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Is Groupon Good for Business?

Our restaurant chain doesn’t participate in any location-based, deal-of-the-day services such as Groupon or LivingSocial.

It’s not that there would be any major technical challenges with these services. We would be able to track sales and the use of coupons just as we do now with printed coupons, which we do use. In fact, with Groupon and services like it, we’d be able to integrate the service with our point-of-sale system. That would let us keep better track of our coupons and how they’re being redeemed.

The reason we’ve stayed away from Groupon and other location-based deal-of-the-day services is their business model -- and ours.

When we pull the trigger on any promotion, we try to meet as many of the following objectives as we can:

1. Highlight what we offer. We want to encourage people to see (and eat) the things that make Boloco unique.

2. Do a good deed. A deal may support our community or a local cause or nonprofit.

3. Attract and keep customers. A deal should bring new guests into the restaurants as much as possible -- and not just once for the one-time promotion.

And, of course, we want to make it fun.

In the past, Groupon wasn’t a good way to meet these objectives. In its early versions, it was the equivalent, in our minds, of an old-school discounting strategy, except that the restaurant received even less of the proceeds after the discount.

When Groupon and the other services were getting their start, restaurants and retail businesses were at the height of their struggle with the economy. Some people feel this created a perfect storm. A lot of restaurants were desperate for guests, even the loss-making kind who only follow deal after deal. They needed a way to get incredible numbers of people into their restaurants -- and hoped that they’d return the many, many times needed to recoup their investment.

In our early conversations with Groupon, we couldn’t see a way to achieve the objectives I mentioned earlier. But today, our conversations are very different. All business models evolve, and so have Groupon’s and those of other deal-of-the-day services.

One day soon, we will pull the trigger on working with one of these services. And you may read about it when we do, since one of our criteria is that whatever we do, it better be big enough that Groupon or whichever service we sign up with issues a press release that includes us.

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