Cheap meal deals under fire

Reporter

Tuesday 16 October 2012

THE boom in so-called "daily deal" internet offers during the recession has been blamed for putting restaurateurs in Scotland's biggest city out of business.

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Victoria Weldon

Eateries have been listing themselves on Groupon and other sites where customers can buy cheap deals for meals in a desperate bid to drum up custom.

However, Glasgow restaurateurs have warned too many customers are now using the cut-price deals on which the businesses make little, if any, profit.

In addition, the new customers drawn in by the offers are not, as they had hoped, patronising them again.The Glasgow Restaurant Association (GRA) has claimed Groupon and its competitors are often seen as a last resort for struggling restaurateurs.Owners claim they sign up to deal sites in the hope that customers will return as full-paying clients or buy more food or drink as they use the voucher, but this rarely materialises. They also claim the deals often result in absolutely no profit.However, Ryan James, chairman of the GRA and owner of Two Fat Ladies in the city's west end, said: "Deal websites like Groupon are killing restaurants."They have completely changed the eating habits of the public. People will now wait for a voucher to come up for a restaurant they want to go to and if you become known for doing Groupon, then hardly anyone will eat in the restaurant at full price."Groupon is picking on the cadavers of businesses which are really struggling. It's feeding on our flesh but doesn't care what happens to the skeletons that are left behind."Restaurants offer Groupon's large database of customers a deal, with a discount of usually around 50%.Groupon charges commission plus VAT on the price paid by its customers. This is often around 30%, leaving the restaurateur with only a small percentage of the sum. This is paid to the restaurateur when customers turn up. If only 80% of customers use the deal, then they only get the equivalent fee.Mr James added: "Restaurateurs can't get their staff to work for half-price, or pay half-price for their rent and rates. There are huge costs involved in running a restaurant."If you were to rely on Groupon to make a profit, it just wouldn't happen and it can also dilute your brand if you become known for heavy discounting."Gordon Yuill, who used to own the Merrylee Road Bar & Kitchen in Glasgow, said he never made a profit from Groupon and saw little return business.Mr Yuill, maître d' at the Rogano for 17 years, said: "We used Groupon like almost every restaurant is at the moment. If you're not doing some kind of deal then customers just don't come in."He added: "Sites like Groupon are murdering the restaurant trade. I made no profit. It was just to get people in and generate some business at off-peak times and stop staff standing about doing nothing, but people are becoming more and more reliant on these sites." Groupon, which has 36 million customers globally, said 50% of restaurants that have run deals in the UK have come back.A spokeswoman said: "With many high-street businesses struggling in the current economic climate, we are keen to be seen as a core part of a business's marketing mix, helping them to bring new customers through the door and potential repeat customers."

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Cheap meal deals under fire

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