Groupon's Rose Has Its Thorn: E-Coupon Juggernaut Bodes Badly for Bagel Bakery

Get too much Groupon love, and a restaurant is liable to run out of money for aprons.
A couple weeks ago, our own Mike Lewis reported that the Groupon phenomenon has bolstered Seattle businesses willing to sacrifice small short-term losses for the prospect of attracting scores of long-term customers.

But in Chicago, where Groupon is based, reviews from restaurateurs are mixed. In essence, response to Chicago-area Groupon promotions has been too good, causing one to wonder whether the half-off specials might not mesh so well with mega-metropolises like the Windy City.

Greg Gibbs, owner of Chicago Bagel Authority, felt this pain firsthand when he signed on with Groupon for a deal-of-the-day in January, reports the Chicago Tribune. Gibbs' promotion, which cost $3 for an $8 voucher good for any menu item, sold nearly 10,000 Groupons, 10 times more than the top end of Gibbs' expectations.

"This will end up being the year of the Groupon for us, and that's not a good thing," Gibbs told the Tribune. "We'll count it as a loss. "

After splitting 50 percent of the revenue with Groupon, a standard deal for most businesses, the shop netted about $15,000 for $80,000 worth of food. Gibbs said the promotion hasn't yet translated into additional revenue. "We just don't get the kind of customer that we want to come back," said Gibbs, who saw patrons put items back if their total exceeded $8. "It's a lot of people that come once for the discount, nobody tips, and they're all trying to squeeze it into the exact dollar amount."

comments powered by Disqus