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I'm a big fan of groupon, but this situation is going to repeat itself, I'm sure.

Recent example:


For those who don't read Japanese, that's a mom&pop-like Thai place doing a 500-yen ($6) all-you-can-eat coupon.

They sold 3500 coupons.

I just can't fathom the economics behind that one.

I can't believe I'm defending Group on but.. the normal price for that set is 1000 yen. Furthermore, it's for the lunch menu (ランチバイキング) and the time restriction is such that I doubt they'll ever have to honour all of the coupons. (Furthermore, they are cooking in bulk and you are stuck with whatever they have; I doubt they will strain themselves with the deal)

I can think of a few places that are all-you-can-eat (tabehodai) for 1000 yen. I wouldn't bet on the quality of food, but sometimes you luck out. 500 is insanely cheap, but it is near the break-even point (if you aren't including rent)

Groupon also takes ~50% of the total selling price.

So you are really looking at 250 yen; Around half the break-even point by your estimates.

the client business does not get 100% of the sale of each coupon.

Groupon takes a commission which varies but is reportedly around 50%.

So the client business gets 250-yen per coupon.

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