It’s been mentioned in the past that daily deals sites such as Groupon and LivingSocial might not be good for some businesses. The truth is some merchants have run into serious financial issues when they’ve run a daily deals campaign and it hasn’t done much for their customer relations either.
This seems to be especially true for restaurants and other food industry services. In a recent article on BostonHerold.com daily deals sites were likened to online “vultures” that along with new state legislation, took a bite out of local restaurant businesses this past year. While these sites may be a boon to consumers by offering 50 percent or more at restaurants and other dining establishments, some merchants view daily deal providers as a blight on the industry.
Jeff Gates of Aquitaine Group believes that the biggest issue that restaurants have had to deal with this past year is the explosion of Groupon-type “vulture buying groups.” None of Aquitaine Group’s six restaurants want anything to do with the daily deals sites, though Gates says he is hounded on an almost daily basis with their “flop sweat” marketing pitches.
“They are deflationary weapons of mass destruction and are very, very dangerous for the restaurant industry to get involved in,” “I don’t think restaurants realize how challenging the bottom line is without giving half off to your customers. (They) lose track of what they’re giving away.”
Deep discounts obviously work on the consumer end of the deal but for many merchants, especially those in the food service industries, working with social buying sites is something to be avoided. According to Gates the restaurant business simply can’t afford to underwrite it all.