Isn't this kind of thing beneficial if run with more reasonable margins and a subscription model for customers?
Basically, the customer subscribes to the service and gets discounted meals at the cost of not being able to choose the restaurant himself.
Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin.
I'm not sure if it works for restaurants in particular, but it should work for businesses that cannot easily change supply levels, aren't selling something that is completely a commodity and ideally where varying suppliers is enjoyable for customers.
> Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin.
Businesses receive 20-25% of retail price when they take a groupon deal, so you'd need a profit margin >75% to even entertain that idea. Also it cannibalises some of your existing customers, converting your 75%+ profit margin customers into near zero or loss customers. I'd leave the tables empty.
You do have to consider the advertising in the calculation. If they spend $2K/year on advertising now, and a GroupOn sale might be viewed by 10K/people and purchased by 100-150, then still might come out ahead even with $0 or -$10/head ($1500 in loss for the GroupOn).
If a place is doing a GroupOn it is unlikely a zero revenue person will displace a paying person, since the place would have to be almost at capacity for that to make sense (and if they're that popular, why are they doing a GroupOn?).
But then the real question is: "How effective of an advertising platform is GroupOn?" And that I do not know.
PS - Anecdotally I have read that the "type" of customer GroupOn attracts might hurt it further (people claim they're very demanding, hard to please, and unlikely to return). But anecdotes and anecdotes, have to take them with a pinch of salt.
PPS - I myself wouldn't do a GroupOn because I would feel like it was de-valuing the establishment. It sets the new "normal" to the discounted price.
> then still might come out ahead even with $0 or -$10/head
After blowing an entire year's worth of advertising on a single promotion...
Which is an awful idea because a) advertising needs to be sustained; and b) Groupon users are a small subset of the local population that might be interested in your product.
Basically, the customer subscribes to the service and gets discounted meals at the cost of not being able to choose the restaurant himself.
Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin.
I'm not sure if it works for restaurants in particular, but it should work for businesses that cannot easily change supply levels, aren't selling something that is completely a commodity and ideally where varying suppliers is enjoyable for customers.