Restaurants can do spec work, too

Daily deal sites like Groupon and LivingSocial are built upon the concept of traffic.

The goal of the daily deal site is to increase site traffic by offering amazing deals in a short window of time. The goal of the client – the company featured in the deal – is to increase traffic in the store by providing half-priced meals or spa visits.

The majority of these clients – especially those in our area – are new and/or small restaurants. There are no Burger King or McDonald’s deals; instead, the emails are for the new neighborhood bistro, or the 20-seat enchilada restaurant.

The selling point of these daily deal sites is the promise of increased traffic. The assumption is that increased traffic will eventually lead to repeat customers. Salespeople make their case and small restaurants – most of whom have no one on staff responsible for serious marketing – buy the line.

And then, there it is. Spend $15 and get $30 worth of food from your local Indian restaurant.

That’s a huge discount. Offering a fifty-percent cut on a meal, in an industry that makes on average four cents of every dollar in profit, means you are giving away your food for free. Not just a sample, either. An entire meal. And, as AmEx’s Open Forum reported, only one in five of these people are returning to make a full-price purchase.

A client giving away their craft for the promise of exposure, while the daily deal site profits.

That, my friends? That’s serving food on spec.

Which helps narrow down why I get so annoyed with daily deal sites.

This was lovingly handwritten on October 11th, 2011