Should Your Restaurant Use Daily Deal Promotion Sites?

When social media teamed up with coupons, daily deal sites like Groupon were born. Since Groupon hit the market in 2008, group deal sites have multiplied exponentially, creating a feeding frenzy in nearly every market, especially restaurants. To some, this is the holy grail of advertising and growing your business. To others, it is a scam by corporate giants to take advantage of small businesses.

How does it work?

In order to become a featured business on a daily deal website, you start by reducing your retail prices by 50 percent or more. This gets customers in the door, but the website company is going to take their cut. While each website works differently, according to Social Media Examiner, Groupon gets between 30% and 60% of your already reduced prices. That means for every deal you offer, you are selling products for roughly 75 percent off your retail cost. While this may equate to giving food away, if it gets 800 or 1000 new customers in the door, it just might be worth it.

Costs and Benefits

Daily deals spell out the best of times or the worst of times for small businesses. Before taking an advertising leap with a bigwig website, consider the red flags:

• Tally up the most successful outcome of your daily deal, if the profits still do not add up, it might not be worth it.
• Consider the loyalty of your current customer base. If you are known as the local mom-and-pop hangout, a sudden influx of coupon-holders might drive away some of your most loyal customers.
• If you offer a deeply discounted price, once the coupon expires, people may not be willing to pay retail price, trapping you in a coupon cycle where your only business are those who refuse to pay full price.

How To Effectively Use Daily Deals

Small businesses often stand outside and give away free samples to passersby. A daily deal website is essentially the same concept on a massive scale. It is your job to take that free sample and turn it into a loyal customer. Groupon might get the customers to your doorstep; the rest is up to you. 

First, limit the length of your Groupon promotion. Groupon wants to offer the deal for as long as possible, you want to limit the exposure so you do not give away too much product. Haggle with the website to get the best deal somewhere in the middle.

Next, once you have new customers in the door, offer them a loyalty program, or offer of your own to up-sell and create repeat business. Have a plan to keep them coming back even after the deal is over.

Before the deal starts, prepare your business for a boom in sales. Be sure your employees are ready and clearly display the deals "Terms of Use" to prevent any misunderstandings about the fine print.

Other Marketing Alternatives

Before joining a daily deals site, add up the potential cost of your investment, and consider putting that same amount into an alternative marketing strategy. A well-orchestrated pay-per-click campaign can cost about the same and yield better results. Focus on your local community and establish personal relationships, this is the lifeblood of small businesses. Increasing your online image with review websites like Yelp is an effective way to gain new customers without giving away your product.

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