Monday, June 6, 2011

Be Groupon (etc.) Shopping Savvy

 Update 6/13/11. See end of post.

At the beginning of the year I was tempted by one of the half price deals offered for Slocum House. After all, over the years I’ve had some very good meals at the Fair Oaks establishment. It was always known for good food and romantic ambiance, as well as the chickens wandering the patio.

I don’t know which company offered the half price deal first, but I had recently put myself on restriction from buying these deals. I had a file envelope full of deals I had bought that I needed to use first. Being single, finding an appropriate time/person to use them with has been rarer than I would like.



A few weeks later, another Slocum House half-off offer came from one of the other coupon sites. And a few weeks after that, a third time. Now I was suspicious and feeling thankful that I hadn’t bought one of the deals. Sure enough, about a month later came news that Slocum House was going out of business. Everyone was shocked and disappointed that this long favorite restaurant was suddenly closing its doors. I immediately tweeted and commented on the Bee’s website how suspicious it was that all those half-off deals came just weeks before the announcement. Pretty sneaky, if you ask me. (It should be noted that Chef Vincent Paul Alexander, who had been a chef at Slocum House for seven years, is at the Horseshoe Bar and Grill in Loomis and graciously offered to accept any Slocum House coupons.)


This has made me a bit more wary about these half-off offers. I tend to only buy restaurant ones and we all know that restaurants can have a tough time surviving in this rough economy. I had bought another deal, worth $100, for another restaurant that has been around for a while but I had never gone to. These deals are often used as a means to bring new customers to the businesses, and that’s how I intended to use it. But after the Slocum House example, I was particularly wary of this other coupon I had. I had it from someone who does business with the restaurant that they were having financial problems and had their accounts with him on hold. Needless to say, I used this coupon as soon as I could find the chance to go. Last thing I wanted was to be left with a coupon I paid $50 for that was now pretty much worthless.


Such is the cautionary tale of such half-off deals as Groupon, Living Social, etc. While a majority of businesses do use them to entice new customers, there are cases of unscrupulous ones that are close to dying and look at an opportunity to get a little cash before their demise. Surely it can’t be much. After all, most of these companies work on a split deal. If a coupon is $10 for a $20 coupon, the arrangement is usually the business gets only $5 and the coupon company gets the other $5. That means that when you walk into the establishment to use it, they are taking a $15 loss on that coupon. In the case of Slocum House, which had quite a reputation, I’m sure they sold at least a few hundred of them, which I believe were $50 or $100 value coupons. That would have been a few thousand dollars for the restaurant.


And even if their intention is purely hoping to get new customers in the hopes of saving their business, it could end up not working out that way and they still go under. Either way, you could be caught with a worthless coupon.


My advice is simply to not just buy these coupons willy-nilly, but be somewhat aware of the establishment, its history, and its reputation. After all, it’s buyer beware.

Update:

I sort of chuckled when I read this article titled Why Groupon is Poised For Collapse. In particular, check out this paragraph: 


It also works for businesses that are just having a tough time. As critical as I am of Groupon, the slam dunk case is to sign up with Groupon if you’re going bankrupt. I strongly encourage every business that is about to go under to call Groupon. (Don’t tell them Rocky sent you.) It makes total financial sense—as a Hail Mary play. If you’re lucky, the upfront cash will be enough to help you stay afloat. If not, well, you were already going out of business. 
As a consumer, I love these half-off deals. This only illustrates that they can be used for good or evil.


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