Groupons bad for restaurants?

Fast Casual, a site that offers news related to this restaurant industry segment, reported some troubling news for restaurants that  participate in Groupon discount promotions.

A survey of 150 businesses by Utpal Dholakia,  associate professor of marketing at Rice University’s Jesse H. Jones Graduate School of Business, found that  “Groupon promotions were profitable for 66% of surveyed businesses; however, more than 40% of  respondents indicated they would not run such a promotion again.”

Restaurants fared especially poorly: “”Among the service businesses (restaurants, educational services, tourism and salon and spa), restaurants fared the worst; salons and spas were the most successful,”  the site reported.

The key to success?  Apparently, “… ‘satisfied employees’  is the most important factor for the Groupon promotion to work…for a business. If employees remain satisfied through the promotion, the likelihood of its profitability is significantly higher.”

It seems that restaurant employees have found that discount-seekers tend to be poor tippers. The result:  More work for less money.  Not exactly a recipe for employee satisfaction.

To read the entire feature, click here.

Leave a Reply