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New data from Chicago-based consulting firm Technomic Inc. suggests that restaurant operators are still warm on deal sites such as Groupon and Living Social, contrary to popular belief that such services might be waning in popularity.
According to Technomic, 51 percent of independent restaurant operators who had participated in third-party deal sites were pleased with their result. Further, 46 percent of operators thought they got a good return on investment with their participation in a deal.
Bob Goldin, executive vice president of Technomic, says his original hypothesis when conducting the study was that deal sites were now frowned upon by the restaurant industry.
“I think conventional wisdom … is that restaurants are not happy with the results, it’s unprofitable, they’re doing them but there’s no ROI in it for them,” Goldin says. “So I was somewhat surprised that the results show that there is a faction that’s pleased.”
Still, Technomic’s data shows that there may not be a clear-cut winner in the deals industry. The firm’s report shows that 40 percent of operators have used multiple deal services.
“The early, first-mover advantage that Groupon had is probably dissipated a little bit now as there are so many people offering these deals,” Goldin says. “Restaurants are perhaps dealing with multiple suppliers because I don’t know that they perceive them as being all that differentiated.”
Goldin says there is probably a “shakeout” going on in the deals industry that will limit the number of suppliers in the coming years. Still, he does not believe the industry will die any time soon and, in fact, thinks it will continue to grow in popularity.
“I think its’ become a part of the marketing toolbox for restaurants,” he says. “I think the frenzy behind them is definitely diminished; I think there’s some deal fatigue that’s set in among consumers, and probably the trade too—there’s so many they’ve kind of lost some of the impact. But I think they’re going to be here to stay in some form or fashion.”
By Sam Oches