LivingSocial is known for its daily deals, but this month, the coupon and discount company decided to spice things up with four-star restaurants.
Gourmet is LivingSocial’s latest restaurant product, creating exclusive offers for high-end restaurants to reach out to a high-end clientele.
“We talk with restaurateurs everyday, and through those conversations we’ve come to learn there is a desire and interest by restaurateurs to connect with customers who are just as excited and have just as much passion for food as they do,” says Alli Phillips, general manager of restaurants at LivingSocial.
With talk of a double-dip in the economy and unemployment hovering around 10 percent, however, some question whether Gourmet is debuting at the right time.
Phillips disputes the idea, saying people who plan to dine out will do so, no matter the economic condition.
“Gourmet members are foodies that regularly dine out several times a week,” Phillips says. “For them, a meal out is an experience. It is how they entertain themselves.”
As a company policy, LivingSocial does not discuss margins or profits patrons make off its deals.
For comparison of a potential profit from a Gourmet deal, however, consider Groupon: Restaurants that take on Groupon deals will offer food at half price, meaning a meal worth $50 is purchased by the consumer for $25. Of that $25, Groupon earns $12.50 and the restaurant receives the other $12.50.
A discount deal might be risky for any restaurant, particularly a high-end one, as it agrees to give away food at up to a 75 percent profit loss. The ability to upsell drinks, appetizers, and desserts not featured in the deal allows for an opportunity to make back the money.
The most successful deals are win-win: A consumer has a chance to try a restaurant they otherwise might not afford, and the restaurateur can turn a one-time recruit into a repeat customer.
The foodie appetite in D.C. was a good match for Gourmet, says Phillips. The cool restaurant scene paired with LivingSocial’s partner relationships to create the first Gourmet venture.
CityZen, a chic eatery in Washington, D.C., became the inaugural patron for Gourmet. On Oct. 17, the restaurant offered a $250 menu featuring three canapés, seven dishes, seven glasses of wine, a champagne cocktail, a beer-and-cheese pairing, take-home pastries, and a signed menu in the wine library at a 20-person chef's table.
LivingSocial has plans to launch in nine more markets by the end of the year and continue growth throughout 2012.
To that end, Gourmet launched in San Francisco on Oct. 24 with an eight-course tasting experience at Saison.
Phillips says restaurateurs have been extremely receptive and excited about Gourmet. “Take our San Francisco launch partner, Saison,” she says. “The owners of the Michelin-starred restaurant were looking for a different and unique way to connect with new customers, and saw Gourmet as the perfect way to do so.”
By Sonya Chudgar
