Group buying: what are the benefits to restaurateurs?

07 November, 2013

Group buying, the concept of products and services being sold at significantly reduced prices on the condition that a minimum order is achieved, has emerged as a serious revenue source for hospitality businesses in recent times.

Stephen Lee, owner/manager at Sydney restaurant The Little Snail, and Groupon Australia CEO Alistair Venn spoke exclusively to HospitalityHub about the impact of group buying and its place in the industry.

How has group buying helped your business?

Stephen Lee (The Little Snail): Group buying has brought us a revenue stream from discount or sale from people who would not otherwise have visited our restaurant if not for the 50 per cent discount on our menu price.

As retailers of food, we now have a platform like Groupon to promote a "sale", an effective marketing concept important to retailers.

Our partnership allows us to tap into the large customer base that Groupon has resulting in increased volume of customers from a new demographic.

Each campaign is accompanied by a web page containing photos of our menu items, professionally presented by Groupon for us, cost free. We cap our "sale" at 6000 per campaign and have always managed each target. From our perspective, group buying is an effective, immediate-response advertising platform.

HospitalityHub: Are group buying deals suitable for other restaurateurs and what are the benefits group buying can offer a restaurant?

Stephen Lee (The Little Snail): Yes, group buying deals could certainly be beneficial to many restaurateurs. Using a website like Groupon provides us with great exposure, which definitely increases our customer base and then gives us the opportunity to promote our product on a wider scale.

The increase in volume allows us to spread our fixed cost, more labour hours available and more supplies required which makes us an attractive customer for our suppliers.

HospitalityHub: How can Groupon help restaurants manage their deal volume and redemption process, maximise upsell and optimise for repeat business to help achieve business goals?

Alistair Venn (Groupon Australia): From the outset, Groupon works very closely with partners to identify their business goals ensuring every partnership is mutually beneficial and ROI positive.

Groupon partners have access to a personalised online dashboard called Merchant Center which is an interactive portal providing them with all the information they need to manage their Groupon offers and gain valuable insights about their customers, including: age; gender; location; and if they are new or repeat customers.
Via Merchant Center, businesses can track their deal performance, manage redemption through barcode scanning, calculate incremental spending and upsell, as well as receive customer feedback in real time.

Furthermore, merchants are assigned dedicated account managers to ensure they are fully leveraging the potential of the partnership and that campaigns are executed seamlessly.

HospitalityHub: How does Groupon work with restaurants to calculate ROI to ensure positive business outcomes?

Alistair Venn (Groupon Australia): Groupon is committed to making every partnership a successful one and we work closely with our merchants to ensure their features are ROI positive. Merchants have access to a custom-built interactive 'ROI Calculator' which allows them to input their fixed and variable costs against the estimated revenue ensuring they have full visibility on the campaign's ROI potential.