I always knew that restaurant.com seemed kinda fishy…

My friend and fellow humor columnist Erik Deckers retweeted this story earlier on today that caught my eye as suspicious, namely because every once in a while I’ve found myself faced either with super bargains or even free giveaways for gift certificates from restaurant.com. I never actually bought into them because I was never too impressed with the actual selection of restaurants that they offered, and now after reading this news story and actually understanding how their system works, I can kind of see why most of my favorite restaurants wouldn’t have any desire to give these guys the time of day!

From the consumer side of things, it’s just like Groupon or any of those other social couponing sites – you buy a coupon for less than half of what it’s actually worth, so a $25 gift certificate to Big Chuck’s Beef Emporium costs you $10. What a deal, huh?!

From the restaurant’s standpoint, however, it’s a much darker story – of that $10 you paid to restaurant.com for your gift certificate, the restaurant itself actually gets absolutely nothing … it all goes to restaurant.com, and the payback for Big Chuck’s is that they got a customer referred from restaurant.com that they might not have otherwise gotten and hopefully the customer will actually end up spending more than the value of their gift certificate or possibly even become a regular after the promotion.

The thing is, ask a lot of small businesses that have already been burned by the likes of Groupon – a good number of people use these highly discounted coupons for a cheap meal and then when they’re done, they log on the next day to see where else they can do the same thing with. I’m actually honestly surprised that Groupon is still doing as well as they are because it seems like 6 months ago that story was coming up again and again where business owners were screaming that they just couldn’t afford to deeply discount their products when they were finding that repeat business was next to nil.

Of course, at least with Groupon, the business owner walks away with something … I think the pricing I heard at one time was 50/50, so if a $100 voucher for hang-gliding lessons costs consumers $50, that $50 is split $25 to the hang-gliding instructor and $25 to Groupon…

What’s truly sad about this whole thing, though, is if you take a step back and look at this from the big picture, what’s really happening here is business owners with little to no understanding of the Internet are trusting in these new start-ups to lead the way, and subsequently they’re the ones getting screwed because the start-ups are just salivating at getting a piece of the pie and really, they’re not the ones who have anything to lose! They promise online promotion and referrals to these brick and mortar businesses, and by the time the businesses realize that they gave away a month’s worth of food for free with nothing to show for it, the start-up has moved on to selling the same story to other business owners willing to be woo’ed by the idea of driving customers into their stores from the web.

I guess the moral of the story is to read the fine print, know your business and your customers, and when someone does approach you with the answer to all of your foot traffic problems, don’t get too excited until you stop and think about the potential outcome next month and the month after that…

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