Matthew Ho's Blog

Groupon has turned down Google’s $6 billion offer.

For restaurants, I see some benefits for Groupon far beyond exposure, sampling their menus or offering discounts.

Looking at a restaurants “off-season”, there are certain nights that are often more profitable than other nights.

For example, on Thursday, Friday and Saturday, a restaurant may have 2 full sittings. On a Monday, they may barely be able to fill 1 full sitting. This Monday night, on average, can be seen as an off season for the restaurant. Instead of closing the restaurant on that given night, a restaurant can offer a coupon on Groupon that will allow them to cover some fixed costs of being open.

For any restaurant to be open, an X amount of employees (chefs, waitresses, bartenders) must be on sight regardless of the amount of customers. Along with the necessary food supplies and rent/ payments with the property. This being said, a restaurant can obviously scale back on their employees and goods, but they cannot scale down to the point where it may be too risky. They still need a standard amount of servers and foods for any night. Offering a coupon that allows them to cover these costs (maybe 20% off instead of 50% off) will allow for some revenue to be brought in during an off-season night while still open.

In this case, I feel that “filling seats” will still bring in revenue during a dead night and help cover some fixed costs as long as they calculate the amount discounted accordingly.