feel fair. A menu that hides it leaves price as the only thing the guest can compare.

Discounts are often used to win first visits, because new guests need a reason to try somewhere unknown. But there are other reasons that do not lower the price: an opening event, a tasting evening, a guest chef, a seasonal menu worth talking about, a recommendation from a regular.

Give new guests something to discover rather than something to save. A short story about the venue, photos of real dishes, honest reviews and a menu they can read before they book all reduce the risk of trying somewhere new, which is what a discount was really doing.

Guests who come for the first time at full price, because something interested them, start the relationship on the right footing. They are already paying for what the venue is worth.

An invented bistro runs twenty per cent off every Tuesday. Tuesdays are busy, but the rest of the week has softened, and many regulars now come only on Tuesdays. The owner works out that the discount costs far more than the extra covers it brings.

The bistro replaces the Tuesday discount with a fixed-price two-course menu on Tuesdays and Wednesdays, priced to hold its margin, and introduces a simple reward: a free dessert after every fifth visit, any night. Regulars are told about the change personally, with the first dessert on the house.

Over the next quarter, Tuesdays are a little quieter than before, but the rest of the week recovers, total covers across the week rise and the average spend per cover goes up. Regulars spread their visits across the week again.

servearound's till has no discount function today, so there is no percentage or amount off a bill to give; a gesture is recorded as a comp, on a dish or a whole check, with its reason, and comps appear in payment analytics by member of staff. servearound does not run a loyalty scheme either, so rewards are run in your own routine.

What it does show is the behaviour a discount or a reward should change: reservation analytics show covers by day and hour, the dashboard shows covers and spend per cover against the previous period, and guest analytics show how many guests came back and the repeat rate. With Campaigns, an invitation to a tasting or a set menu goes only to guests who opted in, chosen by tier, visits or spend. See Analytics and Campaigns.

A discount lowers the price; a reward recognises the guest for coming back.

Waiting for the offer, and seeing full price as too expensive.

Coming back, because the venue values the guest.

Usually. A discount applies to the whole bill at menu price; a reward is often a single item at food cost.

When it is temporary, targeted and measured: a launch, a genuinely empty period or a one-off for a lapsed guest.

Gradually: replace percentages with added extras, limit availability, then replace with rewards, and tell guests why.

No. A set menu, an added extra or an event gives guests a reason to come without lowering prices.

Measure over months how often guests visit, at what price and whether they come only for offers.

Discounts or rewards: each builds a habit. A standing discount teaches guests to wait for the offer and lowers the price they think is fair; it often moves guests to the discounted night rather than adding new ones. A reward teaches guests to come back, says the venue values them and usually costs far less.

Use discounts sparingly, temporarily and with the offer margin sum done first. Build promotions around added value rather than lower prices, keep menu prices honest, set rules for discounts at the till, choose rewards that build the habit you want and move away from discounting gradually, telling guests why.