Peekaboo Promotions: What They Are and How to Pull One Off in Your Restaurant

When you start to look for promotion ideas for your restaurant, it can sometimes seem that you’ll need a marketing degree to pull them off. Re-targeting, segmenting audiences, and tracking pixels are the stuff of advertising firms, not independent restaurants! 

While there is certainly value in those more technical methods, there are still some good old-fashioned analog techniques that you can use to increase your sales and get more return business. 

One of those methods is the Peekaboo Promotion, aka the “No Peeking” or “Red Envelope” promotion. We’re going to break down what it is, and how you can use it to get big results for a small investment. 

What Is It?

The Peekaboo Promotion is a method of marketing to your existing customers, turning them into repeat customers. 

Here’s how it works. When your customers finish their meal, their server will hand them a sealed envelope. Inside, there will be a gift certificate or coupon for their next visit. But the coupon comes with a couple of conditions. 

  • The envelope must stay sealed until the customers complete their next meal. And it must be opened by their server. The customer can’t open the envelope at home and then bring it to the restaurant.
  • The envelope must be opened within a certain month. The idea is to bring customers back during a slow time. So it has to be opened and used during the time that you specify.
  • The envelope will only be opened at the end of the customer’s meal. So they can’t order their meal based on their coupon. They have to order without knowing what they’re going to win.

Why Does it Work?

So many promotions are aimed at finding new customers. But getting a new customer costs 5x as much as retaining an existing one. Plus, your chances of selling to an existing customer are high, at 60-70%. Compare that to only 5-20% for new customers.

So focusing on your existing customers is not only less expensive, but it’s also more effective. 

As for this specific promotion, it’s fun! There’s a small prize inside every envelope, meaning everyone is a winner. The curiosity of what is in their envelope will draw customers back to your restaurant at a time when they may have stayed home instead. One restaurant reported an increase in sales of $25,000 from this method — a 22% increase from their previous year. 

How Does it Work?

The first thing you’ll need to decide is when to run your promotion. A logical choice would be to hand out envelopes during the busy holiday season for redemption in January. But that may not make the most sense for your restaurant. For example, if you’re located in a ski town, it would make more sense to hand out your envelopes at the end of the ski season for use in the summer. The tourists won’t be in town, but the locals will, helping you to boost your sales during your quietest month.

Next, you’ll need to figure out how many prizes and envelopes to put together. Look at the number of tables or checks you had in your giveaway month last year. If your sales are on track to be the same, you could just use that number. But if you’re experiencing growth of say, 10%, add an extra 10 to 15% more envelopes to account for the increased business.

The next step is to decide on your prizes. Include a wide variety. Your smallest (most affordable) prizes, like a free soft drink or side of fries, will be in the largest number of envelopes. Then you can add some coupons for free appetizers or desserts, a few free entrees, and maybe some merchandise. Finally, you’ll add a gift certificate or coupon for just one or two of your grand prize. This could be 100% off their bill or tickets to a local sporting event or food festival. Make sure your grand prize is something really attractive to provide an incentive for guests to come back during your slow time. 

When figuring out your prize distribution, you’ll need to think about what the cost would be if 100% of the people who receive an envelope come back to use their coupon. Keep in mind that all of these people will be generating sales for your restaurant. But you’ll want to know what the total cost of the promotion could be, from the cost of creating your coupons to the costs of the prizes. 

The Coupons and Envelopes 

When designing your physical coupons and envelopes, there are a few things to keep in mind. 

First, these don’t have to be fancy. There are companies that can print your envelopes and certificates for you, but you could also do it yourself with a local printer. 

First, make sure your envelope isn’t see-through. The whole point is that customers have to come back in and have a meal in order to find out what they won. If they can hold the envelope up to a light and read their coupon, it defeats the purpose.  You can prevent this by either using a colorful envelope or by folding the coupon inside to make sure it can’t be read. 

You’ll also need to make sure your envelope is branded to your restaurant. If you use a plain white envelope, customers could open it, check the coupon, and then re-stuff it into another white envelope. You don’t want the customer to know they’re getting a free meal before their meal, or they could order everything on the menu and you’d be on the hook for the bill!

It’s also a good idea to print the instructions on the outside of the envelope. This will help prevent the customer from opening it on accident, or forgetting when the promotion is taking place. Add a simple note reminding customers NOT to open the envelope, but to bring it back with them to the restaurant during the appropriate month. 

If you decide to print out your coupons and envelopes yourself, you can enlist the help of host and service staff to stuff them during their downtime. 

And train your staff to explain the promotion before handing over the envelope. If the customer tears into it before they understand how it works, they’ll void their coupon!

Tracking Your Success

During your promotion, you’ll want to track the outcome. If you don’t monitor the cost of your coupon redemptions along with sales accompanying an envelope, you won’t know if your promotion was a success or not.

Depending on your POS system, you may be able to set up a system allowing servers to flag checks where an envelope was present. Another simple way to keep track is to train your staff to print out a copy of each customer’s check and staple it to their coupon upon redemption. At the end of the night, they can hand it in when they do their checkout. This will let you track coupon redemptions, as well as the sales associated with those envelopes. 

At the end of the promotion, first figure out your total expenses by adding up the following: 

  • Cost of printing envelopes and coupons
  • Any labor costs involved in putting them together
  • Costs of all redeemed coupons including free drinks, appetizers, meals, and any external gifts that were purchased to include in the envelopes

Then subtract those total expenses from the total of all sales that accompanied an envelope. Now you’ll know the total net sales that were brought in by the promotion. 

Compare that to your sales from the same month in the previous year to get an idea of your success!

Conclusion

Marketers are always talking about “gamifying” the customer experience, and this is an easy way to do just that. The Peekaboo Promotion is one of simplest, most affordable ways you can boost your sales in a slow month. And yet, not many restaurants do this promotion. 

With such a low upfront cost, this is a great way to improve what is usually your slowest sales month. If it’s a success, you could bring it back year after year, or even run it twice per year. No marketing degree required!

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