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I like Google offers more than Living Social and Groupon

Home Forums General Columbus Discussion I like Google offers more than Living Social and Groupon

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  • #477190

    cbus11
    Member

    It seems a question of how a business spends its advertising dollars. I am not as mostivated as some people by these discount deals, but know several people who see it as excuses to try new places.

    I have bought some Dine Originals and Faveroos in the past. Personally, I feel a litte cheap when I pull out the coupons.

    #477191

    SusanB
    Participant

    Walker is correct on the 50/25/25 model.

    #477192
    Walker Evans
    Walker Evans
    Keymaster

    cbus11 said:
    I have bought some Dine Originals and Faveroos in the past. Personally, I feel a litte cheap when I pull out the coupons.

    Just a point of clarification… Dine Originals is a local membership-driven nonprofit. The gift cards that are sold are what makes up the membership dues rather than a cash-based dues system. Not quite the same thing as a for-profit Deal of the Day company.

    #477193
    derm
    derm
    Participant

    They had Basi too.

    I sort of see your point. In the case of Rigsby’s and Basi, I dont go very often, so this drives me to those places. In the case of Shoku and Spagio, I go often. They compete with Z Cucina, Trattoria Roma, 3rd and Hollywood, Figlio, AAB, Vino Vino and the others on the Grandview strip near my home where most of my dining is. This gives them a competitive advantage in a most competitive few block area. Now when we go out, those two are first choices. The coupon paid to put them in front. They also limit what you can buy with the coupons as well as when you can attend to drive you towards what they want to sell and when. I knew that before I bought them. They dont sell out every seat every night so this will increase their bottom line, even if percentage wise it may be less than others tables. Not different to me if you go and are not a drinker so dont order cocktails and have a lower bill without that higher marked up item. Or you are not a big eater and split a plate, or are vegetarian and so get the veggie platter or a salad main course instead of the prime rib. Do you voluntarily go to a restaurant and order the most expensive, most highly marked up dish for each person when you go out to eat? A soda instead of water? Skip the appetizer or dessert? If you do not you are keeping money in your pocket and not the restaurants. My wife and I at Rigsbys would get a bottle of wine and thus may generate a larger profit from the meal than someone buying only food and not drinks. The wait staff will be tipped from the full amount by me so a local employee gets paid. And while I like the owners of the restaurants well enough, I like my wife and kids more so keeping the money in my wallet as opposed to voluntarily paying more has not a qualm in my mind.

    #477194

    cbus11
    Member

    Well said derm, I think I may have to revise my thinking on these.

    #477195

    ToddAnders
    Blocked

    Given that the typical restaurant margin are b/t 15-20% I can never understand why a bar/restaurant would want to offer a groupon/living social deal. It makes no economic sense. Also, wouldn’t you want to reward you loyal customers who come often rather than the one timers looking for a deal who MIGHT become a regular?

    I would like to see owners save that money and maybe comp a salad or drink for these regulars.

    Now, for a brand new business that have no base, it might make sense. But know as a customer, they too would be better off standing at the door and handing out $5 bills to everyone who came in for dinner.

    Also, it is a 50/25/25 split and the restaurants 25% split is divided into 3 payments; 30 business days after the offer, 60 business days after the offer and 90 business days after the offer. I’m sure most never do the math on how much it cost them to carry that money as well.

    A professional service, such as massage, might work out better with these kind of offers b/c their hard costs are lower and they work off higher margins.

    #477196
    Walker Evans
    Walker Evans
    Keymaster

    derm said:
    They dont sell out every seat every night so this will increase their bottom line, even if percentage wise it may be less than others tables.

    I think we agree on a lot of points, and I do think that marketing to put yourself ahead of your competition (in one way or another) is important. That being said, I’m not so sure that a “grouponed” customer increases the bottom line when you are selling food for 25 cents on the dollar. A movie theater can give away free tickets to get “butts in seats” because they’ll make more money from concession sales. If a restaurant gives away food at 75% off just to get “butts in seats” then they make up the money with _________? While I’m sure you’re a great customer that tips well, orders wine and orders beyond the coupon’s value, from what I’ve read that’s not the norm for the average coupon-wielding customer.

    Are deal of the day promotions a good marketing value? That’s the debate.

    Are deal of the day customers individually helping a restaurant’s bottom line? No. They’re an expense more often than not.

    #477197

    thecandlelab
    Participant

    There’s one additional piece you are missing – the lifetime value of a new customer. If you can pick up a new customer that comes back to eat at your restaurant several times, its OK to lose money on that first transaction because you make it up in the long run. Think of it this way – when they run an ad in The Other Paper or This Week News, they just “lost” money on that transaction. But the restaurant believes that ad will bring in new customers or remind their existing customers to come in again, and these deal sites are the same thing.

    I agree that there is a legitimate debate about whether “Groupon customers” are likely to come back and spend full price again. Its also up for debate if running one of those ads is seen as cheapening your brand. We ran a couple a while back, and probably won’t do any more, but it did bring us a lot of new customers that we have turned into repeat business.

    If you believe in your food/concept/service, and you think you can turn a first-time visitor into a repeat customer, then its worth it to take a loss on that first transaction. I agree these DooD sites are way too pervasive and losing their shine for both merchant and customers, but its still a valid marketing tool if used correctly.

    #477198

    GCrites80s
    Participant

    I wonder if eventually there will be some kind of application added to say, Quickbooks that would analyze the effect of these kinds of promotions. You’d have to have a certain amount of them redeemed for it to be statistically significant, but it takes more than just sales numbers to determine the effectiveness of the promotion since the promotion itself can ravage sales totals the day they are redeemed. Short of having an accountant specifically analyze the promotion’s effects on cash flow of your business, of course…

    #477199

    mrpoppinzs
    Member

    I see this as instead of a restaurant spending a couple of grand for example on web adverts at CU they may try this type of marketing to mix things up. I have become conditioned to see a lot of advertising as background noise, a two pronged approach may be a good idea. It seems more like another tool in the toolbox. I am not sure it is something to get worked up or worried about. My New Year’s resolution was to try new places and learn COTA (paying full price will have to wait). :)

    Even if the grouponers do not come back, they seem like the type to yelp and talk about things. Before I try a place I have not been to, I always ask if anyone has been there.

    #477200

    cbus11
    Member

    +1

    The money would be going somewhere. I really can’t image this is more than a blip on anyone who is not connected to advertising’s radar. It seems just a business decision for a small business, but there is more of a concern from the advertising industry. I think there is a fear of leaching profits. If it is unsustainable then it will have a very limited impact. It seems odd to actively boycott a form of advertising, I say let it rest on its own laurels.

    #477201

    Anyone in outside sales knows that companies will pay top dollar for high quality leads. That is essentially what daily deal sites are doing. They are “guaranteeing” you that people are going to walk thru your door. If they don’t, then you still make margin on their unused voucher. Paying for customers is expensive regardless of how you look at it. Whether or not you can convert that customer into a repeating one is up to the business.

    To compare daily deals to other forms of advertising I think is not accurate. I certainly think it has value to small businesses, if used properly. More so than online display advertising, which many studies show to be easily the least effective form of online marketing out there.

    #477202
    Walker Evans
    Walker Evans
    Keymaster

    cbus11 said:
    It seems odd to actively boycott a form of advertising, I say let it rest on its own laurels.

    I don’t think anyone is calling for a boycott. I expressed my own annoyance with the overexposure of these systems as a customer, but I’m not circulating a petition or anything.

    #477203

    cbus11
    Member

    Boycott just means ‘to abstain from buying or using’, any extrapolation beyond the personal level was not implied.

    #477204

    ToddAnders
    Blocked

    Walker, I agree; all these “Limited Time Offers” happening daily, don’t seem very limited.

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