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Home / Lifestyle

Consumer Watch: Cheap eats could spike prices

Herald on Sunday
14 Jun, 2014 11:09 PM4 mins to read

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Sally Harris tries out more new eateries because of having a coupon book to use. Photo / Michael Craig

Sally Harris tries out more new eateries because of having a coupon book to use. Photo / Michael Craig

Daily deals and discount vouchers for meals may push up costs

Thousands of New Zealanders are cashing in on daily deals and voucher specials to eat out for less — but there's a warning: the offers may force up prices.

Promoters say dining discounts are the most popular category on voucher sites. GrabOne sold just over $21 million's worth of dining vouchers last year, with fine dining the highest-selling part. Entertainment Book deals added up to a spend of $25m.

It's little wonder. A recent GrabOne special offered a three-course meal for two at swanky Auckland restaurant Wine Chambers for $90; a six-course degustation was $99 instead of $198 at Mecca Viaduct Basin via Groupon, and the regional charity fundraising Entertainment Books offers thousands of deals.

If the goal is to entice new customers in the door, it seems to work.

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A Hospitality Report survey by AUT and the Restaurant Association showed more than half of respondents are swayed by a deal or offer when it comes to choosing a new restaurant.

Massey University marketing expert Valentyna Melnyk said the habit could, however, eventually mean higher prices for everyone.

"It is possible that the price-sensitive consumers are paying less for a night out with the smart shopping around, but overall, it seems those deals actually increased the demand in the industry by attracting more customers, which from the economics theory is likely to push prices up rather than down overall."

AUT hospitality expert Lindsay Neill said many diners only went to places offering a discount.

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"People I work with do this. The deals are attractive because of the price and that motivates certain customers to go. They want the best value they can get," he said.

He said it was up to the restaurant to ensure the customer had a good experience and returned. "Bad food and bad service is still bad food and bad service at any price."

Entertainment Books marked its 15th year in New Zealand this year. The company says the books, which sell for $65 in Auckland, have been responsible for $25m spent in the restaurant industry in the past year and 1.3m dining decisions.

Restaurants track each time an Entertainment Book is used and keep a note of the total spend before deductions.

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GrabOnedeals have been operating since 2010 and 9.8m vouchers have been sold to more than 780,000 customers. Dining deals are about 40 per cent of sales. Across New Zealand, 4000 restaurants and hotels take part, from fine dining to fast-food franchises like McDonald's.

Entertainment Book spokeswoman Ruth Boyes said research had shown that customers responded best to buy-one-get-one-free deals and 25 per cent discounts.

Neill said daily deals had an advantage over Entertainment Books because they grabbed people's attention by popping up in front of them, often via email at work.

"They both serve a purpose. For older people, books might come in handier."

But Boyes said they were a different proposition. "What daily deals have done is educate customers to be more aware of offers in general, and that has led them to find the Entertainment Book as the best way to find genuine, high-value offers from businesses that they really want to try, without restrictions or the limited timeframe to make use of the offers."

Groupon CEO Alistair Venn said brunch, Indian and all-you-can-eat rib deals had been popular. "Restaurants are among the most popular deals on Groupon and make up over a third of what we sell."

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Money back after a few meals out

Glen Eden woman Sally Harris says it hasn't been hard to get value for money out of her Entertainment Book.

She was given her first book by her niece and bought one this year as part of a school fundraiser. It was valid from June 1 and she has already used two coupons, one at a local garden centre cafe and the other at a New Lynn restaurant.

The book cost $65.

"I've recovered two-thirds of the money I paid for the book, on a couple of meals out. We'll use it one more time and then anything else we get is a bonus."

She has recently moved into the neighbourhood and said having the book was a good way to try new places.

"It makes us go and explore, and not go to the same place all the time."

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This week's GrabOne deals

• Jervois Steak House: $90 for two-course chef's lunch and a glass of wine
• Squid Row: $20 for $40
• Refreshment Room: $30 for weekend brunch for two
• Viaduct Grill: $79 for four-course meal for two

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