Dayhoff Soundtrack: Jay Hancock Baltimore Sun: Groupon: Baltimore restaurants hot and cold on deals

Monday, June 20, 2011

Jay Hancock Baltimore Sun: Groupon: Baltimore restaurants hot and cold on deals

http://www.baltimoresun.com/business/bs-bz-hancock-groupon-grumps-20110607,0,650886.column

Editors note:

Until very recently, I was only vaguely aware of Groupon. And then what little I knew was in the context that Groupon is about to issue an IPO.

One wonders if Wall Street will be begin to address some of its difficulty of late in valuating Internet-driven tech initiatives? I guess that is fodder for another moment.

Meanwhile, just last week, some tech-savvy, cutting-edge family members bought it up and my curiosity heightened – more from the consumer, and vendor point of view.

I also had many questions; of which Mr. Jay Hancock does a good job answering. Questions like how vendors could afford to discount their prices in an environment of rising cost factors, demand obstruction – read, lack of business demand, and competitive pressures that do not allow vendors, shopkeepers, business restaurant owners to raise prices to keep up the profit margin contraction.

Kevin Dayhoff

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Groupon: Baltimore restaurants hot and cold on deals

Jay Hancock originally published in the Baltimore Sun 7:57 p.m. EDT, June 6, 2011 http://www.baltimoresun.com/business/bs-bz-hancock-groupon-grumps-20110607,0,650886.column

Has The Prime Rib, which requires waiters to wear tuxes and exudes "the intoxicating aroma of old money," according to Esquire magazine, got a deep discount deal for you.

Eat $100 of the restaurant's haute chow and pay just $50 under its wildly successful Groupon promotion, which was pitched last month. (Diners have all summer to use the offer.) Order The Prime Rib's signature dish, which normally costs $47.95, and pay only a little more than you would at Outback.

The Rib sold 5,000 coupons within a few hours on Groupon.com. What's next for the Calvert Street shrine? Tank tops on Saturday night? An all-you-can-eat fish fry for $14.95?

"We certainly don't want to dilute our brand," says general manager David Derewicz. But, he said, the restaurant likes using online coupons "to drive business in our direction during typically slower, hotter months. It's worked out fine."

Maybe he'll still feel that way after Groupon bargain scroungers descend, order $500,000 in food and pay for only half of it. (Less than half, actually, because Groupon takes a cut of the coupon proceeds.) The Groupon fad is in full bubble, but Baltimore restaurateurs say the Groupon experience is sweet and sour.

Investors, who will get a crack at Groupon stock in the initial public offering announced last week, are likely to have similarly mixed results. Restaurants are a key industry for Groupon, but many want nothing to do with the company. To try to win them over, Groupon is already sharply cutting the percentage that it takes from each coupon sale, according to eatery proprietors. That will hurt its revenue… http://www.baltimoresun.com/business/bs-bz-hancock-groupon-grumps-20110607,0,650886.column