To Groupon or Not To Groupon?

As a relative veteran—17 years—in Naples, on Florida's Gulf Coast, this comfortable European-American bistro is known for its creative menu and top-notch ingredients. Chef/owner Alexander Bernard says he keeps his guests happy with new items, including blackberry Canadian elk strip loin ($35), and long-time favorites such as lobster bisque ($7 bowl), crispy duck ($28) and macadamia nut-crusted grouper ($29). He offers no daily deals.
Gilt Club
Located in the historic Old Town district of Portland, Oregon, the Gilt Club is a play on words—gilt means gold plated and also a young, female pig. When the restaurant opened in 2005, it was known for hand-cut meats and pork rinds ($8). It has since garnered national attention, featuring an eclectic menu with unusual cocktails and entrées such as quail stuffed with foie gras ($23), a current favorite, says owner Jamie Dunn, who works with Groupon.
What led to your decision whether to use a daily deal recently?
I tried it once a few years ago with a local company, and I didn't like the results. We're not open in the summer, which is the off-season here, so I thought I'd offer it in October, which is before the season really gets going. It didn't help our business and didn't create new customers. I have eight months to make money. In the end, I decided I didn't want to discount my season when (commodity) prices and labor costs continue to rise.
Deciding to try Groupon was the result of a combination of trying to think differently in the economy we are in and seeing the staggering results of other businesses in my market using it. I wondered how could I give up part of my sales. But then I kind of stopped looking at it like a coupon and started looking at it like an offer. So, that's how I structured it, very conservatively, you pay $15 for $30 in food and beverages, and only a couple [allowed] per person.
What has been the result?

The restaurant continues to gain regulars. There are no convention centers to bring in visitors, but there's a large seasonal population. I have built a really good local and seasonal following that includes a big and loyal Midwest clientele. I think it’s best to do that by consistently offering great food and service and building relationships with customers. They are comfortable talking to me, and they let me know what they want.

It was great. When we were on the Food Network we had about 1,000 unique visitors on our website. When this hit, we saw more than 4,000. I had made the Groupon an amount that almost guaranteed people would spend more than the value of the offer. And I was surprised with the quality of the user. They were savvy and sophisticated—not what I would consider coupon clippers. They bought in and wanted to be here.

Do you think you will change your mind?

No, I don't think so. I think there are too many issues with discounting, with too many people just looking for a deal and not really experiencing the restaurant. Those aren't loyal, regular guests. You need to fill seats, yes, but this isn't for us. If you're a large restaurant or a new restaurant, maybe you need to do it to get people in the door and in seats, but we like building relationships. That's not from people looking for a deal.

We’re now on our second Groupon, you pay $17 for $37 in food and beverages. You have to get your staff to buy into it. They've heard horror stories about bad tipping and bad behavior, but we found the vast majority of users were great guests and good tippers. Many visited again. When we had a rush at the end (of the offer) and people couldn't get a reservation, we extended it. That made for goodwill, so we both benefited.