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Discounts of 30% helped a Hanoi restaurant increase foot traffic and lift revenue at the start, but the business’s financial performance remained weak over several months. In 2023, Minh, 45, opened a Central-style eatery in Hanoi with the goal of recouping his investment within a year. In the first month, customer flow was moderate, so he introduced a 30% weekly discount to attract more diners. The early results were visible: more customers came in, particularly on discount days, and revenue increased.
However, the deeper discounts also squeezed profit margins per dish. While revenue rose, profits were not sufficient to cover costs. With fixed expenses—such as about VND 25 million per month for the venue—along with labor and ingredients, the break-even point was estimated at roughly VND 3 million per day.
After several months, another issue emerged: customers began to adjust their behavior to the price cuts. Many returned only when promotions were available, while days when normal prices were applied saw weaker demand. As a result, promotions shifted from a temporary tactic to an ongoing pressure the restaurant had to sustain.
The growing financial strain put Minh’s plan to break even within a year at risk. Even with steady operations, the restaurant was effectively “selling more but not making a profit.” The case highlights that higher footfall does not automatically translate into profitability. Without careful cost management and a disciplined pricing strategy, continuous promotions can push a business into losses.
Chị Nguyễn Thị Huế, who previously ran a restaurant, said discounts can be a double-edged sword. If the cost of goods and profit margins are not tightly controlled, prolonged promotions can undermine the business model. Many new ventures use discounts as a fast way to attract customers but fail to calculate the full cost impact. In practice, each dish has a price threshold that preserves profitability after accounting for materials, operating costs, and depreciation. Deep and persistent price reductions can drive sales below the break-even price without operators realizing it.
Overuse of promotions can also change customer habits. Instead of building loyalty through product quality and experience, promotions can train customers to wait for discounts. Expert Tran Khanh Minh Son added that promotions should be used as a short-term tool to stimulate demand at specific times rather than as a core strategy. He emphasized that owners should define target customers, position the product clearly, and control margins closely.
When a restaurant repeatedly sells below its listed prices, customers may come to value the product less over time. Returning to normal pricing can become difficult, and customers may respond negatively. If promotions are used, they should be time-bound, have clear objectives, and be paired with improvements in the customer experience.
“Attracting customers is necessary, but maintaining profitability is the determining factor for survival. A sustainable model cannot rely on constant price cuts,” Sơn emphasized.
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