A promotion can make an outlet busier. Deciding whether to continue requires a comparison with what would have happened without it.
A discount changes the volume required
01Measure contribution in money
Illustrative example: an item sells for a net VND 100,000 with variable cost of VND 35,000. Contribution is VND 65,000. A 20% discount lowers revenue to VND 80,000 and contribution to VND 45,000, assuming unchanged variable costs. Volume must rise about 44.4% to preserve total item contribution, before campaign costs or extra staffing.
02Promotion revenue is not incremental revenue
Customers who would have paid full price may switch to the offer. Others merely shift a purchase from another day. Total promotional sales are therefore not wholly incremental. Compare a baseline adjusted for weekdays, seasonality, traffic and purchases of other products.
03Choose the hours and customer groups
An off-peak promotion may use spare capacity. At peak times, discounted customers can displace full-price demand or weaken service. Consider contribution relative to constrained capacity, new-customer objectives and experience quality.
04Design a pilot with stopping conditions
Test selected outlets or suitable time periods. Track incremental contribution, basket mix, additional staffing and repeat purchases. Agree spending limits and review timing beforehand; do not scale solely because transaction counts increase. If awareness is the objective, identify the investment and how value will be tested later.
Key takeaway
Judge promotions against a baseline and capacity constraints, rather than promotional revenue alone.
All numerical examples are hypothetical, not client results. Definitions, assumptions and business context affect the conclusion.
Back to F&B ↗