Question:
We have done traditional advertising in the past (radio, paper). It works somewhat but I don't feel we're getting the best bang for the buck. I've been looking at Groupon and Restaurant.com. What are your thoughts?
– Russ Kandalaft, Owner, Freestones City Grill, New Bedford, MA
Answer:
The key difference with these sites—Groupon, Restaurant.com, Village Vines and a few others—is that rather than paying for the ad up front as you do for traditional media, you pay by offering significant discounts to potential guests. The website benefits by pocketing a percentage of the sale or a transaction fee and you hopefully benefit with new guests in your seats.
There are advantages and disadvantages to this approach:
Pros:
- Big one: no immediate out-of-pocket investment.
- As with gift certificates, many guests who buy the discount won’t actually come to collect it.
- Guests who might not normally dine at your location may have incentive to give you a try. You can impress them for repeat business.
- You may be able to get reports with marketing data and guest contact information from the sites.
Cons:
- If the special offer is too attractive you may be overrun with bargain hunters who show up once just for the deal.
- These sites may require steeper discounts than you would normally be comfortable offering to make themselves attractive to their subscribers.
- Your existing regular guests who subscribe to these sites (and would have dined with you anyway) will also take advantage of the discounts.
In my work with restaurants I’ve heard both the highest praise and the foulest language reserved for sites like these. In general it comes down to making sure you can still break even by offering such a deal and having the staffing ready if the ad is successful. For that reason new concepts/locations and seasonal operations who run these promotions at slow times of year are often the most satisfied customers.