Casual restaurants resort to coupons as meal tickets

Here's the surest sign that casual dining is in the dregs: Coupons are flying.

For consumers, it might seem like edible gold. Five dollars off here. Two-for-ones there.

Restaurant coupons are arriving like early Christmas presents in newspapers, mailboxes and on doorknobs. In many regions recently, coupons have been doled out by Ruby Tuesday rt, Bennigan's, IHOP ihp and Smokey Bones. So has a T.G.I. Friday's gift card bonus.

Value combo meals are hot, too. Chili's is promoting $10.99 Baby Back Bonus — ribs, salad, fries and dessert. Applebee's appb is pitching combo lunches starting at $5.99.

"This is one of the worst scenarios that I've seen in the 14 years I've covered the industry," says Lynn Collier, analyst at KeyBanc Capital Markets. "Consumers are the winners — we'll only see more of this."

This is not supposed to be the time of year for coupons in the $70 billion casual-dining industry. Business should be picking up as the holidays get closer. Not this year. Blame the housing crisis, higher gasoline prices and the uncertain economy.

"It's like a perfect storm hitting casual dining right now," says Clay Dover, chief concept officer of Bennigan's parent Metromedia Restaurant Group.

Hectic lives are not helping. "When your kid has soccer practice on Tuesday, a flute lesson on Thursday and a soccer game on Saturday, who has time to eat out?" restaurant consultant Linda Lipsky says.

That's why Bennigan's will test a prototype Bennigan's Quick Grille in Dallas in 2008, with food ordered at a counter and no waiters. "We've got to find ways to adapt to consumer lifestyles," Dover says.

In tough markets — including Michigan and Washington, D.C. — Bennigan's has circulated coupons worth $5 off meals of $15 or more.

Unlike a 50-cent coupon for detergent, a $5 restaurant coupon can be extremely alluring, Lipsky says. Once lured in, she says, diners can be enticed to buy pricey desserts and drinks. "That's how restaurants make a profit." But it can be a one-night stand. "Some diners don't come back until they get their next coupon," consultant Ron Paul says.

Others in the coupon wars:

•Ruby Tuesday. The chain saw same-store sales plummet 10.5% in September. It now offers $5 off two dinner entrees in some markets.

•IHOP. The chain lets its regional franchisees decide on coupons. Some have recently offered two-for-one coupons. "Tons of people out there use coupons," says Carolyn O'Keefe, IHOP chief marketer. "We want to make sure we get our fair share of coupon shoppers."

•Smokey Bones. The barbecue ribs chain, which parent Darden has on the block, has a $5 off $15 purchase coupon in regional markets.

•T.G.I. Friday's. Folks who buy $25 gift cards for $25 get $5 "Bonus Bite" cards for future purchases. One catch: Bonus Bite cards expire Feb. 29, 2008.

TELL US: Are you eating in restaurants less these days? If so, why? Do you use coupons?

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