As I understand restaurants, Ticket - labor - food - rent,utilities,insurance, etc. = profit, which is generally around, oh, 3% to 10%. If my normal 2 top ticket is, oh, $40, my profit is somewhere between $1.20 to $4.00 because my actual costs run $36.00 to $38.80
So, now I "sell gift certificates for 25% of face value" to, basically, advertise my establishment. For every 100 "coupons" that are redeemed, I'm short not only my "profit" of $1.20 to $4.00 but also I'm short of covering my costs by $26.00 to $28.80 per 2 top!
For me to recover the "lost costs", I have to turn at least seven (7) non-coupon tables and possibly as many as 24 non-coupon tables for each redeemed coupon so I can use my "profit" to pay bills!
Not for me.
Not good for the FOH staff.
Not good for the BOH staff
Fantastic for GROUPON, /img/vbsmilies/smilies/laser.gifFree Money (mine plus the coupon buyers!)
Yeah. It seems like a really crappy deal for the restaurants. We're selling a $50 gift certificate for $24. From what I've heard we only get 60% of that $24 and groupon the other 40%. I guess it brings people to the place that haven't been there before, but all we're doing is losing money.
foodpump-that is a good point. Are people tipping on the total $50, the $24 they paid already or not at all? I'm sure the servers will be a bit salty.
I believe the thinking is that people will come in and because they're only spending $24 for $50 worth of food they will be more willing to spend more on wine and liquor. That certainly doesn't help food cost. We're basically giving away food.
I guess the results will be realized between now and june when the groupon expires. I'm sure i'll post when the results are in...
Look, the people are not attacted by the food, service, ambiance, friend's referrals, etc. No, they are attracted by the discounts. Doesn't make for good customers. Think the Bra-bin at the local Mall*Wart....
The big joke is that the customer contacts groupon, and they contact you. 3rd party. They have the customer's e-mail/contact info and money, you don't get it. They might rent it out or sell it to you, but that's an even bigger kick in the crotch than thier 40% cut.
Hopefully they might drink and cover some of the costs.