Well, darn. Didn't think about it much, did they?

First, you can tell GroupOn how many vouchers you are willing to issue. If you don't want 1544 groupies raiding your place, don't sell 1500 vouchers. That's not hard.

Second, guess who uses GroupOn? GroupOn users are mostly young people with not much money. If that's not your target market, maybe you should advertise some other way.

Oh, yes. My husband's old restaurant did a groupon offer once and pretty much the same thing happened- They got swamped by hipsters who never intended to go back anyway, gave away a ton of food, waiters got stiffed, etc. And yeah, the grouponers did displace a lot of full-price, "real" customers in the last few days before the groupon expired. There are plenty of good competitors coming out now that have models more favorable to the businesses, though. I don't ever buy groupons, even though they're a good deal for me... it would make me feel kinda dirty, like I was stealing. (I don't have moral qualms about most other discount programs or coupons, though.)

I'll offer a counterpoint - there was a new Pizza place around here that came around selling coupon books for a free pizza plus discounts for the price of a pizza. I did manage to get the "free" Pizza before the place went out of business. It turns out that the pizza was OK, but nothing special, which is fatal given the competition.

So, buyer (and seller) beware.

Full disclosure - I've used a groupon coupon for a homebrewing kit. It seems like a good deal for both parties - I got a discount and I pretty much have to come back for more ingredients.

As a_r_g says, you can limit the number of Groupons sold. I have purchased and used vouchers from Groupon, Teambuy, Dealfind and Swarmjam and have had mostly good experiences.

Many restaurants require reservations. The restaurant can specify in their offer that they will only sell 200 vouchers, that you must mention the voucher when you make the reservation, and that only 5 vouchers can be used on a given night. It is all up to the restaurant.

We meet with a group of friend every few months and it's our turn to pick the restaurant in September. We chose a restaurant where we have a voucher,so they will be selling seven meals off that voucher. We also tip based on the full price before the voucher is subtracted.

My wife used one for a haircut, hair colour, manicure and pedicure for $49. She liked the place and may go back. We have used half price oil changes and bought BCAA powder at a suppliment store.

I have had a number of half price massages and one that I bought in June was booking appointments in October. They are obviously spacing the voucher usage so they don't take a big hit on income in any given week.

I buy so many vouchers that I need a spreadsheet to make sure that I don't let one expire.

You have to look at what the possible -- and especially likely -- consequences of your actions are. A new pizza place did the same thing to themselves a couple of years ago. They put coupons on the doors of the neighborhood. Weekend comes and they are flood and can't make it.

Twenty years ago, I was a struggling real estate agent. When I printed flyers, I would distribute 50 - 75 at a time. I hoped to get one or two calls and I wanted to be able to get to the people right away.

One of the worst thing to do is to entice people to try your business for the first time and then piss them off. A local gas station was offering a voucher for a small Dominos pizza for 99¢ with a gas fill. When I picked up the pizza, it was about 5" in diameter, cut in four pieces with one piece of pepperoni on each piece. When I complained the guy at the counter said, "What do you expect for 99¢?". I haven't been back to Dominos since.

Is it just me or does this seem a little out-of-character for Ms. Alkon?

I have used Groupon and you can definitely limit the number of vouchers you give out.

I used a Groupon deal to take my family to see "The Nutcracker" over the Christmas holidays performed by a top-tier ballet company. Had we not had the Groupon deal, it would have been ridiculously expensive to attend.

Is it just me or does this seem a little out-of-character for Ms. Alkon?

Why out of character? I'm not saying Groupon should be banned.

I tend to patronize businesses that I have fondness for and am very loyal to, and that other customers feel the same way about. I love a bargain, but I also don't take all that are available to me, because I want people to be paid a reasonable amount for their work. Sure, a business can choose to have a loss-leader but I think businesses need to be very careful that they understand that they will be flooded with customers and not necessarily high-quality, sticky ones. Also, for me, whether patronizing a business is pleasant for me has a lot to do with whether it's crowded. I/we rarely go out on a Friday or Saturday night -- I think of them as hell nights for going out.

I'm a business owner & have rejected several of these groupon-type "marketing deals" as I prefer to offer the sales/ steals to my regular clients, who are my proverbial bread & butter. Why should I lose money to someone I don't know, who is specifically looking for the cheapest option available? Cheap skates & bargain hunters are not my target demographic.

I think some businesses think Groupon is a silver bullet and end up in over their heads. If you're an upscale restaurant with limited seating, it's maybe not for you (or, you have to really limit the offer as Steamer described).

One new-ish business in my city (a casual order-at-the-counter kind of place that caters to young people and families with kids) has made it work. They know they're probably going to lose some money on it -- but they see Groupon as a less expensive alternative to taking out a radio or TV ad. They aren't very visible from the street, so Groupon was a way to get people in the door.

So, how does a restaurant go about attracting new customers?

My wife and I go out probably every other week, and we like to try new places as well as go back to the ones we like. So far it's hit or miss, more miss than hit.

Crazy problem, isn't it? Maybe we're fussy, because I've not had much luck locally with recommendations. We had great luck on vacation because the kids know the good restaurants where they live.

The biggest fail is that the businesses don't realize what the narrative is here. Groupon is the super-awesome hero by handing out these great deals. If I'm running a business I don't want people thinking that Groupon is awesome, I want them to think *I* am awesome. Printing my own coupons and doing my own sales is much smarter in the long term. If you're starting out then Groupon might be a good way to build some quick visibility, but personally I'd try some of the stunts Ramsay used on the UK version of Kitchen Nightmares first.

It's a brilliant marketing strategy for those who know how to work the system. Most Groupon's are only about 50% off, from what I receive (it may just be my area). It's hardly very low. In this economy, I like to cut costs wherever I can, and so do many people that I know, and value it.

Groupon is like all marketing schemes... It works great for some, terrible for others, and is kind of a crapshoot since you won't know whether it's good until you've tried it. You can say the same kinds of things about TV ads, newspaper ads, internet banners, door flyers, coupons, and a guy standing on the sidewalk holding a sign pointing toward the business. Heck, telemarketers are still in business and apparently must be making some sort of profit, even though telemarketing calls really don't do anything more than piss people off.

"So, how does a restaurant go about attracting new customers?"

Well, you have to attract the right kind of customers. Groupon attracts bargain hunters and people looking for a good deal - not nessecarily a good value (a good deal is paying. If you are say, a Michelan star restarunt or coture designer then you do not want to attract bargain hunting customers, you certainly don't want to cater to them. If you are running a "turn 'em and burn 'em" quick-serve restaraunt that relies on bulk sales (like Denny's) or a low-end day spa trying to hook people into buying a subscription (Massage Envy) then these are the kinds of customers you want (because there are a lot of them).

"Most Groupon's are only about 50% off..."
By the time a restaraunt pays for everything (rent, salaries, utilities, etc) they have about a 10% profit margin.

"In this economy, I like to cut costs wherever I can .... and value it"
Of course you do as a consumer. I do the same. But from a business standpoint, Groupon would not be a marketing avenue I'd choose.

We also tip based on the full price before the voucher is subtracted.

This. My mother used to be a waitress - any of you out there ever tip on a comped meal as in 0.00$ - dont ever go back, they remember you and you dont want to know what they did to your food if you did

Elle wrote:

"Most Groupon's are only about 50% off..."
By the time a restaraunt pays for everything (rent, salaries, utilities, etc) they have about a 10% profit margin.

If two more customers come into your restaurant, none of those costs increase. The only cost is the raw food cost. The key is to take reservations and limit the number of vouchers taken on a given evening.

We used a teambuy voucher last Monday. We paid $15 for the $30 voucher, so if Teambuy took half, the restaurant got $7.50. Our bill was over $43, so the restaurant got another $13+ totaling $21 or $22. That more than covers the cost of the food. The food and service were good, so we will tell our friends.

They also lucked out in that we went to the restaurant in June and forgot to bring the voucher. It was too far to drive home and get it, so we had a full price meal.