The Pitfalls of "Daily Deals"

Even before the advent of Groupon, many restaurants fell into the coupon trap.

Smart restaurateur s realized that's exactly what Daily Deals are - a trap.  A recent article in the New York Times addressed the pitfalls of Groupon and similar services: "The consumers were being told: You will never pay full price again. The merchants were hearing: You are going to get new customers who will stick around and pay full price.  Disappointment was inevitable."

Do Groupon-type customers come back?  Yes …if they have another coupon.  According to Lingo-Link, a blog discussing how companies can give the best customer service, “...people who are signed up with Groupon get a different half-off coupon offer emailed to them every day.  And as a result Groupon has developed, in a way, their own cult following."  The loyalty is to Groupon, not your business.

There is no replacement for a well-run online ordering system such as NetWaiter, which gives customers the control and convenience of ordering takeout and delivery online.  Daily Deal programs only train shoppers to come back when a discount is available - there is no loyalty.  Unlike NetWaiter, which is, in fact, very likely to draw customers back repeatedly and have them happily paying full price.

An online article from MIT's Technology Review also examined how merchant reputations changed before and after a Daily Deal.  The article reported the average rating scores from reviewers who mention Daily Deals are about 10% lower than scores of their peers.  And, what’s the cost for these poor reviews?  Extraordinary.  If the standard discount is 50%, and the Daily Deal site takes half the money paid by each customer, your restaurant is essentially giving a 75% discount to a customer that might come back.

Bottom Line: Forget flushing marketing money on Daily Deals.  Instead, implement long-term and cost effect marketing programs.  NetWaiter should be one of the key pillars of your marketing strategy to attract good customers who pay full price.  Get people into your restaurant, create brand awareness, and make money!