BOGO vs. Percentage Discounts: Which Is Better for Your Restaurant?

TLDR

A buy one, get one free offer sounds hard to resist. So does 20% off your next order. But for a restaurant owner, the question is which promotion actually brings in more business without eating into profits. BOGO deals can encourage customers to order extra items, while percentage discounts give them an immediate saving. Both have their place, but the cost and results can be very different. Here's how to choose the right discount for your restaurant and make sure the offer is worth running.

BOGO vs. Percentage Discounts: What's the Difference?

BOGO stands for "buy one, get one." A customer purchases a qualifying item and receives another item for free or at a reduced price. For example, a coffee shop might offer a free iced latte with every latte purchased, or a bakery could give customers 50% off their second pastry.

A percentage discount works differently. Instead of adding another product to the order, it reduces the price of an item or the total bill. A restaurant offering 20% off a $25 order would charge the customer $20.

The biggest difference is what each promotion encourages. BOGO gives customers a reason to add another item to their order, while percentage discounts make the purchase they already want less expensive.

Here's how they compare:

Neither option is automatically cheaper for the business. A free pastry might cost less to provide than a 20% discount on a large order. But giving away an expensive main dish could cost considerably more.

That's why it's worth looking at the numbers before deciding which offer to run.

How Much Do BOGO and Percentage Discounts Actually Cost Your Restaurant?

Let's say your coffee shop sells a latte for $6. The ingredients, cup, lid, and packaging cost $1.50 per drink.

You want to introduce a promotion and are considering two options: buy one latte, get one free, or 20% off a latte.

Here's what happens to the money from each sale.

Illustrative example using assumed costs. Figures exclude labor, rent, payment processing, and other operating expenses.

In this example, the 20% discount leaves $3.30 after product costs, compared with $3.00 from the BOGO deal. But the customer receiving the BOGO offer takes home two drinks instead of one.

Now consider a different offer: buy one latte, get the second 50% off.

The customer pays $9 for two drinks. After $3 in product costs, the café keeps $6 before other expenses. That's more contribution from the transaction than either of the original promotions, although it also requires the customer to spend more.

This is where the details of a BOGO offer matter. A free second item and a half price second item can produce very different results.

Before launching a discount, check three things:

1. Your product costs: How much does each qualifying item cost you to make?
2. Your expected order size: Will customers need to buy an additional item to qualify?
3. Your remaining margin: How much money will be left after fulfilling the discounted order?

Also consider how many customers would have purchased at full price. Giving a regular customer two drinks for $6 when they normally buy two for $12 reduces the revenue from that purchase considerably.

A promotion can increase the number of items sold while leaving the business with less money. Looking at the actual cost helps prevent that surprise.

Learn to set up a BOGO for your restaurant in this guide.

When Should Restaurants Use BOGO Promotions?

BOGO deals work particularly well when you want customers to purchase an additional product rather than simply pay less for their usual order. The offer should give people a clear reason to change what they buy.

Bring More Customers in During Slow Hours

A café that's busy every morning might have plenty of empty tables after lunch. Offering a second coffee at 50% off between 2 PM and 5 PM gives customers a reason to visit during those quieter hours.

You can limit the deal to selected drinks and specific times instead of reducing prices throughout the day. This helps focus the promotion on periods when additional orders would be most valuable.

Introduce New Menu Items

Suppose your bakery has introduced a new chocolate croissant, but most customers continue ordering their usual favorites.

You could offer the new croissant as the discounted second item when someone buys a qualifying pastry.

Customers get to try something new without paying full price for both products. If they enjoy it, they may choose it on a future visit. Square also recommends pairing new products with popular items through BOGO promotions to make it easier for customers to try something unfamiliar.

This approach is particularly useful for seasonal drinks, new desserts, and menu additions that customers might otherwise overlook.

Encourage Customers to Order Together

BOGO also makes sense for products people naturally purchase in pairs.

Think of two friends ordering bubble tea, coworkers picking up afternoon coffees, or a family choosing desserts.

A second item offer can make a shared purchase appealing, especially when the discount applies to products customers already enjoy.

One important detail: BOGO doesn't have to mean giving something away for free. A second item at 25% or 50% off can still be attractive while allowing the restaurant to collect revenue from both products.

This flexibility gives restaurant owners room to experiment with offers that suit their menu and costs.

When Are Percentage Discounts Better for Restaurants?

Percentage discounts are useful when customers need a little encouragement to complete a purchase. They are also easier to apply across different menu items, making them a practical choice for restaurants with a wide range of products and prices.

Here are three situations where they can work particularly well.

Encourage First-Time Orders

Someone discovering your restaurant online might like your menu but hesitate to place their first order. A small introductory discount can make that decision easier.

For example, offering 15% off a customer's first online order gives them an incentive to try your food without requiring them to purchase multiple items.

Keep the offer limited to new customers and consider setting a maximum discount amount so larger orders don't become too expensive to fulfill.

Bring Back Customers Who Haven't Ordered Recently

Not every customer stops ordering because they dislike your food. Some simply forget, change their routine, or start visiting another place.

A targeted discount can give these customers a reason to return.

For example, a restaurant could offer 15% off to customers who haven't ordered in 30 days. This is often a better use of a discount than sending the same promotion to everyone, including regulars who are already ordering every week.

Sign up to try out Per Diem automated customer journeys today.

Encourage Larger Online Orders

Percentage discounts can also help increase order size when paired with a minimum purchase amount.

A restaurant might offer 10% off orders over $40, encouraging someone with a $35 cart to add a side or dessert.

The important part is setting a minimum that makes financial sense. A higher order total doesn't always mean higher profit, especially when the additional items have low margins.

Which Restaurant Discount Actually Brings Customers Back?

A successful promotion shouldn't be judged only by how many people redeem it.

Imagine your restaurant runs two campaigns. The BOGO offer attracts 150 orders, while the percentage discount brings in 100. At first glance, BOGO looks like the clear winner.

But what happens afterward?

If only 15 customers from the BOGO campaign return, compared with 30 from the percentage discount campaign, the picture changes.

The second promotion attracted fewer orders but produced a higher repeat purchase rate.

This is why tracking customer behavior after a promotion matters.

For a coffee shop, tracking purchases over the next 30 days might provide useful insight because many customers buy coffee several times a month. A restaurant with less frequent visits may need a longer period.

For a fair comparison, run offers for similar customer groups, account for differences in timing, and measure the results over the same period. Ideally, compare them against a group that received no promotion. This helps you understand how much extra business the discount actually generated.

Also pay attention to customers who return at full price. They're a stronger sign that the experience itself is bringing people back.

How to Set Up BOGO and Percentage Discounts With Per Diem

Choosing a promotion is one part of the process. Setting it up should be simple enough that restaurant teams can launch an offer without spending hours managing discounts.

Per Diem has introduced automatic discounts, giving Square merchants the ability to create both BOGO offers and percentage-based promotions for their branded ordering experience.

For example, a coffee shop can introduce a buy one, get one offer on selected drinks, while a bakery can use a percentage discount to promote a seasonal special.

Merchants can also create BOGO deals that discount the additional item by a percentage instead of making it completely free. This makes it easier to offer an attractive deal while keeping product costs in mind.

And because Per Diem brings branded ordering, loyalty, and customer marketing together, restaurants can continue engaging customers after the promotion through relevant email, SMS, and push campaigns.

The goal is to make it easier for restaurants to run offers that fit their business, without relying on the same discount for every customer.

BOGO or Percentage Discounts: Which Should You Choose?

Start with the result you want to achieve.

If you're introducing a new drink, encouraging customers to order together, or trying to increase sales during quiet hours, a BOGO offer could be a good fit.

If you're welcoming new customers, encouraging larger purchases, or reaching people who haven't visited recently, a percentage discount may be the better option.

And if you're unsure, test both with a small group of customers before rolling them out more widely.

The most effective restaurant promotions give customers a good reason to order while leaving enough value for the business. Keep your offers simple, understand their costs, and use the results to improve your next campaign.

Ready to create your next restaurant promotion? Book a demo to learn how automatic BOGO and percentage discounts can work alongside your branded ordering experience.