Local businesses frown on Groupon

Posted at: 11/28/2012 5:48 PM
Updated at: 11/28/2012 6:21 PM
By: Jill Galus, KOB Eyewitness News 4

With the holiday shopping season underway, everyone seems to be looking for a deal.

Groupon is a popular place to get discounted prices on experiences around town, but when it comes to eating, one restaurant owner said he is not buying it.

Groupon advertises itself as having "unbeatable deals," but Mike Baird, owner of Vernon's Hidden Valley Steakhouse, said it actually ended up costing him more money in the end.

"I think it's a bad business model," Baird said.  "I'm the one providing all the services, I'm the one with the costs for food, I'm the one with the cost for employees and keeping the lights on and yet, they got half the money and it went out of state."

In two days, Baird said, he sold about 2,400 Groupon deals; but out of the $88,000 he made, half of that went to Groupon.

A Rice University study found only 30 percent of businesses actually benefit from the deals.

"After doing the math it was costing me about 20, 25 bucks a head to actually have customers in the restaurant," Baird said.

The popular website offers discounts for select restaurants in Albuquerque.

Owners choose to participate. Most deals feature half-off bargains. The tradeoff is filling seats with potentially more, and new, customers.

"Basically it brings in the customers looking for a deal and doesn't necessarily bring you lifetime customers," Baird said.

But those who have purchased Groupon deals before, said it's attracted them to new businesses they have then included as part of their regular routine.

"I think it's a good way to try restaurants and local businesses here that you might not have," one woman said.

Another woman said she would rather get a direct discount from the restaurant itself.

"There's no use in going through somebody else who's going to take a percentage of something they're doing to get a discount when you can go straight to the source," she said.

KOB Eyewitness News 4 checked with a variety of upscale restaurants around town, and out of a half-dozen, found they too offer their own deals instead of working through another party, like Groupon.

"There's a lot of local businesses that do offer discount services like that but are local and keep the money in the state," Baird said.