

One Last Party for Drew's Eatery after Disastrous Discount Deals - pgroves
http://chicagoist.com/2011/12/09/one_last_hurrah_for_drews_eatery_af.php

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keypusher
There are quite a few reviews on Yelp that indicate they had real problems
with service, food quality, menu selection, and price. Their menu basically
consists of expensive vegan hot-dogs and fairly generic sandwiches, which is a
tough sell in Chicago when you have some very good food around for very cheap.
It also seems like the owner is now backing away from any claims that it was
Groupon which actually did him in.

If I had to speculate, it seems like the restaurant was likely faltering
already, and the owner tried to attract new customers with some Groupon deals.
It didn't end up generating the kind of revenue he had hoped, it didn't result
in new returning customers, and the restaurant closed down. I think if you
have a restaurant that is really great and you want to the word out, Groupon
can be a real driving force in getting people in the door. However, if you
cannot guarantee the kind of experience that is going to make them come back,
and/or you are already walking a tight line financially, it might not be a
good idea at all.

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abalashov
To be fair, Yelpers are an exceptionally tough crowd. I mean, I really don't
know of any place offhand that is widely regarded as "good" in meatspace,
anecdotally, that doesn't get savaged on Yelp. When I read Yelp reviews for a
place, it's because I'm curious about the worst things that dickish, self-
proclaimed connoisseurs have to say about it, not to get any real baseline for
what the place is actually like. It's never even a tenth as bad as Yelp says
it is.

Also, the owner mentioned utilising many different discount/coupon programs.
Groupon may stand out because it's kind of emblematic, but there's no reason
to think from anything that has been said that it was the majority of their
coupon activity. Is there?

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btucker
I truly hope local businesses will come to accept that a $5 for $10 deal,
where the customer has to jump through some hoops to get it[1], is almost
surly a terrible way of attracting new customers. Why would anyone want a
customer who is willing to go through that hassle to save $5? I don't think it
even takes math to realize this is a crazy promotion idea.

[1]: last I recall it was click through to purchase, login/enter credit card,
wait a day, return to print

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matwood
_Why would anyone want a customer who is willing to go through that hassle to
save $5?_

My cheapest (and not frugal, actually cheap skates) friends are the ones who
would jump through all sorts of hoops for a dollar. They are also the ones I'd
never want as customers. It's odd to me that businesses don't recognize this.

~~~
bunderbunder
They probably do recognize it, but it's easy to get flustered and forget
things when you're dealing with someone who's trained in high-pressure sales
tactics.

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dmk23
No doubt, it is sad for your friendly neighborhood restaurant to go out of
business, but at the end of the day it is every owner / manager's
responsibility to understand and own up to their pricing and discounting
decisions. Of course if you'd offer to give up a dollar for a quarter (exact
economics of a Groupon deal) you'll get swamped with takers and get ruined.

Groupon salesforce surely sold them stories on how great it is, but at the end
of the day there is no excuse for not doing your own math. I suspect many
"Groupon drove me out of business" stories are simply a way to blame someone
for the overall business failure. Might as well say "it is due to economy" or
"changing neighborhood demographics" or "to spend more time with family" or
really anything.

EDIT: When I say "blame" I mean anything listed as a "reason". People often
like to be indirect when they do the blaming.

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coffee
> ...but at the end of the day there is no excuse for not doing your own math.

You're over simplifying it. Just about every merchant can understand that they
are giving up a dollar for a quarter. They get that. What they don't
understand, and what the hard sell is, is customer retention. Being sold on
repeat customers that will drive revenues in the long term based off of a one-
time loss lead (advertising cost).

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redsymbol
Understanding all that is the biz owner's responsibility too.

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JoachimSchipper
The relevant part of linked statement (PDF):

* Drew's Closing Statement / 12.05.11

Drew's eatery: established in March of 2008.

Drew set out to open an Eatery that was both sustainable & organic. Over the
course of 3+ years and listening to his customers requests we expanded our
menu to offer more vegan and gluten free options. Our latest menu is about 50%
vegan and offers over 70% Gluten Free. Trying to keep up with our competitors
we began working with the online deals (groupon, plum, kgb, living social,
reward network, price bunch, and others) We soon realized that these deals are
not what they seem but yet are silent killer and only build false hope. We
accept full responsibility as nobody forced us into Groupon or any other deal.
We stopped doing any future deals in October and had hoped we could recover,
but it was too late.

~~~
maratd
I don't think so. He clearly realizes the problem lies with him and his
business, but manages to blame someone else anyway. It doesn't just take
realization. It takes action.

You have to realize that the fault lies with you and then you have to act on
that realization. Seems he realized things were going sour, but his solution
was to jump in with the daily deals sites, instead of fixing the real problem
with his business.

You can use Groupon in one of two ways.

You can sell off excess inventory. In the case of a restaurant, this may mean
running a "breakfast only" deal if most of your clientele comes in for lunch
and dinner. Or you can run a "dinner only" if most of your customers are a
breakfast and lunch crowd. There are other creative ways and I have truly seen
"Groupon done well" in this way. You focus the Groupon customers to fill gaps.

The second way you can use Groupon is to temporarily keep your failing
business afloat. If this is all you do, your business will fail. It'll just
take longer. Groupon is like a credit card. They'll give you cash fast and you
better use that cash to fix whatever is wrong with your business. If you
simply sit on your ass and do daily deals, you're just delaying the
inevitable. Don't blame Groupon, blame yourself for not fixing your business.

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corkill
If your business isn't going well and you discount your prices and sell on
mass, what exactly is meant to happen..

Would be good if the deal sites did some kind of business model check/chance
of profiting check. But realistically it's not up to them and they can't
understand a business owners business better than the actual owner.

The business owner is having one last give stuff away for free day...

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abalashov
I was just in Sheridan Park, and this makes me very sad.

