Considering Groupon for Your Restaurant? You Might Want to Think Twice

Deal-of-the-day website Groupon is all the rage in the service industry right now, offering huge discounts for customers if a certain number of people buy their gift certificates.  However, more and more restaurants are finding that though it gets guests in the door, it has a negative impact on the bottom line.  Have you considered using Groupon?  Here are a few things you should consider before signing up:

Customers may not return or purchase more than the certificate amount - Prepare your staff to welcome guests back for a second visit or upsell them on menu items they don't order.

Be strategic about your offer - Instead of offering $100 of food for $50, offer $25 off over a series of four visits.  For this, you may have to start your own loyalty program, but customers who sign up for this might be more loyal to your establishment than Groupon users, who tend to be loyal to whatever deals Groupon is offering

Figure out what type of discount makes sense for your business - Groupon promotes discounts of 50 to 90% but other similar sites offer smaller discounts, starting at 10%.  If your goal is to get people in the doors, perhaps starting with one of these sites would be more beneficial

Do your research - Figure out all the possible outcomes of getting involved with getting involved with a site like Groupon, crunch the numbers and see if it really makes sense as a marketing strategy because that's ultimately what it is.  Will you get more business through traditional marketing, or even social media sites that won't cause you to give away $100 for $10?

For more on Groupon and how it's effecting the restaurant business, check out this article from Restaurant Hospitality and this blog post on RestaurantRamblings.com, which has some really great comments from readers who have direct experience with sites like Groupon.