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Daily Deals: 3 Tips for Your Restaurant’s Experience

Image from MorgueFileIf you have the internet, watch TV, go to restaurants or have simply just been living and breathing for the past few years, chances are you’ve heard of and maybe even used a daily deal site.  The concept is usually as follows: A daily deal company pitches the idea of their company to a restaurant, the restaurant agrees, the company sells certificates for the restaurant to customers for half the price (Ex: a $50 certificate is sold for $25) and once the certificates are sold a percentage goes back to the restaurant and the rest is profit for the daily deal company.

This method has proven quite successful for companies like Groupon and Living Social , both estimated to be worth somewhere in the billions.  However, that also means there are clones of these daily deal companies popping up every day (with businesses like Google and Facebook being two of the bigger ones).

While it may seem like all of these companies would overload the market, there is still a need/want for more and more.  After all, consumers are always looking for a deal and restaurant owners are never ones to turn away business, especially in a down economy.

However, while the discount sites may seem like a win-win on the surface, this may not be the whole story.  The tips below cover just a few of the often overlooked specifics that could help protect restaurants from coming up with a losing score in the daily deal game.

1)  Be a Part of Creating the Fine Print

Businesses are often quick to jump at a chance to get people in the door with free advertising, the hope that customers will spend past the coupon amount and the promise of a nice percentage check from the sale of said coupons.  But to really make it work it is imperative that business owners are able to set restrictions on coupon use (i.e. if you’re busiest on the weekends make sure deals can only be used Monday through Friday).  At the same time, going too far overboard with restrictions can turn a customer away from the purchase (i.e. Offer is only good for a specified meal choice).   If setting these restrictions isn’t possible, restaurants could run the risk of upsetting customers due to long waits and overworking their staff on already busy evenings.

2)    Have Realistic Expectations  

Probably the most key element to signing up for a deal program is knowing exactly how much you’ll be receiving back once the coupons are sold and if it will be enough to help instead of hinder your business.

Hamilton Nolan of Gawker.com reminds, “Groupon often takes half of the money of a coupon offering for itself, and, with a 50% discount, leaves the business selling its goods for 25 cents on the dollar.”    And while even getting that small amount back may sound tempting, once normal costs like labor, food, etc. are calculated in you may realize that the return on investment is even smaller or worse, non-existent.

While considering the financial side, it’s also a good idea to think about how these deals could bring down morale as well.  In article in The Boston Globe, Joanne Chang, operator of Myers + Change in Boston warned, “Every restaurant tries to charge a price they think is fair based on what they put into it. Then to just give it away, it makes me sad. I don’t like feeling what we do is devalued.’’

3)    Coupons Don’t Create Loyal Customers

Even though daily deal programs get the word out about your business and may even increase traffic during otherwise slow times, doesn’t mean that’s where the selling to customers stops.  As noted on smartmoney.com, “They (daily deals) also introduce consumers to experiences they might not otherwise consider if they weren’t deeply discounted.”  Following this philosophy, many patrons will more than likely be stopping by for the first time which means that the deal site has accomplished their task, but now it’s up to your restaurant to provide excellent food and service in order to make the customer realize that even if no coupon was involved, your business is worth paying full price for in the future or even recommending to a friend.

While there are seemingly endless tips, tricks and words of advice available, ultimately deciding whether a daily deal site could help your business is dependent on you and your establishment.  However, sitting down and taking these tips, the advice of other businesses and the deal site sales pitch into consideration could help you make the decision to be the next big deal which, if executed correctly, could also make you the next hot restaurant.

Has your business participated in daily deals?  Ever purchased one for yourself?  We’d love to know how it worked!  Please share your tips and advice in the comments.

3 thoughts on “Daily Deals: 3 Tips for Your Restaurant’s Experience

  1. Somerset Industries

    Offering one-day-only coupon deals might be a great way to get a lot of foot traffic, but that doesn’t mean you’ll see a huge spike in revenue. Restaurants have to pay attention to the details of the deal. If you don’t layout the fine print correctly, you could end up losing a lot of money on the deal.

  2. Amber Coleman Post author

    You make a great point! Just because someone comes in doesn’t necessarily always mean they’re going to spend more (if any) over the original certificate amount. It’s always good to know what you’re getting into before you’re left not knowing what happened.

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