Happy Hour
Also called: happy hours
What is Happy Hour?
Happy hour is a defined period of discounted pricing, usually on beverages, designed to draw customers into otherwise slow hours. It is a contribution play rather than a margin play.
Why Happy Hour matters
During slow hours, fixed costs are running regardless. A discounted drink that still covers its variable cost adds contribution that would not otherwise exist — but only if it is not cannibalising full-price trade.
Happy Hour formula
Incremental contribution = Extra units sold × Discounted contribution per unit
Subtract contribution lost on customers who would have paid full price anyway.
How Happy Hour works in practice
Set the window where footfall is genuinely weak, end it before the peak begins, and compare contribution per hour before and after. Pair discounted drinks with full-margin food to protect the average.
Frequently asked questions
Not if the discounted price still exceeds variable cost and the volume is genuinely incremental.