How do restaurant owners really feel about daily deal sites like Groupon and LivingSocial? A recent poll by Technomic found that about 40 percent of them had run a daily deal. Of those, 51 percent were “pleased with the result.” Sixty-nine percent said the deals brought in new customers, and 52 percent said it resulted in earning repeat customers.
What about restaurants that haven’t tried daily deals? Restaurants responding said they haven’t used the deals because they think other forms of promotion yield a better return. However, overall, these restaurant owners said that a lower commission rate would encourage them to participate.
Many restaurant owners are leery of daily deal sites because of horror stories like the one reported in The Indianapolis Business Journal. The owner of the Creation Cafe claims she didn’t agree to the final version of a Groupon offer that resulted in 2,600 people buying a Groupon for a 62-percent discounted dinner. Co-owner Lynn Shepherd told the Journal that if everyone who bought the deal came in, the restaurant would go out of business. So far, she said, most customers who bought the deal have been understanding about being told the offer was issued in error.
Then, there are the more commonplace experiences like the one reported in the Riverfront Times. The owner of Local Harvest Café & Catering had almost forgotten about a Groupon deal that 3,500 customers had purchased–but right before the deal expired, hundreds of customers descended on the eatery.
The result was what you might expect: The staff was run ragged, the kitchen ran out of food and the regulars were upset they couldn’t get tables. After all that, negative Yelp! reviews from first-time diners who ate during the Groupon rush pretty much outweighed any positives from the experience. The disgruntled owner Tweeted that Local Harvest would never run another Groupon again.
What has your experience been with daily deal sites? Has it paid off for your restaurant?