You Can’t Discount Your Way Out Of This Economy

Forty-two percent.

That’s the share of restaurant owners who said their place didn’t turn a profit last year. Not broke even. Not limped along. Didn’t make a dime. Nearly half the industry, running full kitchens, managing staff, opening their doors every single day and going home with nothing.

So I understand why the first question out of every owner’s mouth right now is some version of the same thing:

Do I raise my prices again, or do I start discounting to get people back in?

It’s a fair question. But it’s also the wrong one. And getting it wrong is going to cost you.

Let me explain what I mean.

The Math That Nobody Wants To Look At

Menu prices have already risen 36% since Covid. Thirty-six percent. According to the Bureau of Labor Statistics, that’s roughly what the average restaurant needed just to cover higher costs and hold onto a 5% margin the same thin margin the industry ran on before any of this started.

Read that again. You raised prices 36% to end up exactly where you were.

Meanwhile, hourly wages for restaurant employees jumped 41% from pre-pandemic levels.

Wholesale food costs are up 35%. Utilities, supplies, credit card swipe fees all of them double digits higher than 2019. The National Restaurant Association added it all up and found total expenses for a typical restaurant jumped 36% between 2019 and 2026.

So you raised prices to keep pace with costs. That’s not greed. That’s survival.

But here’s the problem. Your customers don’t know your P&L. They know what they paid three years ago and what they’re paying now. And a lot of them have decided they’d rather cook at home.

Discounting Isn’t The Answer Either

I know what’s going through your head right now. You’re watching the traffic slow down and thinking a coupon or a happy hour special might bring people back. Maybe it will for a night. But you’ve already got margins that look like a rounding error. Every dollar you discount is a dollar you were barely keeping to begin with.

Broad-based, general non-targeted, discounting trains your best customers to wait for a deal before they come in. It attracts people who aren’t loyal to you they’re loyal to the price. The minute someone else offers a better one, they’re gone.

That’s not a customer base. That’s a clearance sale.

Here’s What’s Actually Killing You

It’s not the price. It’s the gap between the price and the experience.

A customer who pays more and feels like they got more they come back. They bring somebody. They leave a review that sounds like a love letter.

A customer who pays more and feels like they got the same thing they always got, or worse? They don’t complain to you. They just don’t come back. And they tell four people why.

That’s the real math nobody’s running.

The owners I’ve seen navigate this well aren’t the ones who found some magic price point. They’re the ones who looked at the full experience and asked an honest question:

If I were a customer walking in tonight, would I feel like I got my money’s worth?

Sometimes the answer is yes. More often than any of us want to admit, the answer is no, not because the food isn’t good, but because nothing else changed. Same lighting from 2018. Same server who forgot the ketchup twice. Same parking lot that hasn’t been pressure-washed since the previous administration. Same nothing that makes someone feel glad they chose your place over the twelve other options they drove past on the way.

You added $4 to the entrée. You didn’t add anything to the reason they came.

So What Do You Actually Do?

You stop thinking about pricing as the lever and start thinking about value as the lever.

That doesn’t mean a renovation. It doesn’t mean a new menu from scratch. It means auditing the experience the same way you audit your food cost line by line, honest about what’s working and what isn’t.

A warm greeting when someone walks in. A server who knows the menu well enough to make a real recommendation. A table that’s clean before the customer notices it needed to be. The little things that cost almost nothing and feel like everything when you’re sitting across from someone you’re trying to impress.

It means being intentional about your regulars. The people who come in twice a month are worth more to your business than a hundred first-timers you’ll never see again.

Do they know you know them? Does your staff know their names? Do you have any way any system at all to reach out to them when you haven’t seen them in a while?

It means getting smart about when and how you promote. Off-peak specials that fill slow hours without gutting your best nights. High-margin dishes that get positioned, described, and recommended not buried at the bottom of a menu no one reads past page two.

And it means understanding that your customers are making a decision every single time. Every visit is an audition. Either you win the next one or you don’t.

The Bottom Line

You probably can’t discount your way out of this economy. And you may be close to the ceiling on what the market will bear in terms of price increases alone.

But there’s a third option that most owners aren’t talking about and that’s increasing the perceived value of every dollar a customer spends with you, without necessarily spending a fortune to do it.

That’s a strategy conversation. And it’s one worth having before you make a move in either direction.

Need Help? 

One-on-one with a restaurant professional?

First one’s free.

If you’re sitting on these questions right now whether to raise prices, run a promotion, or just figure out where the customers went we can talk you through it. A free 30-minute strategy session, no pitch, no pressure. Just a real conversation about what’s going on in your business and what the options actually look like.

Spots are limited.