"People who tip correctly on the coupon and treat the staff well and are comfortable with our clientele," Youngers explains.
A recent study conducted by the Jesse H. Jones Graduate School of Business at Rice University has a different slant on Groupon: Restaurants, it says, are getting a raw deal.
Groupon, a two-year-old social promotion site, features a daily deal in the cities where it operates. The coupons are designed to offer consumers a significant discount for the featured deal; the discount is valid only if a minimum number of consumers purchase the coupon. The Rice University study "conducted surveys with 150 businesses spanning 19 U.S. cities and 13 product categories that ran and completed Groupon promotions between June 2009 and August 2010."
"Groupon promotions," according to the study, "were profitable for 66 percent of the businesses surveyed; however more than 40 percent of the respondents indicated that they would not run such a promotion again. Among the service businesses (restaurants, educational services, tourism and salon and spa) restaurants fared the worst; salons and spas were the most successful."
Youngers isn't sure how many new customers -- the ideal in terms of using Groupon as a marketing plan -- Trio's Groupon led to the restaurant. Unlike a different web-based coupon program that Youngers used (and hated), he says Groupon at least attracted customers who tipped correctly -- that is, on the full, nondiscounted price of the meal.
A local restaurateur who has been very happy with his Groupon experience is Kevin Lyman, owner of the Kokopelli Mexican Cantina in Prairie Village. He believes that, because Groupon is internet-based, its customers tend to be a younger demographic.
"You get instant customers out of it," he says. "Unlike a traditional coupon, customers pay for it up front. I've had a 78 percent redemption already and we've been very happy with the kind of customers Groupon has sent to us. You know how some promotional concepts bring you customers that you hope you'll never see again? Well, Groupon customers -- maybe because they've already paid to sit in your seats -- are restaurant-savvy. They tip well, treat our staff well.
"Have I been happy with it?" Lyman goes on. "Yes. But I read that there are restaurants that feel ripped off. I think the experience is what you make it."
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I use coupons and I am not a D class diner. Staff love diners like me because I tip very well. In this economy it is difficult to pay for a night out and coupons allow me to do just that. I also have a food blog and love write about local indie joints. Promotions like these allow me to get out and try new places that I can write about and hopefully help drum up new business. Blanket statements like your comment are insulting and false.
I know multiple people who have purchased Groupons that way, myself included. Advertising isn't always evil and just because there's a few bad eggs out there doesn't mean you should see the negative in everything. Try opening your eyes and seeing things from all points of view before you automatically deem it to be bad.
I know multiple people who have purchased Groupons that way, myself included. Advertising isn't always evil and just because there's a few bad eggs out there doesn't mean you should see the negative in everything. Try opening your eyes and seeing things from all points of view before you automatically deem it to be bad.
Right Jacquie and I bet that you believe the world is flat too. You have a gift for bedazzling prophecy. Spouting ad-copy from the mind of a huckster adds nothing to the conversation.
Groupon isn't meant to be a coupon site, they consider themselves a city guide which is meant to match consumers with businesses. Of course every business which has a groupon deal is going to get those "coupon clipper" type customers that will only come that one time. However, they will also get people who are legitimately interested in in trying out the business and will become a regular customer. The dollars earned from the new regular customer over the course of their customer life span will definitely make up for the coupon clippers. Also, most businesses only break even with a Groupon deal, so a groupon isn't about making money, it's about introducing your business to a new customer base.
I think I found a new favorite Chinese restaurant from one of my Groupon purchases. I went alone a couple weeks ago on my Groupon, and brought some friends this past weekend - I imagine the restaurant is at least as pleased as my tastebuds.
I enjoy Groupons and have used them as a way of checking out places that I had never tried visiting before and as a way of getting stuff I like even cheaper. I tend to look at the money I've saved on the groupon as a reason for an extra beer or appetizer; something on the menu I couldn't always afford. I always tip and I always go over the face value of the groupon.
Here is the hard truth about discounted prices.
Cafe' Trio is locked into discounts forever.
In the long run you lose. Discount patrons are exactly that. Notoriously disloyal, they will go on to the next cheap place on the list rather than return and pay full price. Servers hate this nonsense and suffer for it. To say otherwise is lying. Coupons attract a certain class of diner I would characterize as D list. Cafe' Trio the best to you, but you have marginalized yourself in a rock solid negativity that does not bode well for long term viability.
Exactly, Ben. Groupons are advertising, it's not really about making money. If you compare the cost of Groupon to print, radio or TV ads, it's a good deal for restaurants.
For me personally, if I am eating for half price, I would be inclined to drink an extra beer or two. For the restaurant, alcoholic beverages have a larger profit margin and allow them to recoup some of the expenses in running that type of promotion. If you figure in advertising costs to get 2600 people through the door though, it may be a better deal than it seems initially...
The coupon program Cafe Trio hated must have been restaurant.com which i think has a better deal and more bang for your buck when you factor in the 80% off coupons
I used 3-4 groupons so far,most of these times I went over the pre-set amount and thought it was still a good deal. I liked one of the restaurants before the groupon and will go there again. Other places I've never heard of, thought they were OK at a discount but probably will not be back.I have to admit,I have sort of a guilty feeling redeeming groupons at real small places,unlike GAP or larger companies.
I think when figuring profitability Groupon advertizing is more effective than mail-in coupons, flyers or yellow pages.
I think Groupon mentions something about tipping on the pre-discounted amount, which helps.
I was curious about the redemption rate, which is something people always throw out there as a reason this is a great deal (i.e. some people inevitably buy them and don't use them which equals free money).
Quick math using the 78% redemption rate quoted above: if a restaurant sold 1,000 deals for $20 worth of food each, they've already redeemed $15,600 worth of food.
However, the Groupons only cost the customer $10, and the restaurant only gets HALF of that. So they've taken in $5,000 for that $15,600 of food, which may increase somewhat as the last Groupon redeemers trickle in.
Now, customers are likely going to go over that $20 threshold somewhat, so there's some profit to be had there.
However, the potential of repeat business is the selling point of Groupon. And here's the thing: are the customers going to come back to that restaurant at full price, or are they on to the next Groupon offer? I would contend that unless you absolutely knock the diners' socks off, they're not likely to become anything resembling a regular customer when there's another 1/2 price deal waiting to be had.
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