How often do you comp???

[SVLFever]

So a question for all my fellow F&B friends out there in the Square world.  I have a question that I have been pondering lately and was curious to hear others thoughts on this...

How often do you comp a food/beverage item(s) for things OTHER than an error?

What I have been wondering is if there is an approximate number of money/items/cost that other food and beverage owners are using in "comps" to help generate addtional sales.  The examples I was thinking of include;

• Comping an item(s) for a regular/loyal customer.
• Comping an item(s) for VIPs, which would include customers checking your place out for a possible large event, local celebrities, social media influencers, etc....
• Comping an item(s) for special events, such as birhdays, anniversaries, etc....

Do you have a specific percent of sales or dollar amount that you authorize, or have staff authorize, for these type of things?

I have always used about 2% to 4% of gross sales for "promotional" purposes, but that would include advertising and loyatly programs.   Any other numbers out there?

I would love to hear your thoughts so please share them here when you can.  Thanks in advance.

[TheRealChipA]

John,

You are pretty much in line with my budgeting for this.  I find my sweet spot is 3% of gross sales, with my range being 2-4%.  And, like you, that includes all discounts for all reasons.  I'm starting to consider pulling loyalty rewards out of this, though.  This is because my loyalty customers (nearly 4,000 now!) spend on an annual average about 60% more than all other customers combined.  This means that this program (including monthly fees) more than pays for itself, which makes me happy.

[SVLFever]

Yeah @TheRealChipA .  Square Loyalty is growing fairly quickly for me as well.  I have only had it on for about 6 months and I'm at about 3500 enrolles, based on this fancy graph I had the Square AI make for me.

I agree 100% with your thought though.  There is more of a cost in NOT doing Loyalty, as I'm also seeing an average higher spend from my customers on Loyalty.  Why penalize advertising or other forms of promotion due to the sucesss of this program, which is driving revenue.  So yes, your thought about eliminating it from the cost makes some sense.

[TheRealChipA]

@SVLFever Loyalty is my Square Achilles heel, along with Subscriptions.  Both of those has so much potential, and yet it seems to me that both of those are (to use a colloquialism) the red-headed step-children of the Square Ecosystem.  I love them.  I hate them.  I need more from them but I fear that Square is putting them on the back burner.

For example, I need the ability to give one-time rewards to certain loyalty customers.  I need the ability to give one-time rewards to groups of loyalty customers/tiers of loyalty customers.  And, for goodness sake, I need the ability to have subscriptions that can be redeemed and tracked in real time for a pickup fulfillment!!!!!!!

Your loyalty trend mirrors mine.  If my other customers were even half as loyal as them, I'd be making twice the money I am now.  Eventually Square will figure out that we need more to grow what we are building.  Hopefully, it's not too late and I don't move on to a third party.  As for Subscriptions, they finally listened to us, but then they started ignoring us again.  I'm totally baffled at that roadmap.  

Anyway, I'm going to start running some what-ifs with Loyalty and see how it all stacks up.  Square AI will hopefully help me make a decision soon enough.

[SVLFever]

AMEN @TheRealChipA !!!!!

I agree 100% on your Loyalty and Subscription comments.  So much potential, but so little attention from Square on these two things that could really help DRIVE business.   

I really hope at some point that the roadmap takes these two things into consideration, as I think it would in the long term, really help drrive business for Square as well.  We all could win if done correctly.

[homeprogreen]

I comp a lot of cold beverages. But there’s a method to my madness. The delivery driver's and the mailman all know that they can grab a cold drink from the reach in whenever they bring something to the shop. That ensures that I always get my packages. The reach in is over by the door ( on purpose) so when customers come in most of the time they don’t really see it until they turn around to leave so they stop grab something and start back to the register. If it’s a good regular or someone that just spent a decent amount of money I tell them it’s on me. It’s a really good way to build customer loyalty for a very small amount of money. I stock that reach in by ordering drinks from Walmart since it’s cheaper than ordering from the distribution company 

[isabelle]

Love this method!!! Incredible way to build loyalty. People don't forget kindness like that. 

[homeprogreen]

Yes it’s popular and people definitely seem appreciative 

[SVLFever]

That's a simple, yet great idea @homeprogreen .   That type of customer perk is something that can make someone "return the favor" for you.   I do something similar during the holiday season, and give my regular UPS and other delivery drivers a $50 gift card to visit my facility.  My out of pocket isn't that much, but they do all sorts of things to help me throughout the year.  It's well worth it.

Thanks for sharing!

[indianathomas]

I need to start doing this.

[tulanejeff]

Love this. We also offer gratis lemonade or coffee to our purveyors, delivery drivers (Fedex, UPS), as well as DoorDash couriers.

Many couriers are treated so poorly by other businesses. We've definitely earned some new customers and friends by gifting a beverages to these hard working service workers.

We also offer a loyalty punch card for our breakfast sandwich. After 8 you get one free.

Our FOH staff has the authority to give 10% off to neighbors and regulars. It encourages them to get to know our guests and develop a relationship with them.

And for those super loyal 3-4 time a week regulars, an occasional 100% comp will make them feel over the moon. 

On the off chance that we mess up an order or an order is late arriving, I'll offer a small value gift card, or fully stamped punch card, to entice them back.

The small gesture of a discount/comp pays it forward in repeat traffic 10-fold.

[SVLFever]

Very nice @tulanejeff !!!   It's unfortunate to think that people forget that a little kindness goes along way...and your examples demonstrate that. 

Thanks again for a few great ideas!

[indianathomas]

I’m in the same boat with comping. We typically budget 2–4% of gross sales for promotional discounts, which includes comps, loyalty programs, and incentives. In 2024, we issued over $50,000 in comps and discounts, driving a $500,000increase in revenue. However, our total profit remained roughly the same as 2023—highlighting a critical reality: discounts are a balance, not a shortcut.

Here’s our takeaway from looking at 2023 vs 2024:

• Discounts—and comps—can drive traffic and boost customer loyalty, but they don’t automatically improve profit margins. You can generate more top-line sales, yet still break even if your margins compress.
• We are now working towards tracking comps separately, using distinct categories such as guest relations, waste, promotions, and employee or owner meals. We shoot for non-marketing comps (like service-related or waste) should stay below 1–2% of gross sales, while marketing-related discounts can vary—so long as they deliver solid ROI.
• Caution is key. Overuse can create a “coupon mentality” that erodes long-term margins.
• We've started setting daily/monthly comp budgets and training management, ensuring everyone knows that comps are a too, not an open door to unlimited gifting.

The Keva Take Away Strategy:

1. Categorize your comps. Distinguish marketing-driven comps from service-related, employee, or owner comps.
• Service/waste/employee/owner: under 1–2%
• Marketing/promos/comps: aligned with your 2–4% budgetized marketing spend
  Set clear budgets. Aim for:
2. Track ROI—you did: $50k in comps returned $500k in revenue. But monitor margin impact: did your prime cost (food + labor divided by gross sales) drift? If comps are skewing that, you may need to adjust.
3. Train your team and enforce controls. Empower managers to respond responsibly, according to policy, while preventing fraud and misuse.
4. Adjust dynamically. If comps spike in one category, say loyalty, be ready to shift strategy. Loyalty spending might deserve its own budget line, separate from general promo comps.

[SVLFever]

I will agree @indianathomas that the "comps" can be a very slippery slope, especially if done incorrectly.   There is an absolute certain balance of;

• Value to the customer
• Benefit to the customer
• Cost to the business
• Benefit to the business

The 2%-4% range for marketing and promotion seems to be fairly consistent to this discussion, but should 90% of your budget go into one "comp" for something, absolutely not.  Should you comp hundreds of thousands of " a few cents off" to get to that number, absolutely not.   There is a "sweet spot" in getting it right.   In my opinion, based on your analysis above, I would absolutely say you have done that (and quite well I will add).   It's a great example to the thought that SHOULD go into determining what you do and don't comp.   Thanks for sharing it, as I hope it makes people thinkg about it a bit more rather than just "let's give this away to this guy" type of thing that some people get lulled into.