Breaking: Groupon Gets Some Local Competition

Regular readers of this blog and of SLM’s Front Burner are aware of my fascination with Groupon, the Chicago-based juggernaut that has successfully merged couponing with social media. Apparently I am not alone.

Two seasoned local marketers (Norty Cohen of Moosylvania and Scott Anderson of KIG Healthcare Solutions, Inc.,) and a local restaurateur (Brendan Marsden of Modesto), have joined forces with Sauce magazine to introduce Hot Sauce, Deals of the Day, a similar program, but one that’s tailored to local restaurants. (SLM interviewed Cohen in May 2009, and the restaurant coupon was a conversation topic.)

I am told that Groupon’s heavily-discounted, one-deal-per-day offer has been so successful nationwide that there are backlogs. Merchants are enticed by the potential of a huge new customer base and buyers, well, they never tire of a good deal. Almost sounds too good to be true. But keep in mind that Groupon is only 18 months old–and most of their deals are good for one year–so the final tallies for success (or carnage) are not yet in. 

As I understand it, here’s how this local model will differ from Groupon:

• It will charge the local restaurant less per sale than Groupon
• It plans to give 10 percent of its proceeds to a different food-related charity every month
• It plans to offer multiple deals per day
• It plans to cap each offer at 1000 sales, creating a sense of urgency for the buyer and limiting the exposure for the restaurant

From the parameters above, Hot Sauce seems to be offering a better deal to everyone. But remember, Groupon is the 800-pound gorilla and the clones followed “with varying degrees of shamelessness” according to Andrew Mason, Groupon’s 29-year-old CEO and founder.

My conclusion…I’m still fascinated, but I must admit, with each huge Groupon sale and the launch of more and more clones, speaking as a former restaurateur, I’m getting just a bit anxious. Deep-discounting will never be a cure-all. –- George Mahe