Can I get some feedback here? My wife talked to one of the sales guys. I read about a lot of horror stories and apparently so did Groupon as the sales lady said they addressed a lot of the issues over the last year.
The split now is 60-40
The redemption is only at about 80% You still get paid on remaining 20 percent.
Working with the restaurants to make sure that they spend money when they coming in…IE NO COUPONS with the groupon.
40 percent first week issued, 30 percent first month and 30 month at end of campaign.
ANYONE have any experience here? whats the best dollar value should I shoot for?
Speaking from experience…there is little to no money made from Groupon.
You are basically getting free exposure. By the time you take out the food cost of the food sold and then given away to Groupon, you break even.
So as long as you are ok with just breaking even and receiving free exposure, go for it.
You will have the folks who will buy additional items and those that only want the coupon deal.
Be sure to figure out the cost of the deal you want to offer. Be prepared for the initial hit the first 2 weeks once it hits. Try to have the offer hit on a Thursday or Friday.
Groupon is great for bringing customers to your door. It works very well for that.
That said, the customers Groupon brings are not the ones you want. Their orders are not profitable, and they don’t stick around. They are the most fickle customers on the market, and to them food is fungible. A Tombstone pizza is just as good as yours in their eyes, as long as they got a good deal on it.
And quite possibly upset your regular customers when your level of service drops because you’re completely overwhelmed with Groupons.
I dipped my toe into the water with a Daily Deal that is done by our local news paper. I sold 500 of them (that was the cap). About 70% of them were sold to existing customers.
For the 30% that were new I can use my POS to see what their purchasing has been since they used their offers. It was about 2 years ago, and not one of them has become a customer by my definition. Not even one.
Grouponers are also much more likely to give you a negative review on a site like Yelp - there was actually a study done on it.
Their payment terms still suck too. You have to wait 6 months to get the final 30% of your money? For the first month Groupon will be loaning you cash. Once your labor and food costs from the promotion are settled, you’ll be loaning Groupon money for 5 months.
So if I understand correctly… The customers attracted by coupons don’t come back? You mean to say they are fickle and only buy from places that coupon? Next thing you know you will be telling me you all have regular Tuesday night customers that call every week and order your Tuesday “Special” :idea: . Nice, pity they never call on Friday and pay regular price though.
Jeez, did I get flamed for putting that out there on this forum a couple years ago lol…
I will say again… a cheap customer that buys because of price is no friend of a small independent pizzeria.
They will drop you like a hot rock when the guy down the street has a cheaper deal.
No specials/coupons here. Same prices, same published menu every single day. Both locations. Identical prices every day. Every week. Never a coupon. Or if it makes you feel better: same “sale price”, every day, every week.
If a new Chevy cost’s the same today as it did last week, like it will next Thursday, and you can get low interest finance any day of the week it’s not a “special”.
Versus …“Low interest finance on Tuesdays only” IS a Tuesday special… It cost’s less if purchased within a certain timeframe. A “special”. Or coupon. Or discount from the regular posted everyday price. People will buy on Tuesdays. They are highly unlikely to buy on Monday or Wednesday. You have not only given them a reason to buy on Tuesdays, you have given them a reason to NOT buy on any other day.
Fail to see how a Groupon customer differs from a regular coupon customer? They are both motivated to buy by a discount. It follows that they will buy where/when the discounts are offered.
Maybe you can explain to me how a Groupon coupon and a “regular” coupon somehow differ in the motivation to buy message? They both motivate the customer to buy on price. Price alone. You can put whatever you want in the body of text. It’s price selling. Period.
Pizzamancer gets it…
"That said, the customers Groupon brings are not the ones you want. Their orders are not profitable, and they don’t stick around. They are the most fickle customers on the market, and to them food is fungible. A Tombstone pizza is just as good as yours in their eyes, as long as they got a good deal on it.
Same for Little Caesar’s, home of the most price-motivated customers in the pizza universe. You brought up Little Caesar’s the last time the board had this discussion, and how their $5.00 price is discounting. According to your definition, however, it isn’t because it’s their everyday menu price. I asked you about it last time around, but you never answered.
The difference is Groupons are money losing propositions for the restaurant. Coupons and specials are crafted to be profitable, and in many cases are carefully constructed to get customers to spend more than they otherwise would have.
It’s also common to use specials as a form of price discrimination, which I am a firm adherent of. My menu prices are high, and I always have coupons out. But about 65% of my orders go out the door at full price. The bargain shoppers will come on Tuesday to get their “special”. That’s great for me, because I’d be slow anyway, and those people would not be my customers at regular menu price. People that aren’t price sensitive order whenever they want at regular price. I’ll gladly take both ends of the market.
He certainly does, but he’s talking about Goupon - the original topic of the thread. I’m not sure if he believes the same about Coupons. I don’t know Chris, but I’ve seen him post many, many times about is adherence to database mailers. Maybe I’m wrong, but I assume those contain some type of coupon.
I think it’s great that you never have to put out a special or discount, but it really isn’t a reality for most of us in the pizza business, nor do I agree with it for the price discrimination capabilities described above. It’s built into the model for most of us.
That’s the thread from almost two years ago where you described how having a continuous 2 for 1 special and “Family Meals” offered a discount really isn’t “discounting”. I don’t think you ever sold anybody on the idea though.
How is having a “Family Meal” discount package on your website (http://www.pizzability.ca) different than printing it on a coupon? So those of us that send out a coupon with a bundle are “discounting”, but you aren’t because it’s your price all the time? My head is spinning.
Didn’t you also recently have a “Crazy 8” advertisement on your website? Was that not a special?
Groupon does bring in customers with out a doubt. It also brings in headaches too and most were pointed out.
I have 3 suggestions when dealing with Groupon that has worked well for my customers in the pass:
If possible offer a item that would not be order by itself, the idea is to get the customer in the door and to purchase more than what is on the coupon. ie. You offer a special dessert which is normally not on the menu. 1 of my customers in Japanese Restaurant offer an order of Sushi Appetizer for 50% off then they pushed full meals and drinks to bring the meal cost up. Yes it is a little hard in a pizzeria but it can be done.
Offer an Item that is not on the menu. You can inflate the over all selling price and the customers doesn’t have a reference on the menu to see the normal price. This allows you more room for a small profit instead of selling it at cost or a lost.
I believe most important: Groupon will push you to give a deep discount on the item, then they will take 40% off the top for themselves. So pricing is very important so you don’t lose your shirt on this deal. Start backwards on your Groupon price, meaning know exactly the cost of the item you will be selling on Groupon. Add a small profit if possible then add Groupons 40%. which will get your Groupon selling price. Say you offer a Lg. Specialty Pizza $14.99 normally, Groupon will be asking you to sell it for half off ($7.50) now Groupon will take 40% off of that ($3.00) so the question is does that pizza cost you less than $4.50 to make?
The biggest mistake I seen is the Business Owner not pricing it correctly and the deal ends up costing them too.
Groupon is great to get customers into a business, now it is upto the business to win them over to bring them back.
I have seen Viral Coupons on Facebook do very well and the Business Owners keeps all the money plus you build a list so you can promote more coupons via emails.
You can inflate the over all selling price and the customers doesn’t have a reference on the menu to see the normal price. This allows you more room for a small profit instead of selling it at cost or a lost.
Mr Donner, if I had ever had the slightest inclination to hire your services you have just sealed the deal that will never occur…
Yes, coupon marketing at it’s best. Jesus, maybe my customers are somehow different but I assure you if I could even bring myself to look them in the eye after doing that they would most assuredly call BS…
Yep. Not having coupons out there is just short sighted. If you are running full tilt, 24/7, then maybe not, but there isn’t a pizza place on the planet that is that busy, (and if you were, basic economics tells you that there is far more demand vs. supply and you should increase prices to capitalize on it).
Will a customer order on Tuesday because you have a special that night? Of course they will. Does that equal a lost full price sale of Friday night? Hell no.
Ok guys, I give. I know I operate in a very different fashion to the accepted norm. I will quit trying to change the world and will keep my thoughts re this subject to myself after this post.
Last comment/justification, I opened a second location in the city. There is Little Caesars all the way to high end independents etc within the same delivery area as myself. 12 pizzerias. Completely different environment to my small town first store. Another independent opened a store less than a block away a month before we opened. His third store. He coupons and has mid week “specials”. Produces an average product.
I have sent many many mail outs. Our colour glossy menus. 15,000 of them. Radio advertising for a month. Not a single coupon. Not a single discount from our regular menu price.
I projected to lose money for six months. Eight months in and we will “just” turn a profit this month. We have a very high chance of showing a net profit in the first year. Fully staffed (as in place operates without owners working there on the schedule) Have been building a committed customer base on our quality and service. Not price.
The other new guy? For sale right now. $25,000. He is starving. I know this for a fact as I have hired a couple of his laid off employees… As I said, average product, not a bad product.
Pricing is in line with comparable product sold elsewhere.
So it’s obvious to me that even though my concept fly’s in the face of the accepted way to market a pizzeria,
it would appear to work for me. In a small town, AND in the city.
Or one could say I am welcoming 100% full price money to walk in the door every day of the week vs 6 days a week…
Enough. We disagree. Let’s agree to disagree lol… My theory works for me like your dough recipe works for you. I might not agree with your dough recipe, no matter. Works for you.
Groupon is a ey expensive method of attracting business…it may work for some but most folks I’ve spoken with wish they never did the deal…
I tried to figure out away to make it worthwhile, but could never find a profitable solution, once you discount the deal, give Groupon their share, (plus the credit card fees), there’s little left for the operator…
While we still have coupons in higher end magazines for our restaurant, we have gone the route of no more combo specials or daily specials…
Our motto is you Dont Discount Great food…
Will it work? I dunno but if you really believe in your product like boatnut does, who is to say it doesnt…
Whats good in one area might not work in another…
If you want to compete with the big chains or even little caesars, then You see yourself as one of them…
I see myself as a Gourmet Pizza restaurant… We want to compete with Full Sit down restaurants. not the “norm”
I want my avg ticket price to sky rocket… So to go with the original theme of this thread… With Groupon that will NOT happen… I will never do groupon, livingsocial or any other deal like that again… The customer does not stick around after its purchased… and then your discounting to your loyal customers that come in and pay full price because they love the food!
Ah hah, the madness spreads…
Will it work? Absolutely, with some caveats… You better have a better product than the coupon guys. You better give better service. ( Like calling at least every tenth customer back to verify their food arrived on time, was hot, was what they ordered etc etc).
Area? I suppose if you were in a very low income area it would not. Any other should be fine?
In my first year of business I was convinced to participate in a “Community Discount Book” where the proceeds of the sale of the coupon book went to a local charity. (The charity got 10% of the money collected from the sale of the books, but that is another issue). I was hammered for the next three months by the customers that wanted to use the coupons. Then I saw less than 0.1% of those customers (yes that is one out of 1000) come back to the store for a regular priced pizza.
Needless to say that was my one and only time participating in any coupon scheme. I figured I came within a few dollars of breaking even on the deal but the headaches it brought were not worth the effort. I will stick to doing things my way and let the people looking for cheap pizza go down the road to the bargain pizza place.