Coupon websites get mixed reviews

'It's hard to build a strong brand and Groupon... cheapens the brand.'

Rob Yafee, owner of two Pawtucket restaurants, was among the first to jump onboard when Groupon, a coupon website that offers consumers a daily bevy of half-off deals at local establishments, expanded to the Providence area two years ago. More

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Focus: HOSPITALITY

Coupon websites get mixed reviews

'It's hard to build a strong brand and Groupon... cheapens the brand.'

PBN PHOTO/MICHAEL PERSSON
LOSS EATERS: Chris Palias, owner and head chef at Sophia's Tuscan Grille in Warwick, said that he is pleased with his Groupon experience. He estimates that he gained 15 regulars from the coupons.
Posted 8/20/12

Rob Yafee, owner of two Pawtucket restaurants, was among the first to jump onboard when Groupon, a coupon website that offers consumers a daily bevy of half-off deals at local establishments, expanded to the Providence area two years ago.

Now, he’s ready to jump ship.

“I would never do it again,” said Yafee, who owns Garden Grille, a vegetarian restaurant, and Wildflour, a vegan bakery and juice bar. “I think it might make sense for certain kinds of business. I really don’t know what that [business] is.”

Groupon and Living Social are perhaps the most nationally recognized of a slew of online discount-shopping options. And while they clearly are not for every business, there are some owners, such as Chris Palias, who operates Sophia’s Tuscan Grille in Warwick, who report positive experiences.

He has run one deal with Groupon and one with Living Social. Preferring Groupon for its merchant services, he nonetheless had better results with Living Social. Palias said he was able to negotiate a better than 50 percent take of the Groupon sales with the company by using his Living Social success as leverage.

His 60-seat restaurant, which is advertised mostly through reputation, gained approximately 15 couples as regulars after the Groupon.

“We had a pretty solid following beforehand, but I feel like using [the coupons] was the icing on the cake,” he said.

Both Groupon and Living Social on a daily basis send an email to a subscriber who has selected marketplaces – a city or a geographical area – for which he wants to see available coupons. The user purchases the coupon, most often saving 50 percent on a meal, event, or service such as a manicure or picture framing, and then can redeem it beginning the following day. The user typically has a small timeframe in which to redeem the coupon.

A typical company-merchant arrangement is that each gets half the coupon price. So if a subscriber buys a $15 Groupon, the restaurant or spa gets $7.50 and Groupon gets the same.

“It is not a moneymaker,” said Dennis Dubois, who owns two Spike’s Junk Yard Dogs hot dog franchises. “Giving food at that price is cost at best. It’d [likely] be a loss.”

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