Best Tips for Groupon and Living Social Marketing for Restaurants and Cafes

Restaurants and Cafes are increasingly turning to sites such as Groupon, Spreets, Scoopon, Livingsocial and Dealme, all with differing degrees of success. There have been, however some highly publicised coupon marketing horror stories.

The Groupon Equation can be highly effective at getting new customers in the door, but unless you have a plan to make a profit out of each of those customers, you are just increasing your losses.

One bakery in the United Kingdom, Need a Cake, offered a 75% discount on 12 cupcakes, which normally retailed £26. She offered the cupcakes at £6.50, which was a bargain that was taking up by 8,500 people. She was losing between £2.50 and £3.00 per sale for a total loss of £12,500. “Without doubt, it was my worst business decision ever.”, stated Rachel Brown in an article on MSNBC on the 22nd of November, 2011. “My poor staff were having to slog away at all hours – one of them even came in at 3 a.m., because she couldn’t sleep for worry.” Heather Dixon from Groupon told the BBC that Groupon didn’t allow a limit on the number of vouchers that could be sold. “We worked very closely with small businesses, but ultimately, they know their businesses best and what they’re able to handle.”

The Groupon Equation can be highly effective at getting new customers in the door, but unless you have a plan to make a profit out of each of those customers, you are just increasing your losses.

Whilst Coupon marketing for your restaurant or take away can definitely increase the numbers of customers in your business, it is important to remember the old adage that revenue is vanity and profit is sanity. With that in mind, here are some tips to ensure that you make the most out of a coupon marketing activity.

1. Have an upsell plan. Offer something at a cheap price that will get people in the door, but that will be easy to upsell. Use the offer to get them in the door with an upsell strategy in mind. For every 50 cent coffee offer them a Cake. For every 75% discount off a main meal, offer them a pre dinner drink, wine with the meal, and offer them dessert.
2. Don’t treat customers differently. Too many restaurants and cafes treat their Groupon customers badly because they aren’t making any money out of them. Some of these people are just working the coupons going from one business to the next in search of the cheapest meals. These aren’t going to be your customers but they may refer people to your restaurant. For those people that do come in and could afford to pay for a full priced meal, you want them to have the best possible meal to ensure that they will want to come back.
3. Limit the deal. You don’t have unlimited physical or financial capacity for customers paying 75% offer. (Remember, if your food costs are 30% of the menu price, you are selling at 16% below the cost of the food, before rent, payroll and electricity!!!) Limit the deal so you don’t end up like our baker in the UK, losing a year’s worth of profit on one terrible deal.
4. Make the deal work for you. If you are busy on Friday and Saturday nights, you don’t want to be driving customers with 75% off coupons on those nights. Limit the nights. Make the Living Social customers come on a Tuesday or Wednesday night if they are your quietest nights. The coupon salesperson may not like this, but remember, he needs your business so don’t do any deal, structure it so that it will work for you.
5. Give the customer a reason to come back. What about giving customers a coupon for a free dessert when they return? That way you can gently wean them off the highly discounted meal and get them to be a return customer.
6. Build your database. Grab contact details for every customer that comes into your restaurant with the coupon offer. Whether it is an email address or mobile number to SMS to, grab what you can from everyone at the table. For extra points grab their birthdays so you can automatically send out a birthday offer to them. These people like offers and if they have a good time with you this time, they will be pretty happy to come back to the restaurant for a birthday offer and of course, they will bring their friends.

So that’s it, our tips to help you get the most out of your Groupon, Scoopon or Living Social marketing plan for your restaurant, take away or café. It’s a great way to do online marketing and can create a lot of buzz, but you must have a plan to increase profit, not just the number of customers through the door.