Do you use Groupon or LivingSocial for local restaurants? Record-setting Jeopardy champ and resident Seattle genius Ken Jennings does, but not for the reason you might think.
“I subscribe to Groupon because it’s good to know which nearby restaurants have mediocre food & will probably be out of business soon,” Jennings said on Twitter recently.
While you could argue with Jennings’ blanket characterization, Seattle Kitchen hosts and noted local restaurateurs Tom Douglas and Thierry Rautureau agree that Groupon and other deal sites are the bane of their business.
“I’m selling literally a $100 gift card for $25. If I could afford to do that don’t you think I would just lower my prices and kick booty or do it myself?” said Tom derisively about the deal site business model. Essentially, businesses have to offer a 50 percent discount and pay the site a stiff fee on top of that.
“How desperate do you have to be to do it even one time? You cannot stay in business at these kind of prices,” Tom said.
Thierry tried offering a Groupon once for one of his noted Seattle restaurants, in large part to determine what kind of customer he would attract. Suffice it to say he wasn’t impressed.
“Completely lame,” is how Thierry succinctly described his experience. He lost money and didn’t bring in the kind of customer who would ever come back again.
But he disputes Jennings’ contention that a Groupon is a recipe for a mediocre meal.
“It just means it’s a restaurant that might not be making the right business decision or is one that is desperate for cash,” Thierry said.
Clearly Tom and Thierry aren’t the only ones avoiding the deal sites. Groupon, LivingSocial and others have struggled mightily over the past year (although Groupon has shown some signs of improvement after firing its CEO earlier this year.) Both Groupon and Living Social continue losing money, with Amazon recently writing off almost all of the $175 million it invested for a stake in LivingSocial, the Associated Press reported recently.