The Story
I am a fool for a fun, sexy website and a good deal, as much as the next person. Usually I can remain satisfied, as long as the experience ends there. However, we decided to take an offer from the well publicized collective buying site groupon.com for a, well, ahem “All you can eat meat buffet” (okay, I know. Shoot me later) at Rodizio, Stockholm. Of course, the price was good (50% off – 245kr per person) and the imagery presented on the site was quite overwhelming:
Home page
food/atmosphere
So off we went, dragging a (non coupon carrying) friend along for the promising experience. The location was quite solid, although the interior suggested it had experienced better days. The staff were nice, before we announced that we were (yet another) set of customers sent by Groupon – then the experience went downhill from there.
The “buffet” was infact non existent albeit leftover potatoes and soggy leaves, which could’ve been salad in a past life. Once we sat down, we were provided with a plate of mush (read tzatziki, bulgur, yesterday’s mushrooms). When we asked for a spoon – the reply ” No, use your fork”. Humph. Meat was… dry and of questionable origin (later I went downstairs to the bathroom, and saw piles of empty Lidl bags – so I guess that answered the question). We quickly ate the food, kind of pissed that we had spent 122kr on such a terrible experience, and feeling sorry for the friend who was going to have to fork out 245kr for his share.
Yet somehow, the begrudging staff and awful food all made sense, once we started to see other diners paying for their dinners with Groupon codes. Yes, you guessed it. I don’t think one of the guests, of this half full restaurant used real money to pay for the meal (besides our friend), and I can only imagine this was devastating for their obviously failing economy.
The Money
Let’s have a quick look at a few numbers:
- 245kr (full price of “All you can eat)
- 122kr (discounted “All you can eat” price offered by Rodizio, through Groupon)
- 25% (supposed comission taken by Groupon for each sale).
- 200 (Approximately the amount of Rodizio deals bought through Groupon).
- 91.50kr (the amount earned by Rodizio from each sale from Groupon).
And now let’s put that into an equation:
91.50 (Rodizio earnings) x 200 (amount of deals bought) = 18300 kronor (final winnings from Groupon customers -not including any charges for drinks with meals)
Considering the possible winnings from the same amount of non-Groupon customers for Rodizio would be 49 000kr. That is a gross loss of 30 700kr. I wonder if the 18300kr even covered the costs for food, staff and general restaurant costs for 200 customers?
The Sell
The next obvious question, is why would a business like Rodizio consider using collective buying sites like Groupon? A common pitch by Collective-buying companies, is that they provide exposure to their large customer base through discounted rates on client services. It is quite a popular sell to luxury based businesses (such as beauty therapists, adventure sports, restaurants) which would have felt the pinch during last year’s downturn.
In terms of Rodizio’s example, a possible conclusion is that it is a failing resturant, in dire need of new customers fast – so saw this as an easy PR stunt to gain exposure to the web-savvy crowd. Possible issues they did not expect?
1) There would such a huge interest in this deal, which they would need to cover costs for.
2) The profile of a Groupon customer is “deal hungry” and perhaps not their usual target clientele.
3)A further tarnished reputation, by providing poor service/ sloppy food. (As groupon deals are web based, a high percentage of their users are engaged in social networks/blogs and often share experiences on these platforms).
The Moral
Only engage your organization in group buying sites, if you are able/willing to provide whatever high quality service you would provide to normal customers. As this is primarily a brand buiding/PR exercise, if you are unable to hold your service high you will not only lose short term profits, but also suffer negative brand engagement.
