Can You Blame the Death of a Restaurant on Groupon?

WafflesI recently came across an article about a man who had run a waffle restaurant successfully…until Groupon, as he claimed, killed it. He points out how Groupon customers were impatient and critical, as opposed to his regular supportive customers. And he blames Groupon for the demise of his company.

But is that really fair?

After all, this man started out with an art gallery, and fell into making waffles. From the sound of things, he didn’t have a business plan for how he’d grow the new business. And as we all know, starting a business requires a LOT of planning. Sure, customers may be happy with your product today, but what about tomorrow? And the day after?

The Groupon Effect

Yes, Groupon customers do act different. They are out for a deal, and you have to swim upstream as a business owner to get them to come back as repeat customers. The article pinpointed the very issues many small business owners have when they offer this sort of deals to customers. He’s certainly not alone in that regard.

But there are ways to circumvent this “Groupon Effect.” The first is being proactive. Know that you’ll have a flood of new customers, and buy enough inventory to cover it. No employee should be running to the supermarket to buy supplies for waffles in the middle of a rush. Perhaps there are measures that can be taken beforehand, like churning that delicious homemade butter before customers are waiting.

And customer service must be at an all-time high. Because, yes, Groupon customers may never come back to your location, as they’re seeking great deals. But on the other hand, Groupon has given them a cost-effective way to assess whether they want to become regulars of your restaurant or shop. If you make the experience more difficult and unpleasant for them, you’ve made that decision easy; they won’t return.

Talk to your staff and explain the importance of treating every single customer like your only one. Sure, the cook is yelling in your ear back in the kitchen, but when you reach a table, you should be all smiles and charm. That’s just the nature of doing good business.

Many small business owners falsely assume that offering a daily deal will be a money maker. Usually it’s not, since you have to discount your product or services about 50% and then give Groupon its cut. It’s what’s called a loss leader: you probably won’t make money on that sale, but the idea is that either customers buy more in that visit, or come back in the future. But it’s up to you to make those sales.

Put the Blame Elsewhere

I understand this man needs to vent. Starting a business is extremely difficult. But, like with any type of marketing, you have to be prepared for how to make the most out of the opportunity.

2018-02-22T06:19:46-07:00 July 28th, 2012|Categories: Growth and Expansion|

About the Author:

Nellie Akalp
Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

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