Understanding the Impact of a Weekly Promotion
The CompanyA leading national restaurant chain
The ChallengeThe client had launched a “Seniors Night” promotion in a small group of locations. The promotion ran once a week (every Wednesday) and offered seniors 25% off their dinner entrees. Internal analysis was yielding a wide range of results regarding the overall profit impact of the program, ranging from a material loss to a significant increase, depending on the method of analysis. The client did not know how to proceed.
The SolutionAPT’s Test & Learn™ software used advanced patented algorithms to match test restaurants (which had implemented the promotion) with a custom set of control restaurants (which had not implemented the promotion). Using APT, the client determined that, on average, the promotion drove a significant increase in check count and margin on Wednesdays. Using APT’s Menu Analyzer in conjunction with Test & Learn, the client was able to determine that the increase in transaction count was large enough to offset a decrease in average check size for checks containing a senior meal.
APT showed that the program had no significant cannibalization impact on other days of the week, and may have actually resulted in a traffic increase on other days due to the advertising surrounding the program. APT then de-averaged the overall results to identify restaurants for which program rollout would be most profitable. The software showed that the program worked better in locations with lower median income and where a lower percentage of sales were already coming from senior meals – for those restaurants, senior meal checks were generally incremental and thus profitable.
The ResultsAnalysis in APT ended the internal debate about the success of the program, determining that a nationwide rollout would generate nearly $3MM in incremental profits. Additionally, by targeting rollout to only profitable locations, APT’s targeted rollout generated an additional $1MM profits.
Next Case Study: Natural Experiment Pricing Case Study