Save Money, Lose Sales!

Saving money and being frugal is good practices in any economy but too many companies do stupid things in the name of savings that actually costs them money instead.

Last Sunday, we celebrated two family birthdays.  Imagine having a large party and spending hundreds of dollars at the bar on cocktails, appetizers,  suffer through a mediocre dinner with burnt food and bad service and then be told that we don’t care about you.    Knowing that the service is spotty at times at Olive Garden and the food has gone down in quality for years, we didn’t mind because it was tradition and we were having fun.   We’ve put up with the same issues before and have been loyal customers for over 20 years.    I found it  annoying to wait 1 1/2 hour to get a refill on my Coke yet the wine orders are always filled in less than 5 minutes but it happens every time I’m there.    The action that broke our allegiance to Olive Garden was when the manager told us that they don’t celebrate birthdays anymore.   My brother-in-law was looking forward to being recognized and it was like a dash of cold water in the face.   With one comment and action, all the goodwill that the restaurant had with our extended family of 30 just got up and walked out the door.

Let me explain this to you Olive Garden:  It’s called customer retention and smart companies work hard to keep it.  It costs a lot more to get new customers than to keep loyal, complacent ones.  We don’t feel compelled to put up with all the things that bothered us for years anymore so I would have to thank them for that.  I am now on a search for other places to hold our monthly gatherings.

I know that for my next birthday, I won’t be asking the family to take me to Olive Garden but to a nice locally owned restaurant where our $275 dinner bill would mean more to them than to an impersonal chain.

Here’s my analysis:   It would have cost Olive Garden an extra $.20-.$30 in food cost to put out two scoops of ice cream, throw a candle on it and wish the customers happy birthday.    I’m pretty sure that they don’t pay the waiters extra to sing the song.    Our dinner bill came to over $275 for 7 people.    Our visits there are always with a party of 6-10 so we spend at least $2,000/year with Olive Garden.   We tend to combine birthdays so Olive Garden would spend less than $1 annually to give our birthday people a token in return for the $2,000 in income they get.  So in the name of saving money, Olive Garden just threw away several reliable annual sales source.

The company spends millions of dollars in advertising on television yet they can’t be bothered to put in a loyalty program. Instead they chose to discontinue a token gesture that costs them so little but build up customer goodwill.

This is not saving money but being cheap and dumb.

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