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Groupon, Living Social and other Deal of the Day Sites - News & Updates

Home Forums General Columbus Discussion Dining Groupon, Living Social and other Deal of the Day Sites – News & Updates

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  • #82059
    Walker Evans
    Walker Evans
    Keymaster

    Very interesting article in the Dispatch today (“Deals dissolving“) about chain restaurants pushing a national trend back towards normally-priced menus and steering away from discounts, deals and other cost-saving promotions.

    I imagine this is in anticipation of an economic recovery, and independent and non-chains will follow suit in the near future.

    As a board member of Dine Originals, I speak to a lot of restaurant owners on a regular basis and I’ve gotten the general impression from many people that the burden of slashing costs has really taken a toll on local businesses. It keeps people coming through the doors during tougher financial times, but doesn’t sound like a long-term sustainable practice.

    Just curious what other people think of this news. Will you still be likely to go out to eat as much as you do now if prices slowly inch back up and discounts start to disappear. How often are you using discounts (Discount Gift Cards, Groupon, Fudha, etc) currently? Do you think the restaurant industry is a barometer of economic recovery?

    #378090

    Given Groupon’s vig, I will not be surprised if that model is unsustainable for restaurants. It also strikes me as troublesome. Food costs aren’t going down (unless you start sourcing cheaper), fixed costs aren’t and that leaves labor. The other side is to increase margins on relatively inelastic items like alcohol, but that is proving to be more elastic.

    I’d like to see restaurants – at all price points – focus more on delivering value instead of attempting to compete on a false economy of price. Promotions like Restaurant Week with a prix fixe menu make more sense as establishments can focus on delivering what they do at specific prices.

    A.

    #378091

    cc
    Member

    I would rather restaurants charged across the board fair prices rather than patchwork savings based on coupon holders. I don’t want to feel like I am on an airline when paying $5 more for my food than the the guy at the table next to me. Give good service at a fair price and cut out the gimmicks.

    I think the restaurant industry is on top of the discretionary spending pyramid. The top of the food chain is the most susceptible. I think the ending of coupon deals may also be a necessary tightening of the belt after ‘priming the pump’ by all these clubs and discounts have failed or run their course. I do not think we have seen an economic turn around yet. We will probably see more restaurants close.

    #378092

    somertimeoh
    Participant

    I only buy the coupons for places I don’t already go to. For instance, I’ve been to Deepwood once, years ago and loved it, but haven’t returned for multiple reasons. They came up on fudha and it gave me the kick in the pants I needed to get back there and I’m excited for lunch tomorrow, wooo. But I would never buy one for a BFR establishment or anywhere else like that. So, in my thinking, Deepwood is gaining from this transaction. While the first $20 I spend is deeply discounted, the rest is sales they wouldn’t have otherwise received from me. And hopefully tomorrow I’ll be as equally impressed as I was the first time and force it to hit my radar more frequently. Win-win, right?

    What is the average redemption rate of the coupons? I’m sure that’s factored in when the # offered is established. I remember someone being worried about Weiland’s when they did one on Groupon, but I’m still holding on to mine, which is about to expire, because I don’t get out that way much and it’s the reason I don’t go to Weiland’s more in the first place, even though I love it.

    There’s lots of factors to this industry. I think one or two will come out ahead and the rest will either get bought out or just fold. Looks like Groupon has the early lead though I think their competition here is stiffer as far as restaurants go than in other cities because of the pre-existing DOC program and our local fudha. They focus on a lot of other weird stuff which I think is kinda cool.

    #378093

    i’m becoming a bit obsessed with fudha (groupon is hit or miss) and i can see how it would hurt the restaurant but… ur only allowed to use 1 coupon per visit and u go with a couple of people, no matter what $20 ain’t getting you far unless it’s $5 mac’n’cheese night at Betty’s and even then we always end up buying more than normal. :) if i can do take-out then i’m most likely only spending the amount of my gift card…

    restaurant week is great and they do similar things in other cities. it definitely gets me into the door of restaurants i’ve never tried.

    #378094

    dirtgirl
    Participant

    I’ve used fudha a couple of times, but I can’t help but feel bad for the restaurant since I usually use them at places I would go anyway. And after having a bad experience (Tasi claimed my fudha serial number had already been used by someone else), I think I’ll steer clear. It’s not worth it to save $5 and why would I want to do that when I want the restaurant to profit and stay in business.

    It actually concerns me all of these electronic promotions and discounts that allow you to print out your gift certificate. If I can be told that mine has already been used, then clearly there is a risk of fraud or bookkeeping errors. It’s more of a hassle, but if I could get a genuine non-forgable gift certificate in the mail, it might allay my concerns about hassle/embarrassment if my Tasi experience is repeated.

    As far as discounts, I would prefer to see more restaurants take the lead of Deepwood and do special menus (the morel menu, beer menu, or this week’s wine menus come to mind). I end up spending more than I would otherwise, but I always chalk it up as “educational” when justifying the extra expense. I also like a great bar menu selection. lately, we don’t even eat dinner at Rigsby’s, we just sit at the bar and split a pizza and a couple appetizers. It comes out much cheaper, and we really prefer the experience.

    #378095

    joev
    Participant

    Yeah, I don’t like using coupons. Makes me feel like a cheapskate. I especially didn’t know that the Dine Originals coupons are donations from the restaurant to the DO group – so basically when you use one, the restaurant doesn’t see a penny of the price you paid. Not sure how Fudha works financially, but I can see it being of value as a short term marketing tool for a place that’s underexposed/low traffic. You might retain a few of those customers, but I would guess the heavy Fudha buyer is motivated by the discount more than the quality of the food.

    But I agree – fair pricing is best. I want the restaurants I like to stay in business, and I like to get a good value. Especially on drinks. Please restaurants, stop charging $6 for a glass of wine that costs $6 a bottle. Maybe try a house wine – an unspectacular but decent wine served at a small markup. I’ll drink a few glasses of that, and probably linger longer and order dessert. If I see a $6 glass of Sutter Home or Redtail, I’m going to stick with ice water and finish up quick.

    #378097

    somertimeoh
    Participant

    If I recall Walker correctly, they are donations in lieu of a membership fee. So in order to be a part of the marketing machine that is DO, you donate certificates.

    #378096

    somertimeoh
    Participant

    If I recall Walker correctly, they are donations in lieu of a membership fee. So in order to be a part of the marketing machine that is DO, you donate certificates.

    #378099

    somertimeoh
    Participant

    If I recall Walker correctly, they are donations in lieu of a membership fee. So in order to be a part of the marketing machine that is DO, you donate certificates.

    #378098

    joev
    Participant

    somertimeoh wrote >>
    If I recall Walker correctly, they are donations in lieu of a membership fee. So in order to be a part of the marketing machine that is DO, you donate certificates.

    Still – It makes me feel like I’m screwing the restaurant. But I’ve bought a few that I never used, so maybe it balances out.

    #378100
    Walker Evans
    Walker Evans
    Keymaster

    joev wrote >>

    somertimeoh wrote >>
    If I recall Walker correctly, they are donations in lieu of a membership fee. So in order to be a part of the marketing machine that is DO, you donate certificates.

    Still – It makes me feel like I’m screwing the restaurant. But I’ve bought a few that I never used, so maybe it balances out.

    Think of it this way… restaurants can either pay $3000/yr to be a member of DOC and receive the benefits of being a member of the group… or they can donate $3000 in gift cards which are then sold to raise that money for the group while the restaurant is essentially just comping food costs (which is most cases I’ve heard is around 33%).

    It allows the DOC group (non profit, btw) to raise the same amount of money to function and provide the member benefits while also cutting the annual membership fees down to a third of what they would be if the restaurants had to cut a check upfront and pay directly out of pocket.

    Outside of the external marketing that DOC does for its member restaurants (which is what most of the general public sees) there are also purchasing groups and bulk discount benefits that restaurants receive that can help them save money on everything from fire suppression systems to produce suppliers to linen cleaning vendors to everything else. Not that it matters so much to the general public, but I like to think that local restaurants stand to gain much more than what they lose in that roughly $1000/yr (33% of $3000) that they have to “donate” in gift cards for membership.

    Hopefully that helps you to see those gift cards as being “fair” as they support DOC which then supports the restaurants in a very direct and impactful way. I wouldn’t have joined their board of directors and donated countless hours of my own personal time to assist them if I didn’t feel strongly about their mission of helping our local/independent restaurant community thrive.

    PS: I don’t know if that $3000/yr number is still accurate or not. It was thrown around in the past, but could have changed since then. I’m more involved in marketing and communications on the board rather than membership outreach, so I don’t work with those details on a regular basis. Just wanted to make a disclaimer in case any non-DOC restaurants are reading and considering joining and the membership dues are more/less than mentioned here. ;)

    #378101

    cc
    Member

    I guess then this would not be a ‘burden of slashing costs’ to the owners? It seems like DOC can justify itself. I would still rather not use coupons, I think it takes away from the ambiance of going out. It is a lot different than buying food at a grocery store.

    #378102
    Walker Evans
    Walker Evans
    Keymaster

    cc wrote >>
    It seems like DOC can justify itself.

    I think so. But that’s just me. I’m sure there are plenty of local restaurants who don’t want to join DOC because they don’t think it would be worth it for their particular business model. And that’s fine too.

    I think DOC is a completely different animal than what the conversation was started about. DOC is a nonprofit group formed by local restaurant owners who wanted to start working together for mutual benefit. Groupon and other “deal of the day” promotions are for-profit companies who have a financial model built on selling discounts to restaurants. Not that being for-profit is a bad thing. I’m just really curious (both personally and professionally) about where all of this is heading. Is there danger in “deal saturation”? Is this Dispatch article about national chains a signal that these deal models are going to continue to grow like wildfire or start to plateau?

    #378103

    joev
    Participant

    @Walker – Don’t get me wrong – I think DOC is doing great work, and that’s a very innovative funding model. Kudos. I was just explaining why I have got away from using those coupons.

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