Groupon and the Restaurant Owner “The Good, The Bad & The Ugly”

We have all heard the Good the Bad and Ugly about Groupon but when it comes to the restaurant industry most or the feedback is ugly. The majority of the owners get sucked into the sales potential of the Groupon but forget that the most important thing in owning a restaurant is to turn a profit. “Efforts without results are meaningless”.

There is another often ignored downside for the restaurant ‘in trouble’. With the issue of a coupon, comes a sudden and significant increase in traffic. Do not underestimate how many people will come through your door in the days following your campaign. Your restaurant now has to operate with the same standard of service which requires more staff to handle this load. Notwithstanding the potential loss you are incurring having sold a $50 Groupon for $25 but Groupon will receive $12.50 and you will receive $12.50, you may now find that your operational costs have increased – again with no benefit to you. Will the $12.50 cover your cost of sales, labor and overheads; most likely not. Arguably, in fact, this adds to the loss leader that the coupon imposes. For how long can you operate with this increased burden in addition to the slim margins which characterize the restaurant sector and in a troubled venue?

The best recipe for success is a two prong approach. First, let’s work on increasing your experience delivered to the guest, thus driving repeatability and revenues. Second, maximizing efficiencies to ensure every penny goes straight down to the bottom line.

IRHC Group’s Operational Assessment ensures we maximize your profits and efficiencies and our Raving Fans segment is used by the top 5 casual dining concepts to enhance the Guest Experience and drive repeatability. Why discount when your guest will pay full price for Great Food, Great Service in a Great Environment.

Be smart and think of all the positives and negatives before you coupon or discount your business away.

The IRHC Group Staff

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