If you ask restaurant owners their thoughts on participating in group-buying deals like those offered by LivingSocial or Groupon, you will get a variety of responses and hear some strong opinions. Some will say that the deal helped significantly grow their business while others will tell you they will never participate again.
One Delaware restaurant reported that a Groupon deal increased its new customers by 65 percent. It was able to extend its reach and its brand by being able to tap into new audiences that it otherwise would not have reached. A San Diego chef reported a negative experience. He felt that group deals were time consuming to track and that patrons tipped on the discounted amount, reducing server morale.
So, the question remains, Are group buying deals right for your restaurant? The answer: It depends. The main difference between restaurants that see positive results and those that don’t is carefully structuring a deal that will bring in new, regular customers without overwhelming your restaurant–or your bottom line.
There are three questions to ask before signing up for a group-buying deal:
- Can you bring in new customers? Given that most restaurants break even or take a loss on the actual proceeds from voucher purchases, the main reason to participate is to attract new customers who will become repeat customers. If you think that the group-buying deal will primarily be purchased by your regular customers, then you may want to use other marketing strategies.
- Is there a specific location, product or service you want to promote? One strategy that can bring positive results is to use the deal to promote a specific location, type of meal or time of day for which you would like to increase business.
- Can your restaurant handle the increased business? If the deal brings in many new customers but you are not able to provide quality food and good service, then there is little chance of converting them into regular customers. Make sure you have adequate staff and food supply to meet the demands of the deal. Consider structuring the deal to bring people into the restaurant during less busy times.
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