Pizza Express vouchers: devaluing the brand one discount at a time

Restaurant discount vouchers have become normal in the recession. Squeezed disposable incomes mean the casual dining chains need to complete hard to attract custom. On my high street there’s six chains all offering variants of the same thing (Pizza Express, Pizza Hut, Strada, Zizzi, Prezzo, Ask).

The chains themselves are addicted to vouchers, nowhere more so than Pizza Express.

Last week I watched a large group come into a half-full restaurant without a booking, eating then searching for a voucher on a mobile just before ordering the bill. They expected not to have to book; they expected a voucher to be available.

It struck me then how much things had changed in the past few years, the normalisation of vouchers and about the status of Pizza Express.

Warming to theme I asked an employee about how things had changed over time (see table):

Comparing this against UK search volumes broadly bears out the trend.

You can understand companies like using discount vouchers: they can go back to customers repeatedly with targeted offers. With gross margin on pizza being around 80% that there’s definitely room for some sales promotion. And with a reported database of 3.6 million customers (6% of uk population, gulp!) the strategy has been successful, achieving impressive reach. The tailoring is undoubtedly clever and time sensitive, for example  encouraging boozy groups to re-visit the week after with boozy incentive (see below).

It’s a good way of stretching your marketing budget. I can see the benefits.

It’s also a way of undermining your brand. Discounting has devalued the Pizza Express offering. It used to be the upmarket high street pizzeria but it doesn’t feel that way any longer: it feels more suited to an everyday rather than a treat occasion.

For what it’s worth, when I asked friends about this many say they wouldn’t go to Pizza Express without a voucher now; paying full price would feel wrong. I’d wager margins have fallen, and locked into this cycle of discounting they will continue to do so. The parent company made a £40m loss in the last financial year and its annual report shows the average spend per head is now £14, lower than other brands in their portfolio (see below).

If anyone has the info, I’d love to know the real data on what has changed in the past 4 years since the recession started:

1)     Is the frequency of visit among loyalists up or down?

2)     Has there been sustained business from new customers?

3)     Has the customer demographic changed?

4)     How much have margins per customer dipped?

About Simon Shaw

I'm a Director at an insight consultancy. I'm interested in marketing, market research & consumer psychology. The views expressed are not necessarily those of my employer.
This entry was posted in Branding, Choice, Consumer Psychology, Market Research, Marketing, Marketing Research, Social Media and tagged , , . Bookmark the permalink.

3 Responses to Pizza Express vouchers: devaluing the brand one discount at a time

  1. Neil Brotherton says:

    I love a voucher Simon!If I was going for a smart Italian Im not sure Id be looking at them there chains mentioned in the article. If anything I think P.E have taken steps to define their target market (even if on the face of it it is less ‘desirable’) and taken action to target them. In a recessionary/low growth environment it could be argued that this is a good defensive strategy which enables them to weather the storm and then get on the front foot again when things pick up (maybe they’ll reduce the amount of vouchers then?). Or maybe Im just playing devils advocate! Interesting article though buddy. Hope your well.

  2. Simon Shaw says:

    Hello mate – thanks for the comment. You can tell you work in sales! I can definitely see the strategy increasing footfall; it may well be the new biz director has a smile on his face.

    That said, the parent company is losing cash. A starter, main and desert for under 13 quid might be pushing things too far. We don’t have the data, but PE just don’t seem as busy nowadays.

    The way I see it, it will be a challenge for them to recapture the upper midmarket space they used to occupy when the economy picks up… I’d wager people’s associations have changed (a place to go on a budget, for an everyday not a special occasion) and that these associations will be hard to shift.

  3. Pingback: Online Voucher Codes: What’s Next for Brands? | stuffbyrach

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