Actionable Insights From APT's Retail Practice

The Questionable Economics of a “Good” Groupon

June 25th, 2011 | Posted by JMarek in Promotions - (Comments Off on The Questionable Economics of a “Good” Groupon)

This article in the New York Times, plus my interview in Fast Company, got me thinking again about Groupon economics.  To be clear, I’m talking here about the Daily Deal type offers, not more sophisticated customer-targeted, location-based, fill-up-empty-seats-right-now types of offers.

Here’s the crux, a restaurateur describing a successful Groupon in which a consumer receives a voucher for $14 worth of food by paying Groupon $7 ($3.50 of which Groupon pays the restaurant) :

“You don’t make money on the deal,” Mr. Massari acknowledged, “but in the end we are even.”

That’s because “people spend more than on the coupon amount,” he said. “They’ve been ordering about double the $14 from us. And people usually bring other customers, who are paying full price.”

Beyond that, among those who are redeeming coupons, “80 percent have come back without a coupon,” he said.

Let’s think through each piece of that, imagining for the moment we sold 1000 Groupons: (more…)

Our Initial Thoughts From Restaurant Leadership 2011

March 21st, 2011 | Posted by retailblogadmin in Restaurants - (Comments Off on Our Initial Thoughts From Restaurant Leadership 2011)

Jonathan, Josh, and Michelle from APT enjoyed attending this year’s RLC in Scottsdale.

Political punditry aside, the burgeoning marketplace for daily deal sites and social media continued to be a hot topic – as the novelty of these coupon channels wears off, we are seeing operators move past simple redemption stats to understand what impact these various offers have on actual profits. Additionally, we enjoyed insightful conversations about how restaurateurs are evaluating new pricing and menu strategies in a world with increased commodity costs and signs of a recovering consumer.

We enjoyed hearing from industry leaders ranging from Sally Smith at Buffalo Wild Wings to Robert Brozin, chief of the expanding Nando’s Chicken chain, building on recent interviews with Starbuck’s Howard Schultz and Panera’s Ron Shaich.

Also of note, we’ve been remiss in not mentioning it earlier, we’re thrilled to welcome Wendy’s into the family of companies driving value from Test & LearnTM.

We’ll write more about detailed reflections from the RLC in future newsletters.

This post is the third in a three part series on ideas that will shape restaurant performance in 2011.

Part Three: Marketing