Sharing such a personal story was not easy for me, but I’m delighted and deeply touched by the positive response. Emboldened by that experience, I’d like to continue this writerly tangent, now with something drastically different from my typical content: A persuasive research essay. Groupon seems to have reached its breaking point since the time of the original writing, but it still flounders along, so I feel there are a few things remaining that must be said. Tell me, do you still buy Groupons or other similar online discounts? After reading the piece, was I able to persuade you otherwise?
Disastrous Discounts: Paying the Price for Groupon
Social purchasing is more popular than ever, and new websites offering deep discounts on services ranging from massages to kayaking classes are sprouting up every day. Groupon was arguably the trendsetter, beginning the craze and still drawing the greatest crowds; more than 50 million people subscribe to regular alerts and emails about current deals, and over 22 million Groupon deals have been sold as of January 2011. Most commonly though, the bulk of these prepaid vouchers are for purchasing food in restaurants. Poised as both a painless way to try new cuisines and a money-saving option for revisiting old favorites, it’s easy to see the allure of up to 70% off your receipt’s total. The deals may be booming, but what discount-seeking consumers may not know is that by buying into this trendy coupon game, they may actually be damaging the business they love most. Businesses that see flagging sales are more likely to participate in the first place, and it’s common that those deep discounts actually cut further into their bottom lines. Patrons who seek the cheapest options are unlikely to purchase more than their vouchers are good for, and thus each Groupon is accepted at a loss. Groupon may turn a nice profit from the collaboration since it’s not their merchandise or services on the line, but the small restaurants lose, big time. Whether a business fails or succeeds is entirely in the hands on the consumer, which means that this is one case where individuals can make a difference and vote with their dollars.
Anyone who cares enough to invest in a voucher coupon presumably wants their local eateries to stick around, provide more great deals, and of course the food that makes it all worthwhile. Outsourcing the discounts to a middle man is often the big problem, and one that patrons should ultimately avoid. That’s not to say that all coupons are bad for business owners, but seek instead for deals that come straight from the source. Many casual restaurants and coffee shops in particular already have customer loyalty programs which reward repeat businesses. Ask at the counter, and shoppers may be rewarded with a free beverage or appetizer after a certain number of purchases. It’s a nice bonus for being a regular, and a cost that’s more easily subsidized by the establishment in question. Managers who don’t employ such a tactic may not have thought of it in the first place, so don’t hesitate to suggest starting up such a program to those not participating. Don’t be afraid to speak up; owners interested in pleasing their customers, and especially their loyal fan base, should be open to suggestions.
If the attraction to Groupon shopping is too great to shake altogether, a single discount deal won’t bankrupt a restaurant, but vouchers shouldn’t be like free meal tickets. Purchase Groupons sparingly and don’t be selfish. Although Groupon and many similar websites allow users to purchase additional copies of the same deal as “gifts,” limit purchases to one of each offer. Although it’s against the terms of service to cash in “gifts” for oneself, it’s sadly a common practice, as an estimated 50% or more of these Groupon deals are in fact illegally cashed in by the original purchaser. Additionally, be prepared to spend more than the total value of the deal, since that’s the only way that restaurants can break even. Most importantly, do not forget to tip, and tip well. Waiters and waitresses are often the first to suffer from patrons who abuse the system, and seem unwilling to part with a dime beyond their paper contracts. Tips are not included in these vouchers and there’s no excuse for bad tipping on good service.
Who would intentionally create such a short-sighted business plan, which damages its own sources of revenue? No one, and certainly not any savvy investors; Groupon was not designed to ruin restaurants. There’s good reason why it’s still influential and drawing new supporters, and that’s because for some, it does work the way its intended. When smart discounts and price points are set, proprietors can up-sell items and ultimately make a profit, in spite of the vouchers. What’s more, new customers can be attracted to the low prices at first, but become regulars once they finally try the venue. In a perfect world, this is the ideal outcome of a Groupon for both parties, and while it’s not impossible, it’s becoming increasingly difficult to achieve.
If it seems too good to be true, it probably is. Groupon fits perfectly into that concept, promising much more than it can ever hope to deliver. Although the customers are probably never clued into the damage they do, they hold the key to whether their internet-based vouchers make or break a restaurant in dire straits. Avoiding them altogether and simply supporting your local small businesses is the best tactic, because they need every dollar to stay afloat in these difficult times. The customer really does decide the fate of an establishment with both their fork and their money, so put them somewhere you can trust; not a faceless web-based company, but with the talented, hardworking chefs found right around the corner.