Groupon - A sign a business is failing?

[Vipergrün]

Interesting. Recently purchased Groupon deals for two local places. Both are now closed, one of which I did not get a chance to use the Groupon deal.

Seems there are two categories for Groupon deals, those wanting to dump their inventory, and those trying to raise funds as a last ditch effort.

I guess there are some good deals out there, but wonder if it's any kind of indicator a business is in trouble....

[porsche4life]

I don't think so. It's also just good marketing. A local sno come chain runs groupons regularly, and they frequently have a line out the door even without it.

I know some business love it because you get paid for all groupons purchased, so if only 50% of customers redeem them, you make a nice little chunk of change.

[Pazuzu]

It either means that a business is failing and needs one last desperate kick, or that the business is new to Groupon and unaware of how it's going to screw them royally. Then there's the 5 or 6 companies that someone make it work.

If it's a strong company that is just trying to get some extra business, the wave of Groupies (my term, but hipster people who live and die by Groupon coupons) will hammer them mercilessly for a few weeks (beating up on staff, inventory and overhead while pissing off regular customers), then never step foot in the place again (killing all return business, and you've lost those regulars that got pissed off too).

Go ask a spa or barber or chiropractor who did a groupon a month or two ago if they would ever do it again.


As for your dead Groupon, they will reimburse you completely (or at least give you 100% credit, can't remember which).

[gtc]

Originally Posted by Vipergrün

I guess there are some good deals out there, but wonder if it's any kind of indicator a business is in trouble....

Definitely. Lots of articles out there on this subject.

[Pazuzu]

Originally Posted by porsche4life

I know some business love it because you get paid for all groupons purchased, so if only 50% of customers redeem them, you make a nice little chunk of change.

It's not that simple. Since Groupon will pay back anyone who doesn't use it, AND pays the company for all of them no matter what, it's a lose situation for them unless they stack the deck. The company has to follow strict guidelines about pricing, amount of stuff "offered" per Groupon, and a minimum set guaranteed, which is often far beyond what you would normally want to sell at once. Groupon makes sure that the offer is extra tempting (so people BUY it), and extra easy for the people to use (so they will USE it), then assumes 10% or something that will neither use it, not ask to be reimbursed, and that is their profit margin. there was also some minimum return required before you could be considered for a second run.

There was some other things, we considered it until the contract was on the table so to speak, then we walked away, it was far too scary for a small office like ours.

[Rick Lee]

I've been using Groupon and Local Dines (for dining out only) for a few years now. It seems both ALWAYS have the same restaurants on there. I mean ALWAYS. I use to get monthly coupons in the mail from a fabulous pizza/wine bar that has since become so successful, they no longer need to mail out coupons. But I don't know what's going on with those Groupon and Local Dines places. They must be banking on people (like Mrs. Lee) forgetting about their voucher until after it expires.

[BRPORSCHE]

Mike! Good to see ya!

[Wyvern]

I am a restaurant consultant ... had many restaurants try .
Not one was pleased or will do it again.
Great info here about the "terms" and I do see the marketing potential.

The mentioned Sno Cone who does "regular promos" is an exception to the restaurant rule . as the profit margin on the product is very high ... so selling at even %50 off, they still make good money and the business model for them is in volume not per unit profit.
For "service" based businesses ... Massage, tree trimming, hair cut . the product is time or service so not a tangible cost (or minimum). This is a better fit.

My world is restaurants , so other deals I do not have experience with.

I have used a Groupon for an oil change .. The price covered all the hard parts (oil & filter) and a couple bucks left for labor .. the "Free vehicle inspection" is where the money was going to come from . Seems like I needed wipers, brakes (including rotors) * and a transmission service.

Depending on the restaurant and if their client base is seasonal (one time) or repeat have different needed marketing strategies . the Sno Cone place at the vacation pier just wants bodies ... lots of them. The local neighborhood burger place need repeat customers .. A discount marketing campaign for them attracts the "discount seeking customer" the next time they see them is when they do another discount. the good plan her is to not discount (or do a bundle and discount the fry / drink) not devaluing the burger.
most restaurants spen all or almost all of their marketing budget trying to attract new customers . were there focus is better spent attracting their already customers to visit them more often or perhaps to attract their dinner crowd to come in for lunch (or vise versa)
Look at our friend Starbucks . save you morning coffee receipt and com back that day fro a discounted "treat"

Groupon can help get "bodies" to a new location ... if enough come they may gain some regulars (if EVERYTHING is great, so not a great opening or grand opening idea for a new business). a more effective strategy is to promote .
New , Exciting , Different & have appropriate value

Interesting discussion ... thanks for posting
To answer the OP .. If a restaurant ... YES a bad or desperate sign (most often)

[onlycafe]

has anyone heard of or tried restaurant.com ?

[Bill Douglas]

Thanks, you have just reminded me I have a 60% discount at a Malay curry house (that I goto often anyway) that would have expired

[rusnak]

I don't want Groupon customers. I'm also leery of joining online reviews like Yelp. If you have to rely on those low quality referrals, then I'm thinking that you're circling the drain.

[Wyvern]

restaurant.com is one of my official partners ... still need to be selective where it is used but at least the restaurant has more control of the fine print (day / time / item redemption)

I really "loved" Yelp at first .
I put seminars on for restaurant owners to make positive and combat some of the negatives of Yelp
Here is where it is today.
Every customer is now a "restaurant critic", their insight often is personal only, or takes irrelevant look at concept, location, or realistic expectations.
Yelp now sells advertising and can "sort" even remove reviews.. so if you advertise you can up your rating . I even sat in a meeting with an owner and the message from Yelp was we can make your life easy or difficult !
I do use them for insight and customer perception, look a them by date (an excellent way for you to search Yelp) toss out the top 2 and bottom 2 in each group of 10 and see IF there is a theme to the remaining 6

well said "rusnak"

Funny story on Yelp .
A dive bar (and proud of that fact) had horrible reviews on yelp. (mainly smelly/ dirty / loud .. just as you would expect) Yelp sales person tried to sell advertising and "clean up the reviews" ... owner told them to F - off ! next week he ran a "Yelp Beer Special" = Happy hour pricing if you said "YELP" & & promised to now review them on line .
All Day Happy Hour Drink Specials at a dive bar make for 5 star reviews ...

[MBAtarga]

Originally Posted by onlycafe

has anyone heard of or tried restaurant.com ?

I've used them a dozen times or so to try "new" to us restaurants. The best deal is to make use of the specials that are offered on slickdeals, etc. where there is a discount code and you can buy the $25 gift values for $2 or $3 rather than the "normal" $5 or so.

[URY914]

I had a friend us a groupon for laser eye surgery!

[wildthing]

I thought you meant Groupon the company. They aren't doing so well either.