Is Groupon an effective lead generation and marketing tool for restaurants?
Pat from Tranquil Garden Tea Room has experience with Groupon.
Here's what she thinks: "Both Groupon and Living Social were nightmares for my specialty restaurant! Groupon, especially, overbooked me on Mother's Day, with people not calling to confirm whether they actually had a reservation (even though it was on their form)! So, I got flooded with bargain hunters, some with no reservations, most of whom pretended they didn't know the tip was not included in their 50% discounted deal! Keep in mind that the merchant only gets 1/4 of their usual bill, because Groupon takes 1/4 and the customer gets 50% off! And, these bargain hunters complain about everything, and don't become regular paying customers. Left a bad taste in my mouth! Use Restaurant.com instead, lovely clients that appreciate your hard work."
Do you agree with Pat's view that Groupon is ineffective for restaurant owners?
Answers (1-10)
Groupon vrs Restaurants.... Pablo is correct. You are basically at a loss or a break even after your food cost and Groupon discount. Most restaurants run a 30% food cost so if you have a $30 entree and are discounting it 50% that leaves the restaurant with $15. Now take out the 20-25% commission that Groupon gets, you are not left with $7.50-$10. We have found that these customers are the customers that complain and post bad reviews. Pat should have posted restrictions such as not Valid on Holidays or if you are slower Monday-Thursday you can restrict Valid Monday - Thursday's etc. You have to think of Groupon as a marketing tool for future business. You are attracting old and new customers and I recommend creating a survey where the customer fills out their experience and provides you with their email. From there you can use email marketing to that client letting them know your specials, telling them like us on Facebook with a link and you can retarget that audience. If you don't do something like this, then your campaign was to get people in the door and you are hoping they come back....Your goal is to get in a new customers right?, so you have to retarget those guests and get them back to pay full price. Lastly, my recommendation is to create a 3-course dinner with a salad, a couple choices of pasta entrees or an entrée and housemade dessert which typically is at a lower food cost, thus leaving you a little margin to help cover the costs of the additional labor, linens etc. Best of Luck, hope this helps......
As a restaurant owner I've never understood the allure behind groupon. Customers who use deep discounts like that are highly unlikely to turn into regulars. They will only show when deep discounts are involved. Plus you schedule heavy and pay additional labor just to have the cost of the groupon swipe a big chunk of your profits. I'll stick to grass roots marketing, good ole fashioned customer service and a superior product.
They brought in customers but they were only folks who used the coupon and left. We saw many who didn't read the instructions and were turned off by the restrictions of the coupon. It rarely resulted in new customers that would return coupon free. It really wasnt our target clientele.
We choose not to use them now because we do not want to discount our brand. We have a great product and want to provide it to those who value, local, organic, authentic and hand made entrees and desserts. We have found that using Facebook,Yelp and TripAdvisor we get the type of customer we want without the hassle and discount of the coupons.
100 % correct , we found the same outcome , bargain hunters will always look for a 1 time deal and no matter how well they are treated will not return if there is not something free , we developed our own email list of regular clients through our restaurant and food trucks and through our twice monthly news letter we offer discounts or specials for the slow months to keep traffic coming in and don't take nearly as bad of a hit as a Groupon offer, no matter what way you go if you have someone else do your marketing you will pay , control your own destiny
Groupon is a cosmic disaster for restaurants. It is a model that works for businesses that can handle additional traffic at minimum additional cost. the restaurant industry has food cost that already exceeds the payment that is received through this program. It gets worse from there since most of the people who use it perceive your product to be so overpriced that you can afford to discount it by 50% (they don't even realize you only get 25% minus processing charges.) So these customers are never going to be full paying customers, and will always tell people that if they are to visit the establishment, they got a groupon discount, so others will look to achieve the same bargain. Stay away unless you want to lose money, and not gain customers who will value your product. Also, the staff hated it since they were constantly shorted on tips based on the lower value of the bill, and usually from high maintenance customers. My rant is now over. I hope this helps you out there.
I couldn't agree more with Pat. I have joined the Entertainment Coupon Book program for my restaurant and I deeply regret it. It has attracted nothing but customers who only drink water and do not tip my servers properly on the original amount. If these programs brought back regular customers I would be 100% for Groupon, etc. but it is damaging to those who work very hard to buy, prep, cook, serve and manage/own.
yes I agree with him as groupon or living social or other social media never send repeating customer. and who ever comes they are just looking for quality at nickel and dime. Also they didn't understand the deal then they will leave bad image on internet with bad reviews. Which hurt more on business.
Groupon customers are NOT repeat customers, they are bottom feeders looking for a cheap deal. the margin split for a lead is not worth it.
our experience Groupon was a financial disaster. Not a good thing for the business owner great for consumers
Groupon gets them in the door, but unfortunately most people that use it are just looking for a cheap meal and don't intend on coming back at full price. I was a member of the California Restaurant Association and it was a argument point for years. I'm not in the restaurant business, but will always believer that word of mouth is the best and cheapest advertising you can have. Be creative, have a unique menu, a unique style and an atmosphere that brings in the customers that fit your vision. THEN, remember that your vision may not be that popular based on where you are located! Just making a good soup doesn't make you a great restaurateur!