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Groupon Hounds

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On a number of threads, I've read of my fellow hounds' disappointment with one of their old favorite restaurants combined with their notes that they are doubly sad because they had already stocked up on Groupons for that same establishment.

Does it ever occur to others that the incredibly good Groupon deals are incredibly bad for these restaurants? Maybe the reason the food and service are a touch off is that the owners are struggling? Can good restaurants survive when regular customers--who were previously very happy to pay full price--splurge on buying multiple Groupons? Are "Groupon Hounds" eroding the very spots they claim to cherish?

OK, the restauranteurs are capitalists, and nobody forced them to offer such good deals. But of course their goal was to attract new customers with steep discounts, they didn't plan on reduced revenue from current customers.

As hounds who revere fine food and those who dedicate their lives to bringing it to others, perhaps we should expect a little bit more of ourselves. Take advantage of Groupon when the discount will spur a visit to a new place. But when you know it's gonna be great, show the chef some love. Step up and pay full fare. It's the only way these guys will survive.

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  1. peter, this topic is a very complicated one and i am no expert here. But I would suggest that 'assumptions' are usually not the best way to come to conclusions about an issue. I have read a few articles about the Groupon topic, both on CH and in various other media. I also have heard various restnt chefs and owners offer their own take on Groupon. I hope MCSlim will chime in; he often has overviews of issues like this that can offer a broad way of looking at them, and some new thoughts.

    1. Interesting first post. I' m sure you will generate some discussion on this one. I get your point, but in this economy it's difficult to pass up a good deal. I'm guilty of purchasing a number of gift certificates when they were further discounted on a half price deal site. How do you pass up $50 certificates on sale for $12.50!!!!! I used each and every one and now that they are gone I still frequent the place because I like it. Did the offer bring in new customers, I hope so, but why should I lose out.

      1. http://chowhound.chow.com/topics/653841
        "I Feel Bad Using Coupons"

        This topic has been run into the ground here many times.

        1. Maybe we are lazy or just more spontaneous than our "Groupon hound" friends.
          They usually start out with a coupon for an interesting place they really want to go to and then quickly digress into getting coupons for places that are less attractive but "great deals."
          It seems that the tail starts wagging the dog.

          1. I have long held the belief that the Groupon business model preys upon panicky retailers that are in a death spiral, and today's market activity seems to confirm it - Groupon stock is now under $6. It was a great short sale after its IPO last December.

            1. Was their goal to attract new business? Nobody told me that. If "these guys" want to survive, they need to step up their game, offer me better service than the next guy, don't try to wriggle out of a groupon on some obscure technicality, and don't make me feel uncomfortable because I participated in a promotion they initiated ...because I WILL tell everyone I know what a slimebag they were. Historically the "2fer" or the menu reconfig signaled a resto is struggling, so if a groupon is another modern harbinger, so be it. If a restaurant doesn't like the groupon idea, don't participate, it's that simple. As a customer, I don't have a money tree in the yard either.

              3 Replies
              1. re: BiscuitBoy

                +1, though I do assume many wish to attract new business (some places I've used a Groupon or other coupon have told me so). But for the OP to suggest because I'm already a loyal customer, I can't get the same discount as total strangers is completely ludicrous.

                1. re: kattyeyes

                  Plus #3. I buy the coupons for restaurants that I like. I also buy them for restaurants that I have never been to but would like to try. If the restaurant is good I will return at regular price,a win win situation for all. If it is not good I won't set foot in it again,but that is their fault. Why should I not be able to get a good deal on a restaurant that I have supported?

                  1. re: Mother of four

                    <<If the restaurant is good I will return at regular price,a win win situation for all.>>
                    Precisely! And we tell our friends and family, too, so that's free advertising if all goes well!

              2. I disagree with you completely...................
                Groupon, Restaurant.com, etc. are NOT just to bring in new customers, but to bring in additional revenue and help cover fixed expenses.

                This is particularly true when the coupon is restricted to weeknights or before 7PM or after 9PM on a weekend. The restaurant has an hourly cost of being open and if the discounted meal covers this fixed nut, the profit can be made during prime time.

                Furthermore, if my typical dining plans bring me to restaurant X once per month, but a Groupon Deal or Restaurant.com coupon brings me in 3 times in a months, the total amount I spend in that restaurant will go up. I have never used a Groupon or Restaurant.com deal that didn't have me reaching into my pocket for additional cash. The coupon usually only covers the basic entree, not alcohol, desserts, tips.

                So, If I spend $100 a month at Restaurant X without a deal, but add on 2 additional $100 visits less the $25 value of the coupon, Restaurant X is now getting $250 a month from me and filling 4 seats per month on slow nights that might otherwise stay empty.

                9 Replies
                1. re: bagelman01

                  I agree with your general point, but you're talking revenue / fixed costs and totally ignoring variable costs. What if each meal costs $80 to prepare? So, if you went once at $100, they'd make $20 to apply to their fixed costs. But if you went 3x and paid only $250, they actually only have $10 net to apply to fixed costs. I don't know the real numbers, but just playing devil's advocate to the scenario you laid out...

                  1. re: FattyDumplin

                    Most restaurants target their food cost at 22-27 % of menu prices. Some succeed, others don't.

                    1. re: Veggo

                      cool. learn something new every day. do you know what the break out is of costs on a percentage basis across things like food, staff, rent, etc? i've always been curious.

                    2. re: FattyDumplin

                      as a former retailer and restaurant owner I'd take that additional $10 towards fixed costs anytime over an empty table. I'm paying the servers, cooks, heat, lights, power, rent, insurance anyway.........................
                      Furthermore, a full restaurant is more appetizing to full priced patrons than a mostly empty restaurant and will drive up the average ticket of the full priced diners. If one is seated in a mostly empty restaurant, one hurries to eat and leave, not ordering those lucrative appetizers, desserts and after dinner drinks.................If there is a full house and buzz/vibe, one is more likely to keep spending, ever wonder why a casino has bells and whistles to stimulate spending!!!!

                      1. re: bagelman01

                        Absolutely, at any given moment, the restaurant is better off with $10 to fill an empty table, help cover overhead, build buzz, etc. The restaurant is also better off if, say, 100 new customers come in because of Groupon. But what happens to the restaurant if 100 of its regular customers come in with Groupon 2 or 3 times each? Ouch! All of a sudden that $10 isn't nearly enough to maintain quality and/or stay in business.

                        1. re: PeterHG

                          This is why a smart operator makes sure the Groupon offer has restrictions to channel the additional visits to slack times, or rules such as only one per customer.

                          Her in Southern Connecticut there is a radio based shopping show that has been selling restaurant (and other) discount certificates for more than 20 years. Many of the deals on the air say they are limited to one every X months. Since the radio show takes name, address, credit card info. it is not hard to enforce the rule.

                          1. re: bagelman01

                            Hey there, what is that radio-based shopping show of which you speak? It doesn't ring a bell at all.

                            1. re: kattyeyes

                              The Home Shopper on WELI 960 AM in Hamden. Saturday and Sunday Mornings Host Jim Masters is a familiar face from CPTV. Show has been on WELI since about 1992. Jim bought the show from the original host in 1995.
                              http://www.960weli.com/pages/jox/home...

                              1. re: bagelman01

                                WELI was the first amplitude modification radio signal I captured on my first home-made germanium diode crystal radio with a hand-wound coil and a small microfarad capacitor in 1962, with an antenna strung through the catalpa trees and grounded to the copper radiator. Thanks for the memory, bm! I miss the aroma of resin core solder and the true peace that accompanies experimental electronics.
                                Edit: Apologies for wandering OT. I expect to be deleted, but the above was my youthful soul. All of it.

                  2. I'm not so sure "Groupon deals are incredibly bad for these restaurants", but more that restaurants in desperate need for customers turn to Groupon. Personally, I tend to avoid places that offer these coupons with the thought that they are in a last minute effort to maintain business. Same holds for the entertainment discounts, etc. Many of these places seem to be out of business within a year. Furthermore, more than once, I've walked away thinking even the half price wasn't any bargain.

                    1 Reply
                    1. re: Clams047

                      Clams,
                      There is a very successful restaurant/bar about 1 mile from my home with lines out the door 8 months of the year. BUT in the dead of winter after the SuperBowl has come and gone they need a stimulus such as Groupon or Restaurant.com to stimulate saless.
                      Overall they are very popular and very profitable, currently celebrating their 15th anniversary.

                    2. I've become a full-price-paying regular customer many times at a place that drew me in the first time with a coupon. But few things will guarantee with more certainty that I'll never go back than a place that gives me attitude for using a coupon or a deal that THEY chose to put out there.